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TMI Blog2013 (10) TMI 874X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of Rs.9,45,960/- u/s. 14A of the Act. However, as per the provisions of section 14A r.w.s. 8D of the I T. Rules, the disallowance should hove been worked out to Rs. l,22,25,394/-. Thus, the income of the assessee has been under assessed by an amount of Rs. 1,12, 79,434/-. 3. Considering the facts and circumstances as mentioned above, it appears that the order dated 29/10/2010 passed by the ACIT, Circle- 4, Ahmedabad is erroneous insofar as it is prejudicial to the interest of Revenue. You are, therefore, hereby given an opportunity to represent your case find show cause as to why action under the provisions of Section 263 of the Act should not be taken in your case. You ore requested to attend the office of the undersigned on 31.10.2012 at 12.00 PM either personally or through an Authorized Representative and may also file written submissions, if any, on the said date.." 3. In response to this notice assessee filed following written submissions:- "1. With reference to the above, we are in receipt of your fetter dated 16.10.2012, wherein it has been stated by Your Honour that the Assessment Order passed under section 143(3) of the income Tax Act, 1961 by Addl. Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h is received by GRUH is taxable and GRUH has duty offered the same in the computation of income while filling the return of income. Such details ore placed on Page 37 to 38 of the paper book. As per the provisions of sub-rule (2) of Rule 8D, the working of disallowance is to be made at aggregate of the following: i) the amount of expenditure directly relating to income which does not form part of total income. (ii) in a case where the assessee has incurred expenditure by way of interest during the previous year which is not directly attributable to any particular income or receipt, an amount computed in accordance with the following formula, namely:- AXB/C Where A = amount of expenditure by way of interest other than the amount of interest included in clause (i) incurred during the previous year; B = the average of value of investment, Income from which does nor or shall not form part of the total income, as appearing in the balance sheet of the assessee, on the first day and the last day of the previous year; C= the average of total assets as appearing in the balance sheet of the assessee, on the first day and the last day of the previous year; (iii) an amount equal to one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be made as per Rule 8D. 7. It is submitted that thus all the details in respect of disallowance to be made under section 14A of the Income Tax Act, 1961 were on record of the Assessing after considering and examining the same, the Assessing Officer has finalized assessment in question which is in accordance with the law. It is two circumstances must exist to enable the Commissioner to exercise the power of revision under this sub-section, viz. (i) the order should be erroneous; and (ft) by virtue of the order being erroneous prejudice must have been caused to the interests of the Revenue. An order cannot be termed as erroneous unless it is not in accordance with law. If Assessing Officer acting in accordance with law makes certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written mom elaborately. This section does not visualize a case of substitution of the judgment of the Commissioner for that of the Assessing Officer, who passed the order, unless the decision is held to be erroneous. Case may be visualized where the Assessing Officer while making an assessment examines the accounts, m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d out for calculating the disallowance made under section 14A of the Income Tax Act, 1961. In this respect, we would like to submit that in the paper book on page no. 5, detailed statement of calculation of disallowance under section 14A of the Income Tax Act, 1962 has been given. The same is summarized hereunder again for ready reference. 1. The total income of Rs. 204,91,93,179/-has been bifurcated into exempt and non-income as under: Sr. No Particulars Amount (Rs.) (i) Exempt Income 1,89,42,065 (ii) Non-exempt income (a) Long Term Housing Income 174,36,57,052 (b) Non Long Term Housing Income 28,65,94,062/- 203,02,51,114 Total Income 204,91,93,179 2. Thereafter, the ratio of exempt and non-exempt income has been worked out vis-a-vis total income, which comes as under: Exempt income 0.92% of total income Non-exempt Income 99.08% of total income 3. Out of total expenditure of Rs. 145,66,06,365/-, presuming that proportionate expenditure out of staff expenses of Rs. 8,13,14r575/- and establishment expenses of 2,28,80,940/- has been incurred for earning exempt income and accordingly the same has been allocated between exempt and non-exempt income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udicial to the interest of revenue and the same was set aside by Ld.CIT with the direction that AO should pass a fresh assessment after conducting necessary inquires and after giving proper opportunity of being heard to the assessee. Since no prejudice is caused to the assessee, the order passed by Ld. CIT u/s. 263 of the Act may kindly be upheld. 8. After hearing both the parties and perusing the record, we find that during the assessment proceedings AO found that in the tax audit report the auditor has categorized the expense of Rs. 9,45,960/- being expense inadmissible in terms of section 14A, however the same has not been disallowed by the assessee in the return of income filed by him. So AO sought assessee's explanation in this regard in his notice dated 17-05-2010. In response to this notice assessee replied that assessee has duly disallowed the sum of Rs. 9,45,960/- while computing the income. No further inquiry in respect of this disallowance whatsoever was made by the AO and the disallowance of Rs. 9,45,960/- u/s. 14A made by the assessee in his computation of income was accepted by him. Ld. CIT has found this action of the AO erroneous as AO has not made any inquiry rega ..... 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