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2015 (3) TMI 1066 - ITAT HYDERABAD

2015 (3) TMI 1066 - ITAT HYDERABAD - TMI - Disallowance u/s 14A - revision u/s 263 - Held that:- The order of the CIT u/s 263 is subsequent to the order of the CIT (A) on the very same issue. Once a particular matter has been considered and decided in appeal, on the issue of inclusion of processing fee incurred during the year for inclusion of disallowance u/s 14A of the Act the order of A.O has got merged with the order of the CIT (A) and the CIT has no jurisdiction to invoke the provisions of .....

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sha Vijayaraghavan (Judicial Member) For the Petitioner : Shri G. V. N. Hari, CA For the Respondent : Shri D. Sudhakar Rao, CIT(DR) ORDER Asha Vijayaraghavan (Judicial Member) This is an appeal filed by the assessee against the order of the CIT-III Hyderabad dated 20.03.2014 passed for A.Y 2009-10. 2. Briefly stated, the assessee company M/s. Spandana Sphoorty Financials Ltd is engaged in the business of micro finance and filed its return of income for A.Y 2009-10 on 30.09.2009 declaring total i .....

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r dated 31.08.2012 dismissed the appeal of the assessee. 4. The CIT-III Hyderabad assuming jurisdiction u/s 263 of the Act held as follows: "1.2 On an examination of facts available on record, it was seen that the company had invested an amount of ₹ 2,95,05,66,475 in mutual funds and earned dividend income of ₹ 90.34 lakhs which was exempt from taxation. The AO had disallowed an amount of ₹ 14,23,29,696 u/s 14A of the Act. While working out the disallowance, the AO conside .....

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terests of the revenue. 2. 1. Notice u/s 263 dated 10.01.2013 was issued and served on the assessee asking to show cause why the assessment completed on 26.12.2011 u/s 143(3) should not be revised under the provisions of section 263". 5. Aggrieved, the assessee is in appeal before us and has filed the following grounds: "1 The order of the ld CIT is contrary to the facts and also the law applicable to the facts. 2. The ld CIT is not justified in assuming jurisdiction u/s 263 of the Act .....

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annot be termed as erroneous. 5. The ld CIT ought to have appreciated that the issue of disallowance u/s 14A having merged into the order of the ld CIT (A), it is no more within the jurisdiction of CIT u/s 263 of the Act to consider the sufficiency of disallowance". 6. At Ground No.5 the assessee objected to the jurisdiction assumed by the CIT u/s 263 of the Act and on the ground that the order of AO merged with order of the CIT (A) and CIT has no jurisdiction to revise u/s 263. The ld Coun .....

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allowance u/s 14A of the Act the order of A.O has got merged with the order of the CIT (A) and the CIT has no jurisdiction to invoke the provisions of section 263 on the very same issue. Reliance is placed on the following decision by us. The Bombay High Court in the case of CIT vs. P. Muncherji & Co. (167 ITR 671) held as follows: "The principle underlying section 263 of the Income Tax Act, 1961, corresponding to section 33B of the Indian Income Tax Act, 1992 is that it is only the ord .....

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carefully. In our opinion, this Court's decision in Tejaji Farasram Kharawala's case (supra) still holds the field and is binding on us. Chief Justice Chagla in that case has categorically held that the principle underlying section 33B of the Indian Income-tax Act, 1922 ('the 1922 Act'), corresponding to section 263 of the 1961 Act, is that it is only the order of the ITO which can be revised by the Commissioner. Once the order of assessment is confirmed by the AAC or any order w .....

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