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2022 (1) TMI 876 - AT - Income TaxRevision u/s 263 by CIT - disallowance of expenses relatable to exempt income by invoking the provisions of Section 14A r.w.r 8D(2)(ii) & (iii) i.e., interest disallowance and disallowance of club expenses - HELD THAT:- Admitted facts are that first of all this is a limited scrutiny assessment and assessee has filed reply to query raised by AO under notice issued u/s.142(1) - assessee before AO as well as before PCIT during revision proceedings filed complete details i.e., balance sheet and schedules forming part of balance sheet where complete details of own funds of ₹ 27,95,58,933/- and investments made in purchase of shares amounting to ₹ 19,19,96,254/- are available. Once these funds are available which are more than investment made, neither the AO nor PCIT proves any nexus, in that eventuality only presumption can be drawn that the assessee might have invested these funds out of interest free funds available with him. This presumption is supported by Hon’ble Bombay High Court in the case of HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT] - Hence, we find that the revision order passed by PCIT is without any basis on this issue and hence, deserves to be quashed. Disallowance of club expenses - We noted that there is no finding by PCIT that these are not incurred for the purpose of business and PCIT himself noted that the AO should have investigated this issue further which he has not done. What amount of investigation is required, that AO has to take a call and he has made investigation by issuing notice u/s.142(1) of the Act and the assessee had filed details and explained that it is for the purpose of business. Once, this is the case and even on merits, we are of the view that club expenses are for the purpose of business. Hence, on this issue also we reverse the order of PCIT revising the assessment and this issue is decided in favor of the assessee. In the result, the revision order is quashed and the appeal of the assessee is allowed.
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