2022 (1) TMI 876

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....4), Chennai for the assessment year 2014-15 vide his order dated 30.06.2016 u/s. 143(3) of the Act. 2. The only issue in this appeal of assessee is as regards to the order of PCIT revising the assessment u/s.263 of the Act, revising the assessment order framed by the AO u/s.143(3) of the Act under limited scrutiny under CASS by issuing notice u/s.143(2) of the Act dated 31.08.2015. The assessee has challenged this issue on jurisdiction as well as on merits i.e., disallowance of expenses relatable to exempt income by invoking the provisions of Section 14A of the Act, read with Rule 8D(2)(ii) & (iii) of the Income Tax Rules, 1962 (hereinafter the 'Rules') i.e., interest disallowance and disallowance of club expenses. 3. Brief facts are that....

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....fficient to meet the expenses relatable to exempt income under Rule 8D(2)(iii). Hence, he also explained before PCIT, the details of available funds i.e., amounting to Rs. 27,95,58,933/- and investment in shares from where dividend income earned was to the tune of Rs. 19,19,96,254/-. But, PCIT has not gone into the details nor into the accounts of the assessee but suo-motto applied formula prescribed under Rule 8D(2) of the Rules and directed the AO to revise the assessment. Aggrieved, now the assessee is in appeal before the Tribunal. 4. Before us, the ld.AR for the assessee drew our attention to the assessment order enclosed at page 29 of assessee's paper-book dated 30.06.2016 and also reply to notice u/s.142(1) of the Act, which was sub....

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....enditure. For this, he relied on the decision of Hon'ble Supreme Court in the case of SA Builders Ltd., vs. CIT, (2007) 288 ITR 1. 4.2 In view of the above, the ld.AR stated that firstly on jurisdiction, the AO has conducted all enquiries and moreover this was a limited scrutiny assessment and assessee filed relevant details before the AO during the course of assessment proceedings vide letter dated 28.06.2016. Moreover on merits of both the issues, i.e., disallowance u/s.14A of the Act and allowability of club expenses, both are genuine and reasonable expenses. 5. On the other hand, the ld. CIT-DR, Shri Abani Kanta Nayak, argued that on merits, the assessee case should be examined by the AO because as per the assessment order, no enquiry....

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....ssessee in relation to exempt income under Rule 8D(2)(ii) & (iii). The assessee has earned dividend income to the tune of Rs. 24,71,434/- and made suo-motto disallowance of Rs. 5,13,580/- while filing return of income. Admitted facts are that first of all this is a limited scrutiny assessment and assessee has filed reply to query raised by AO under notice issued u/s.142(1) of the Act. Further, the assessee before AO as well as before PCIT during revision proceedings filed complete details i.e., balance sheet and schedules forming part of balance sheet where complete details of own funds of Rs. 27,95,58,933/- and investments made in purchase of shares amounting to Rs. 19,19,96,254/- are available. Once these funds are available which are mor....