TaxTMI 
TaxTMI 
2022 (9) TMI 549
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....Year 2017-18. 2. The assessee is a company engaged in the business of providing online learning platform in the name of "BYJU" for kindergarten to 12th standard students and other related services. The assessee filed return of income for Assessment Year 2017-18 declaring total income of Rs.62,18,53,627/-. The AO passed an Order of Assessment U/S.143(3) of the Act, dated 24.10.2019 making the following additions to the total income of the assessee: 1. Disallowance u/s 14A of Rs.3,26,95,348/- (b) Addition of share premium u/s 56(2)(vii)(b) of Rs.1,24,43,868/- (c) Capitalisation of expenses of Rs.2,97,03,171/- (d) Disallowance of commission paid to non-resident u/s 40(a)(i) of Rs.30,48,95,804/- (....
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..... Therefore, AAR refused to entertain the application of the assessee seeking a ruling that the said sum is not chargeable to tax and therefore there was no obligation on the part of the assessee to deduct tax at source. The AAR passed the order on 28.01.2020. 5. It is not in dispute that the assessee did bring to the notice of the AO that assessee has preferred an application before the AAR on the question of disallowance under section 40(a)(i) of the Act in respect of payments made to More Ideas, UAE. Following was stated by the assessee in a letter dated 06.12.2019 filed before the AO. 6. The AO however passed the order dated 24.12.2019 wherein he made additions which have already been set out in the earlier part of this order. The....
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....fore the Hon'ble Commissioner of Income tax (Appeals) ("CIT(A)"} which is pending adjudication. • In parallel, the Assessee had initially filed a writ petition before the Hon'ble High Court against the order passed by the AAR rejecting the application. Subsequently, the Assessee has withdrawn the writ filed in order to avoid multiple lines of litigation and to pursue the matter under normal appellate proceedings. Acknowledgement copy of the memo for withdrawal filed before Hon'ble High Court was also filed before the PCIT. • Considering that the disallowance has already been made by the Learned AO in the aforesaid order, the said order is not prejudicial to the interest of revenue and initiating proceed....
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....d the submissions of the learned Counsel for the assessee who made 3 propositions viz., (a) That when the AO has made a disallowance on payments made to More Ideas, UAE and when the said disallowance is subject matter of appeal before CIT, the PCIT cannot exercise jurisdiction under section 263 of the Act and in this regard, learned Counsel placed reliance on the following decisions: i. CIT Vs. Vam Resorts and Hotels Pvt. Ltd., [2019] 111 taxmann.com 62 (Allahabad) ii. CIT Vs. Sampathmal Chordia, [2003] 127 Taxman 525 (Madras) iii. Smt. Renuka Philip Vs. ITO [2019] 409 ITR 567 (Madras) (b) It was submitted by him that if the order passed by the AO contrary to the mandate laid down in section 245R....
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.... of cancelling an assessment and directing a fresh assessment besides enhancing or modifying the assessment and has no power to annul an order of assessment. An order annulling an assessment can be passed only when it is illegal and void, whereas an order cancelling an assessment can be passed when an order is otherwise valid and suffers from some curable defects. The PCIT u/s.263 of the Act cannot annul an order of assessment. If an order is void then that order can only be annulled and it cannot be cancelled and a fresh assessment cannot be directed to be made in exercise of powers under section 263 of the Act. 13. We have given a very careful consideration to the rival submissions. The first and the foremost aspect which we notice is ....
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....d not have decided the issue at all. For this reason, the entire Order of Assessment cannot be said to be void. 16. In so far as the payments made to More Ideas, UAE, is concerned, the AO has already disallowed the payment and added the same to the total income of the assessee and the assessee is in appeal before the CIT(A). In these circumstances, it cannot be said that the Order passed by the AO was prejudicial to the interest of the Revenue. The fact that in the proceedings before the first appellate, the addition will be attacked on the ground that the addition has been made contrary to the provisions of section 245R(2)(i) of the Act and therefore void, cannot be the basis to say that the interest of the Revenue is prejudiced, at thi....