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Shri Rajkumar Damani Versus C.I.T. -2, Mumbai

2016 (1) TMI 602 - ITAT MUMBAI

Validity of revision u/s 263 - Held that:- Assessing Officer has appreciated the facts as per facts before him. Improper appreciation of facts by Assessing Officer cannot be held proper ground for holding the order of Assessing Officer erroneous as well as prejudicial to the interest of revenue under the provisions of Section 263. Provisions of 263 of Act can be invoked. In case of no enquiry on issue by Assessing Officer. The improper or less enquiry cannot be valid basis of invoking provisions .....

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J.M: This appeal has been filed by assessee against the order of Commissioner of Income-Tax - 2, Mumbai, dated 28.03.2013 for A.Y. 2008-09 on following grounds: 1. The Hon ble C.I.T. erred in treating the assessment order passed u/s 143(3) as prejudicial and erroneous to the interest of the revenue and further erred in invoking the provision of section 263. 2. The Hon ble CIT erred in setting aside the order with the direction to the Ld. I.T.O for reconsidering the issue relating to the disallo .....

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ile computing income, Assessing Officer worked out the disallowance u/s.14A read with Rule 8D at ₹ 2,80,272/- as under:- I Expenses directly attributable to exempt income Nil II Interest NOT directly attributable to exempt income (A X B/C) N.A. III 0.5% of average value of investments 0.5% of ₹ 5,60,55,329/- Rs.2,80,277/- Total Disallowance u/s.14A r.w.r. 8D Rs.2,80,277/- Later on, it was observed that assessee had incurred interest expenditure of ₹ 57,80,070/- which was not co .....

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er, namely, IL&FS Investment Financial Services Ltd. As per terms and conditions, if there was a delay in payment towards the purchase consideration of shares, assessee was required to pay interest for the period of such delay. It was submitted on behalf of assessee that out of interest of ₹ 57,80,070/- debited to profit and loss account, the amount of ₹ 57,76,041/- was paid to IL&FS. In this regard a copy of interest account appearing in books of assessee was enclosed for re .....

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s as to why the above interest expenditure of ₹ 57,80,070/- was not considered for disallowance u/s.14A. CIT was of the view that Assessing Officer has made assessment without making proper inquiry, so, the order was to be held erroneous in so far as it was prejudicial to the interest of revenue. Accordingly, same was set aside. The matter was restored to Assessing Officer with direction to consider the issue relating to disallowance u/s.14A r.w. Rule 8D of Income Tax Rules in respect of i .....

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that CIT was not justified in deleting the order of Assessing Officer. The revision of the order passed u/s.143 and setting aside it by CIT with direction to ITO for re-considering the issue related to disallowance u/s.14A r.w. Rule 8D in respect of interest expenditure is bad in law. Similarly, same should be quashed. On the other hand, learned Departmental Representative supported the order of CIT. 4. After going through rival submissions and material on record, we find that assessee is an ind .....

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f calculation of disallowance u/s.14A r.w. Rule 8D was stated in the assessment order in para 8. While working out the amount of disallowance u/s.14A r.w. Rule 8D, ITO has looked into the matter thoroughly with regard to disallowance u/s.14A r.w. Rule 8D and he restricted the amount of disallowance up to 0.5% of average value of investment i.e. 0.5% of ₹ 5,60,55,329/-. It is not in dispute that assessee has placed all details with regard to interest as appearing on page 14 of the paper boo .....

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