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2023 (4) TMI 230 - AT - Income TaxRevision u/s 263 - As per CIT AO had failed to make inquiries with regard to the expenses to be disallowed incurred for earning exempt income, as per the provisions of section 14A - HELD THAT:- Where the assessee had pointed out to the Ld.PCIT that his calculation of disallowable expenses was based on incorrect facts, the ld.Pr.CIT was duty bound to consider this contention of the assessee, and thereafter give his finding on the same, that despite the said contentions and taking note of the same also, expenses were still liable to be disallowed under section 14A of the Act, and the AO having made no inquiry, the assessment order therefore ought be held to be erroneous so as to cause prejudice to the interest of the Revenue. No such exercise having been done by the ld.Pr.CIT in the present case; his finding of the error, merely on the ground that no inquiry was made by the AO on the issue of 14A, without dealing with the contentions made by the ld.counsel for the assessee before him, is not tenable in law. Explanation 2 to section 263 is clearly not applicable in the present case. For this reason, order of the CIT, we hold, is to be set aside. Revisionary power u/s 263 of the Act has been invoked for an inconsequential and immaterial issue; as per the Ld.PCIT’s calculation a disallowance of barely 10% of the income returned by the assessee, the exercise of revisionary power for a trivial issue, that too on the basis of assuming incorrect facts ,is nothing but an arbitrary exercise of the extraordinary power of revision as per section 263 of the Act. Appeal of the assessee is allowed.
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