Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2023 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (9) TMI 739 - ITAT AHMEDABADRevision u/s 263 - assessment order as erroneous on account of issue of disallowance of expenses u/s 14A as not having been examined by the AO - AO power to go beyond the scope of limited scrutiny - contention of assessee that his case had been selected for “limited scrutiny” for the purpose of scrutinizing the expenses debited to the Profit and Loss account for earning exempt income and the issue had been thoroughly examined by the AO and noting that no exempt income had been earned by the assessee, he had made no further disallowance of expenses - HELD THAT:- It is not disputed that the assessee had not earned any exempt income during the year. It is also not in dispute that the jurisdictional High Court has laid down that where no exempt income is earned by the assessee there is no case for making any disallowance under Section 14A of the Act. In the light of these facts, undoubtedly, the view taken by the Assessing Officer in making no disallowance under Section 14A therefore, clearly in accordance with law as interpreted by the Hon’ble jurisdictional High Court. The finding of the ld. PCIT that the Assessing Officer was bound by CBDT Circulars including those contrary to the decision of the Hon’ble jurisdictional High Court – we cannot agree with the same. As rightly pointed out by the learned Counsel for the assessee, the circulars issued by the CBDT are binding on their officers only to the extent that they are not in contradiction to the judicial interpretation of provisions of law. Thus we hold that the view taken by the Assessing Officer in making no disallowance under Section 14A of the Act being in consonance with law as interpreted by the Courts; there is no error in the order of the Assessing Officer. Claim of depreciation on goodwill - It is an admitted fact that the assessee’s case was selected for limited scrutiny and the reason was examining the disallowance of expenses pertaining to the earning of exempt income in terms of provisions of Section 14A of the Act. The Revenue does not dispute this fact before us. In the light of these facts, we fail to understand how the Assessing Officer could have travelled beyond the scope of assessment and how the assessment order could have been held to be erroneous for not having travelled beyond the scope of assessment which was directed to the Assessing Officer. The Assessing Officer had acted in accordance with the scope which was delineated to him. The assessment order cannot be held erroneous for the Assessing Officer having not crossed the boundary for scrutiny which was set out before him. Assessing Officer in the present case, by not expanding the scope of assessment, had acted contradictory to the CBDT Circular is an incorrect understanding of the said circular. Even otherwise, we have noted that the ld. PCIT had invoked clause (a) of Explanation (2) to Section 263 in the said case, that the Assessing Officer had not conducted proper inquiry relating to the issue of claim of depreciation on goodwill, and not clause (c) of Explanation (2) as contended by the learned DR before us. The Revenue cannot improve upon the case made out by the authorities below in any case. Therefore, for this reason also, we dismiss this contention of the learned DR. Assessee appeal allowed.
|