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TMI Blog2012 (6) TMI 410X X X X Extracts X X X X X X X X Extracts X X X X ..... urred expenditure for earning income that is exempt from payment of tax and do not constitute part of the total income assessable under the Income Tax Act, 1961 (hereinafter referred to as the Act for short). Section 14A of the Act is a new provision introduced in the Income Tax Act by Finance Act, 2001 with retrospective effect from 01/04/1962 under which expenditure incurred by the assessee for earning income which does not form part of total income is not an allowable deduction. Even though the main provision of Section 14A is given retrospectivity the proviso imposed a prohibition against the Assessing Officer from revising a concluded assessment either under Section 147 or under Section 154 for making disallowance and for raising deman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In all these cases, the Assessing Officer completed assessments without making disallowances under Section 14A even though the assessee had incurred expenditure mainly by way of interest incurred on borrowed funds diverted for investments in securities, shares etc, the income wherefrom were exempt from tax. By virtue of the prohibition contained in the proviso, the Assessing Officer was disabled from either making income escaping assessment under Section 147 or by rectifying assessment under Section 154. However, since the proviso to Section 14A does not expressly bar the Commissioner from invoking suomotu revisional powers under Section 263 of the Act, in exercise of such powers the Commissioner set aside the assessments and directed reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .11 of 2001, dated 23/07/2001, which does not permit reopening of concluded assessments. We notice that in the case of that assessee, the assessment for 1997-98 was taken up in first appeal and the appellate authority set aside the assessment and remanded the matter for reconsideration by the Assessing Officer on certain other issues. While the assessment remained set aside and remanded by the CIT (Appeals), the Commissioner in exercise of suo motu revisional powers under Section 263 issued notice to the assessee and directed revision of assessment for the purpose of making disallowance under Section 14A of the Act. In this context, we held that when assessment stands set aside and remanded for reconsideration by the assessing authority, su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee should not be subjected to disallowance either by reopening assessment under Section 147 or under Section 154 for raising demand of tax after disallowance or for withdrawing refund granted. If the right of the assessee cannot be taken away by the Assessing Officer, we see no reason why it can be permitted to be done by the Commissioner under Section 263 to achieve the same purpose, which is prohibited under the proviso to Section 14A. We therefore do not find any mistake in the judgment warranting interference in review. Consequently, these review petitions are dismissed.
Registry will attach a copy of the judgment in ITA No.587/2009 dated 14/01/2010 to form part of this judgment. X X X X Extracts X X X X X X X X Extracts X X X X
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