TMI Blog2016 (3) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... n error in exercising his revision powers under section 263 on the facts and in the circumstances of this case. As learned CIT(A) was in seisin of the same matter, i.e. disallowance under section 14A, in the appellate proceedings, learned Commissioner could not have invoked his revision powers on the issue before the CIT(A). The view adopted by the learned Assessing Officer was after due examination of the matter and a considered view after taking into account all the relevant factor and even if a different view, on the same set of facts, was possible, the possibility of another view in favour of the assessee did not render the assessment erroneous and prejudicial to the interest of revenue so as to trigger revision under section 263. In any event, even on merits, the stand of the Commissioner was incorrect and unsustainable in law. For all these reasons, we are not inclined to uphold the impugned order. Accordingly, the revision order stands quashed. - Decided in favour of assessee - I.T.A. No. 1334/Ahd/15 - - - Dated:- 16-2-2016 - Pramod Kumar AM And S. S. Godara JM For the Appellant : S. N. Soparkar For the Respondent : Sanjay Agarwal and A. K. Pandey ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g disallowance of interest as per Rule 8D. ii. The learned CIT has taken investment earning taxable income for calculating the average value of investment. However, as per Rule 8D average value of investment income from which does not or shall not form part of total income should be considered. iii. The learned CIT has taken the net value of total assets for calculating the average value of total assets. However, as per Rule 8D average value of total assets should be taken without reducing the amount of current liabilities and provisions. 3. Briefly stated, the relevant material facts, so far as necessary for the purpose of this adjudication before us, are like this. During the course of the assessment proceedings under section 143(3), the Assessing Officer noted that the assessee has shown dividend income of ₹ 6,93,93,019 but disallowance under section 14A r.w.r. 8D has not been offered to tax. When he took up the matter with the assessee, it was explained to him that the no interest bearing funds were used by the assessee for making the related investments on which these dividends were earned. It was also explained by the assessee that as against an investm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the assessment order is not very specific. As per the AO the appellant is having interest bearing borrowed funds on which interest is paid during the year. As per the AO business funds are mixed up and it cannot be accepted that funds deployed for earning tax free income were entirely out of interest free funds. As per the AO the appellant did not maintain separate account for source of funds utilized for investment activities. As per the AO where tax free activities and taxable income earning activities are carried out using a common kitty of funds, it would be reasonable to apportion the interest burden between two activities, since it is a case falling u/s 14A(2). On the other hand, the appellant's AR had submitted that the appellant had sufficient interest free fund to carry out the investment and it has not utilized interest bearing funds for making tax free investment. As per the AR as on 31/03/2010 the appellant was having share capital of ₹ 82,76,000/- and reserve and surplus of ₹ 36,56,77,963/-. As per the AR the appellant had made investments in the share of M/s. Sun Pharmaceutical Industries Ltd. in the year 1995-96 and 1997-90 on which it has earned d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings, that specific questions have been asked with respect to disallowance under section 14A and the assessee has elaborately explained the reasoning which prevailed with the Assessing Officer. It was also pointed out that when the Assessing Officer has made proper inquiries and then framed the assessment order in a particular manner, it cannot be subjected to the revision proceedings just because the Commissioner has a different view of the matter. Reliance was placed on Hon ble jurisdictional High Court s judgment in the case of CIT vs Amit Corporation [(2012) 21 taxmann.com 64 (Guj)]. It was also explained that in view of the provisions of Explanation(c) to Section 263(1), when an assessment order is subjected to an appeal, the revision powers of the Commissioner extend to only such matters as had not been considered and decided in such appeal , and that since disallowance under section 14A has been subject matter of appeal, the same could not be tinkered with in the course of the revision proceedings. It was pointed out that unless the Assessing Officer is satisfied that the disallowance offered by the assessee under section 14A is incorrect, there is no occasion to compu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner concluded as follows: 6. In the light of the above discussion, it transpires that the AO has not properly computed disallowance under section 14A while finalizing the assessment. Accordingly, it is held that the order passed by the Assessing Officer is both erroneous and prejudicial to the interest of the revenue, and, therefore, the order is set aside to be framed afresh. 7. The Assessing Officer will pass an order, in the light of the above discussions, after due verifications, and after giving the assessee an opportunity of being heard. 5. The assessee is aggrieved by the order so passed by the learned Commissioner, and is in appeal before us. 6. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 7. We have noted that as on the time of passing the impugned revision order, the matter regarding disallowance under section 14 A was pending for consideration before the CIT(A). The assessee had filed the appeal before the CIT(A) on 22nd March 2013 and even the written submissions were filed on 14th October 2013. Learned CIT(A) was thus in seisin of the question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. However, there are several other reasons as well which lead us to the same conclusion. We have also noted that the Assessing Officer had examined the matter regarding disallowance under section 14A in detail and then reached a certain conclusion. This aspect of the matter has been examined at length by the Assessing Officer, and, after due consideration and consistent with the accepted past history of the case, he has partly upheld the contention of the assessee on some aspects of the disallowance. It is a well-considered and well thought about decision, and the view so adopted by the Assessing Officer is not a perverse or unreasonable view. Just because the view adopted by the Assessing Officer is not the same as that of the learned Commissioner cannot be a reason enough to subject the assessment order to the revision proceedings. Whether the net interest amount is to be considered for disallowance under section 14A is now judicially settled by a number of decisions of this Tribunal in favour of the assessee. When these decisions are pointed out to the learned Commissioner, he does not even deal with these judicial precedents. Various benches of this Tribunal, such as in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unambiguous. What is to be taken into account is the total of assets appearing in the balance sheet and there is no controversy about the gross assets and net assets in the formulae. As for the coordinate bench decision in the case of Geojit Investments (supra), all it says is that Since there is mistake in computing the disallowance, as rightly pointed out by the Ld. AR, we are inclined to hold that net current assets is to be considered while applying the formula under Rule 8D of the I.T. Rules instead of gross current assets , but then the limited facts set out in this order do not make it clear as to what is the mistake in computation which has led to the conclusion that net current assets are to be adopted rather than gross current assets and whether the net current assets are net of liabilities or net of something else. There is nothing more on facts or the reasoning process, except for a reference to mistake in computing the disallowance but then there is no clue about this mistake either. We find no guidance in this decision on the issue whether the assets are to be taken as aggregate of the balance sheet value or the assets are to be taken, after netting off the liabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Malabar Industrial (supra), thus the assets being taken on the value in the balance sheet, without adjusting the liabilities, is not such an error, error even if it is, which can lead to the assessment order being subjected to the revision proceedings under section 263. 10. In view of the above analysis, as also bearing in mind entirety of the case, we are of the considered view that the learned Commissioner was indeed in error in exercising his revision powers under section 263 on the facts and in the circumstances of this case. As learned CIT(A) was in seisin of the same matter, i.e. disallowance under section 14A, in the appellate proceedings, learned Commissioner could not have invoked his revision powers on the issue before the CIT(A). The view adopted by the learned Assessing Officer was after due examination of the matter and a considered view after taking into account all the relevant factor and even if a different view, on the same set of facts, was possible, the possibility of another view in favour of the assessee did not render the assessment erroneous and prejudicial to the interest of revenue so as to trigger revision under section 263. In any event, even on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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