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2015 (9) TMI 228 - CALCUTTA HIGH COURT

2015 (9) TMI 228 - CALCUTTA HIGH COURT - TMI - Revision u/s 263 - CIT(A) setting aside the order passed by AO wherein he allowed interest paid in respect of income by way of dividend exempt under section 10(34) against taxable income, contrary to the provisions of section 14A of the Act - ITAT set aside revision orders - Held that:- Under the amended provisions, the authority of the Assessing Officer has been whittled down. Jurisdiction conferred is purely an arithmetical exercise. An Assessing .....

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interest of the revenue mere because that no disallowance of expenditure relating to earning of exempted dividend income was made by the A.O., in his intimation sent u/s 143(1) of the Act, inasmuch as, there was no scope of making such disallowance while preparing the intimation u/s 143(1) of the Act as would be evident from the provisions contained in section 143(1) of the Act effected from 1.6.99. We, therefore, hold that the CITís order u/s 263 is without jurisdiction and is liable to be set .....

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e Tribunal, Kolkata in ITA No. 997 (Kol) of 2004 for the assessment year 2000-01. The appeal was admitted on a substantial question of law. However, after hearing Mrs. Das De, learned advocate for the appellant and Mr. Khaitan, learned senior advocate for the respondent, the said question is reformulated, which is as under: Whether, on the facts and in the circumstances of the case, the Income-Tax Appellate Tribunal is correct in quashing the order of the Commissioner of Income-Tax passed under .....

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late Tribunal. The Tribunal, after hearing the learned advocates for the parties and after considering the law, particularly with regard to Section 143(1) of the Act which existed prior to 1st June, 1999, had held as under : 8. Prior to substitution of Sub-section (1) of section 143 by the Finance Act, 1999 w. e. f. 1.6.99, the scope of section 143(1) was much wider, inasmuch as, a power was given to the A.O. to make an adjustment, by disallowing a carry forward loss, deduction or relief or allo .....

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ound due on the basis of such return filed by the assessee or any refund is due to the assessee on the basis of such return filed by the assessee. Therefore, law does not provide any power the A.O. to disallow any expenditure claimed in the return of income while issuing intimation u/s 143(1) on or after 1.6.99 specifying the sum payable by the assessee or refundable to the assessee. Therefore, not excluding the expenditure relating to earning of exempted dividend income while making the intimat .....

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exempted dividend income at the time of making an intimation u/s 143(1) does not make the intimation or order passed by the A.O. u/s 143(1) as erroneous in so far as prejudicial to the interest of the interest of the revenue. Therefore, primary condition to invoke the jurisdiction u/s 263 of the Act is not satisfied in the present case. Ultimately, the Tribunal allowed the appeal by holding as under: In view of the above discussions and the reasons, we are of the considered view that the A.O. s .....

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therefore, hold that the M.CIT s order u/s 263 is without jurisdiction and is liable to be set aside. In this regard, it is appropriate to refer to the relevant portions of the order passed under Section 263, by the Commissioner of Income Tax which is as under: The case was completed u/s. 143(1) of the I.T. Act at a total loss of ₹ 7,79,520/- and intimation was issued on 16.10.2001 accepting the returned income (loss). Later, it was noticed that expenditure incurred by way of interest on b .....

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d. A.R. But I do not agree with him that involving of provisions of Sec.263 of the I.T. Act in this case is prohibited in any matter whatsoever by the Income Tax Act. From the facts of the case it transpires that no expenditure relating to earning of dividend income of the case u/s. 143(1) which made it erroneous in so far as it had become prejudicial to the interest of revenue. Applying the ratio of the judicial pronouncement of the Hon ble Kolkata High Court in W.P. No.446 of 2002 dated July, .....

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as been given to the Commissioner to call for and examine the record of any proceeding under the Act and if he considers that any order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of the revenue, he can enhance, modify or cancel the assessment and direct fresh assessment. As in the instant case it was found that the expenditure incurred by way of interest on borrowed money in earning dividend income of ₹ 18,36,848/-, which was claimed as exem .....

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stem of prima facie adjustment has been done away with. Submission is, the judgment dated 28th July, 2003 passed by the High Court in W.P. No.446 of 2002 [ Hilltop Holdings India Ltd. -vs- CIT, Kolkata -II & Others], relied on by the CIT, Kolkata-IV in the order passed in Section 263 proceedings, is no longer a good law as it stood reversed in appeal by the judgment passed in Hilltop Holdings India Ltd. vs. C.I.T & Ors. : 278 ITR 501 (Cal). After the amendment, under Section 143(1)power .....

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