AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (8) TMI 1721
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....ld. PCIT has grossly erred in assuming jurisdiction u/s 263 of the Act on the premise that the assessment order dated 14.03.2016 framed u/s 143(3) of the Act is not only erroneous but also prejudicial to the interest of the Revenue. 3. The representatives of both the sides were heard at length and the case records carefully perused. 4. Facts on record show that the return for the year under consideration was E-filed on 28.09.2013 declaring total income of Rs. 3,77,41,570/- under normal provisions and book profit of Rs. 3,58,11,523/- under the provisions of section 115JB of the Act. 5. The return was selected for scrutiny assessment and accordingly, statutory notices were issued and served upon the assessee. After perusing the relevant in....
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.... income needs to be disallowed as per the provisions of section 14A read with Rule 8D and while computing the total income of the assessee for the year under consideration. However, no disallowance of expenditure in relation to exempt income was made by the AO under Rule 8D(ii) and (iii) in the assessment made for the subject year. iii) It is further noticed from the 26AS that during4he FY 2012-13, the assessee company received a refund of Rs. 43,21,760/- for the A.Y 2011-12 electronically, which included interest component of Rs. 4,28,285/-, but the said interest income was neither offered by the assessee nor added back by the AO in the order u/s 143(3)." 7. The assessee filed a detailed reply on 21.02.2018 explaining how the assessme....
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....f the Act which was upheld by the Tribunal only because in that year the Assessing Officer did not make any enquiry in respect of exempt income. It is the say of the ld. AR that during this year, the Assessing Officer has made a detailed enquiry and queries raised by the Assessing Officer were duly replied vide letter dated 02.03.2016 and 14.03.2016 which are exhibited at pages 14 to 32 of the paper book. 11. The ld. AR vehemently stated that the PCIT has wrongly assumed that the Assessing Officer has not made any enquiry and therefore, wrongly assumed that Explanation 2 to section 263 is applicable. The ld. AR continued by stating that neither the assessment is erroneous and prejudicial to the interest of the Revenue. 12. Per contra, the....
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....h is exhibited at pages 14 to 25 of the paper book, the assessee has not only furnished details of investment made but also referred to the Circular No. 5 of 2014 of the CBDT and how that Circular is applicable to the assessee company. In the very same reply, the assessee had referred to various judicial decisions relating to provisions of section 14A and Rule 8D. The assessee had also explained the sources of own funds which were interest free and which were utilised for making investment. 16. We further find that vide reply dated 14.03.2016, the assessee had once again explained that why the disallowance u/s 14A should not be made. This reply is exhibited at pages 26 to 32 of the paper book. 17. Considering these facts in totality, it c....
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....f the Assessing Officer has adopted a view which is a plausible one, the view would not be open to revision by the Commissioner." 22. We find that in the immediately succeeding A.Y 2014-15, the Assessing Officer has made disallowance u/s 14A r.w.r. 8D vide order dated 30.12.2016 framed u/s 143(3) of the Act and disallowances made by the Assessing Officer were deleted by the CIT(A) vide order dated 18.12.2017. The first appellate authority has categorically held that there is no direct linkage between the loans taken and the investments. 23. The Hon'ble Delhi High Court in the case of Escorts Ltd 198 Taxman.com 324 has held that : "The Commissioner can take recourse to revisional powers u/s 2634 of the Act on fundamental aspects of ....