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2024 (4) TMI 189 - AT - Income TaxValidity of assessment u/s 153A - At the time of search, assessment proceedings u/s. 143(3) for the impugned assessment year was in progress before the Ld. AO - HELD THAT:- Second proviso to section 153A(1) provides for abatement of pending assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years on the date of initiation of search u/s. 132 - The impugned assessment year is a year which falls within the period of six assessment years considering the date of search as 22.09.2011. Admittedly, the assessment proceedings u/s. 143(3) were pending at the time of initiation of search. Thus, the proceedings u/s. 143(3) got abated. There was no occasion for the AO at Bengaluru to pass assessment order in terms of the second proviso to sec. 153A(1) and, therefore, is non-est. Since the assessment order passed by the AO u/s. 143(3) is held to be non-est, the instant appeal by the revenue is infructuous. Appeal by the revenue is dismissed as infructuous. Assessment proceedings u/s. 153A r.w.s. 143(3) by the AO after the transfer of file from Bengaluru jurisdiction to Kolkata jurisdiction, pursuant to conduct of search are based on the original assessment made by the AO u/s. 143(3) even though it got abated - As assessee propounded that the case is squarely covered by the decision of Abhisar Buildwell [2023 (4) TMI 1056 - SUPREME COURT] by referring to non-availability of incriminating material for the addition/disallowance made in the said assessment. The said proposition of the Ld. Counsel is rejected at the threshold because the impugned assessment year is an abated assessment year as already observed and held while disposing the appeal of the revenue dealt above. Disallowance made u/s. 14A read with Rule 8D - As argued AO without any discussion on the said disallowance has borrowed the same from the order passed u/s. 143(3) and, therefore, no such disallowance is warranted as the assessment u/s. 143(3) is held to be non-est - HELD THAT:- CIT(A) has rightfully given the direction for recomputing the disallowance u/s. 14A which is in consonance with the decision of REI Agro Ltd. [2014 (4) TMI 1295 - CALCUTTA HIGH COURT] which had upheld that Rule 8D(2) can be applied only in respect of investment which actually yielded dividend income during the year. We do not find any reason to interfere with the finding and decision arrived at by the Ld. CIT(A) on this issue. Accordingly, ground of the assessee are dismissed. Upward adjustment made to book profit on account of disallowance of expenditure computed u/s 14A of the Act r.w.r. 8D - HELD THAT:- Placing reliance on the decision of Jayshree Tea & Industries Limited [2014 (11) TMI 1169 - CALCUTTA HIGH COURT], we hold that the provisions of section 115JB clause (f) to explanation (1) applies as claimed by the revenue for the purpose of computing the book profit. Accordingly, the disallowance as computed by the AO in terms of the directions noted above is liable to be taken into account. TP Adjustment - export to subsidiary - adjustments made in respect of transfer pricing have been borrowed from the assessment made u/s. 143(3) which has been held to be non-est - HELD THAT:- AO does not have the jurisdiction to propose any transfer pricing adjustment in case where he has not made any reference to the TPO. Therefore the additions made by the AO towards transfer pricing adjustment for which both, assessee and revenue are in appeal, are not tenable and deleted. Accordingly, transfer pricing adjustment made by the AO in the impugned assessment u/s. 153A read with section 143(3) are not in compliance with the provisions contained in section 92CA of the Act read with aforesaid CBDT Instruction. AO has simply incorporated the suggestion and adjustment made by the Transfer Pricing Officer vide order dated 31.10.2011 which has no locus standi and is non-est. Decided in favour of assessee.
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