TaxTMI 
TaxTMI 
2022 (7) TMI 598
X X X X Extracts X X X X
X X X X Extracts X X X X
....e been made? (ii) Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT has erred in holding that the Ld. PCIT was not correct in exercising jurisdiction u/s. 263 of the Act by ignoring the fact that the Assessing Officer has passed the assessment order without making inquiries/verification in the light of the fact that the disallowance of Rs.2,91,18,343/- should have been made as provided u/s 57(iii) of the Act? (iii) Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT has erred in setting aside the impugned order u/s.263 of the Income Tax Act and allowing the appeal of the assessee?" 3. Brief facts of the case are that the assessee is engaged in the business of trading and earned income from salary, profits and gains from business and profession, income from other sources and profit from partnership firm. The respondent-assessee filed his return of income on 5.11.2014 declaring nil income. The case of the assessee was selected for scrutiny and order under section 143(3) of the Act, 1961 was passed by the Assessing Officer on 28.12.2016 assessing total income of the assessee at Rs. Nil. 4. The Principal Commissione....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sessee were also distinguishable on facts. The PCIT therefore, held that deduction claimed under section 57(iii) of the Act, 1961 was not allowable. 9. PCIT invoking Explanation (2) of section 263 of the Act, 1961 held that the assessment order passed under section 143(3) by the Assessing Officer was erroneous and set aside the assessment framed with a direction to the Assessing Officer to frame the assessment after taking into account, the observations made by the PCIT for disllowance under section 14A of the Act, 1961 read with Rule 8D of the Income Tax Rules and further directed to properly verify the claim under section 57(iii) of the Act, 1961. 10. Being aggrieved by the order of PCIT, the assessee filed appeal before the Tribunal. The Tribunal after considering the submissions made by the Revenue as well as assessee held as under: "8. We have heard the rival submissions of both the parties and perused the material available on record. We have gone through all the judgements cited by the parties before us. We note that section 263 of the Act enables supervisory jurisdiction to the Pr. CIT over the AO. The Pr.CIT is empowered to act under section 263 of the Act when he cons....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nditure has been incurred for earning exempt income, hence, disallowance under section 14A read with Rule 8D cannot be made as held by the Hon'ble Gujarat High Court in the case of CIT v. Corrtech Energy Pvt. Ltd. [2015]-372 ITR 97 (Guj): [2014] 45 taxmann.com 116 ; 223 Taxman 130 (Guj.) wherein it was held that Section 14A (1) provides that for the purpose of computing total income under chapter IV, no deduction shall be allowed in respect of expenditure incurred b the assessee in relation to income which does not form part of total income under the Act. In the instant case, the Tribunal has recorded the finding of fact that the assessee did not make any claim for exemption of any income from payment of tax. It was on that basis the Tribunal held that disallowance under section 14A could not be made. In the process tribunal relied on the decision of Division Bench of Punjab And Haryana High Court in the case of CIT v. Winsome Textile Industries Ltd. [2009] 319 ITR 204 in which also the Court had had observed that where the assessee did not make any claim for exem»tion, section 14A could have no application. Similar findings was given by the Hon'ble Supreme Court in the case ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tself-Thus, Tribunal was justified in holding that Commissioner was in error invoking revisional jurisdiction u/s. 263 - Mere alleged insufficiency of inquiry in of opinion of Commissioner By Assessing Authority, would not permit him to in walk revisional jurisdiction u/s. 263 - Therefore, essential twin condition for invoking revisional jurisdiction, were not satisfied - Order' of tribunal upheld Revenue 's appeal dismissed. The Pr. CIT has not given any finding as to how the order in prejudicial to the interest of the Revenue. We also note that the Pr. CIT has though invoked Explanation 2 to section 263 but not divulge as to how it is applicable, when legal position is in favour of the assessee. Further, such claim was found acceptable by the Id. CIT (A) in preceding assessment year Where two views are possible even then revision jurisdiction cannot be invoked as held by the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83 (SC) 109 Taxman 66 (SC) had interpreted the provisions of section 263(1) in the following words :"A bare reading of this provision makes it clear that the prerequisite to the exercise of jurisdiction by the Commissioner ....