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2015 (10) TMI 1766 - GUJARAT HIGH COURTRevision u/s 263 - benefit under section 35D disallowed - ITAT setting aside the order of CIT passed u/s 263 cancelling the order passed u/s 143(3) - Held that:- Assessee had claimed the benefit thereof in the assessment year 2007-08 and such claim had been allowed and was not disturbed subsequently. It is subsequently in the year 2009-10 that the Commissioner of Income Tax has taken the matter in revision under section 35D. As held by this court in the case of Deputy Commissioner of Income Tax v. Gujarat Narmada Valley Fertilizers Company Limited, (2013 (8) TMI 300 - GUJARAT HIGH COURT) when the claim has been granted by the Assessing Officer in respect of previous years, such claim cannot be disallowed subsequently without disturbing the decision in the initial year. Under the circumstances, it cannot be said that the view adopted by the Assessing Officer is not a plausible view. It is by now well settled that if two views are possible and the Assessing Officer has adopted one view, the same would not warrant exercise of the powers under section 263 of the Act. Disallowance under section 14A read with rule 8D(2)(ii) - CIT(A) noted that AO had not made any addition under rule 8D(2)(i) which shows that no expenditure had been considered as directly related to earning exempt income and that the Assessing Officer had disallowed part of the interest expenses under rule 8D(2)(ii) - Held that:- In the facts of the present case, as is apparent from the findings recorded by the Commissioner of Income Tax, the Assessing Officer had invoked the provisions of section 14A of the Act read with rule 8D of the rules. The assessee submitted that mutual fund investment was made out of IPO proceeds. Investment in mutual funds of ₹ 14.78 crores was made out of funds lying idle till deployment in business for short term proceeds of Public Issue. Such mutual fund investments were redeemed as and when required for business operation. Dividend income claimed exempt was of ₹ 64,30,214/- consisting of dividend received from various mutual fund schemes invested as above. No direct expenditure was incurred in relation to receive income of dividend, as these investments were made out of temporary idle IPO proceeds. The Assessing Officer after considering the explanation given by the assessee was not satisfied with regard to the accounts of the assessee in relation to earning income that does not form part of the total income of the assessee company. He, accordingly, computed the expenditure incurred in relation to earning dividend income as per the provisions of section 14A read with rule 8D of the rules and disallowed interest expenditure of ₹ 41,32,115/- under rule 8D(2)(ii) of the rules. Thus, the Assessing Officer after examining the issue and calling for the explanation of the assessee was not satisfied with the explanation of the assessee and computed the interest expenditure in terms of section 14A of the Act read with rule 8D of the rules. The Commissioner of Income Tax is of the opinion that he would have assessed the interest expenditure at a higher figure. Therefore, merely because another view is possible is not sufficient to invoke powers under section 263 of the Act. The view adopted by the Assessing Officer, being a plausible view, it cannot be said that the assessment order is erroneous so as to warrant exercise of powers under section 263 of the Act. - Decided in favour of assessee.
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