TaxTMI 
TaxTMI 
2025 (9) TMI 1114
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....The assessee is challenging the validity of the revision order passed by the Ld.PCIT. 2. The facts relating to the issue are discussed in brief. The assessee is engaged in the business of making investment in shares. The assessee filed its return of income for the year under consideration declaring a loss of Rs. 235.27 crores. It was taken up for scrutiny by the AO. During the course of assessment proceedings, the AO, inter alia, raised a query relating to disallowance of expenses to be made u/s 14A of the Actin relation to exempt income earned by the assessee. In reply thereto, the assessee submitted that that it has not earned any exempt income during the year under consideration and hence no disallowance u/s 14A is required to be made....
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....rection to pass the order afresh, after providing adequate opportunity of hearing. The assessee is aggrieved. 5. The Ld.AR submitted that it is now settled proposition of law that the disallowance u/s. 14A of the Act is not required to be made when the assessee has not earned any exempt income. In support of the above said proposition, the Ld.AR placed reliance on the decision rendered by the Hon'ble Delhi High Court in the case of PCIT Vs. Era Infrastructure (India) Ltd., [2022] 448 ITR 674. The Ld.AR submitted that the circular of CBDT relied upon by the PCIT is against the judicial pronouncement and hence, the same is not binding on the AO. With regard to the reliance placed on the amendment to section 14A of the Act brought out by th....
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....22 in Section 14A of the Act. We notice that the proposition that no disallowance is required to be made u/s. 14A of the Act when the assessee has not earned any exempt income, is now settled by various decisions of Hon'ble High Courts and Tribunals. One of the decisions rendered by the Hon'ble Delhi High Court was discussed in the earlier paragraphs. Hence, the view taken by the AO is required to be considered as a possible view, since it is in line with the decision rendered by the Hon'ble Delhi High Court. Further, it has been held by the Hon'ble Delhi and Gauhati High Courts that the amendment brought by the Finance Act, 2022 shall have prospective application. Hence, both the reasonings given by the Ld.PCIT to hold the assessment order....
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....r Industrial Co. Ltd. v. CIT [2000] 243 ITR 83, the Supreme Court held that the provision "cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer" and "it is only when an order is erroneous that the section will be attracted". The Supreme Court held that an incorrect assumption of fact or an incorrect application of law, will satisfy the requirement of the order being erroneous. An order passed in violation of the principles of natural justice or without application of mind, would be an order falling in that category. The expression "prejudicial to the interests of the Revenue", the Supreme Court held, it is of wide import and is not confined to a loss of tax. What is prejudicial to the inter....