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2022 (1) TMI 529 - ITAT CHENNAIRevision u/s 263 by CIT - case of the assessee was selected for limited scrutiny for examination of entire expenditure incurred by the assessee - AO has looked into the expenditure incurred by the assessee limiting to earning of dividend income - HELD THAT:- It is a fact that the case of the assessee was selected for limited scrutiny for examination of entire expenditure incurred by the assessee - AO has looked into the expenditure incurred by the assessee limiting to earning of dividend income. Therefore, in our opinion, the order passed by the AO is erroneous and prejudicial to the interest of the Revenue. So far as merits of the case are concerned, we are of the opinion that the Assessing Officer has to examine the expenditure incurred by the assessee with reference to the dividend income without influencing the observations made by the ld. PCIT with respect to the amended Rule w.e.f. 02.06.2016. Accordingly, we modify the order passed by the ld. PCIT to the extent as indicated above. Disallowance u/s 14A r..w r. 8D - HELD THAT:- After considering the revision order passed under section 263 of the Act as well as assessment order, it is amply clear that the assessment order passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue and the ld. PCIT has rightly directed the AO to re-do the assessment in accordance with law. One of the arguments raised by assessee is that while passing the order under section 263 PCIT has given a finding that 1% of the annual average of the monthly averages of the opening and closing balances of the value of investment has to be disallowed is contrary to the statute. We find from the revision order that the ld. PCIT has not given any finding and it is only his observation and explaining the legal position and directed the AO to re-do the assessment. PCIT has expressed his opinion on the issue and there is every possibility that the Assessing Officer obviously influenced by the opinion expressed by the ld. PCIT. Accordingly, we modify the order passed by the ld. PCIT and direct the Assessing Officer to pass fresh assessment order in accordance with law without influencing the observations made by the ld. PCIT. Accordingly, the appeal filed by the assessee is dismissed.
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