TMI Blog2019 (8) TMI 1330X X X X Extracts X X X X X X X X Extracts X X X X ..... shares and securities, which could yield exempt income. The assessee has also made out a case of no exempt income for the year under consideration. It is settled position of law that in case there is no exempt income earned for the year under consideration, then there would be no disallowances of expenditure incurred in relation to exempt income u/s 14A. This legal proposition is supported by number judicial precedents, including decision of Hon ble Supreme Court in the case of CIT vs Chettinad Logistics Pvt.Ltd. [ 2018 (7) TMI 567 - SC ORDER] where, the Hon ble Supreme Court has dismissed SLP filed by the revenue and upheld the findings of Hon ble Madras High Court regarding no exempt income, no disallowances of expenditure u/s 14A of the I.T.Act, 1961. This legal proposition was further supported by the decision of Hon ble Bombay High Court, in the case of Pr.CIT vs Ballarpur Industries Limited [ 2016 (10) TMI 1039 - BOMBAY HIGH COURT] where, similar view has been expressed by the High Court. Therefore, we are of the considered view that the Ld.PCIT has set aside assessment order passed by the AO without pointing out, how the assessment order passed by the AO is erroneou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and circumstances of the case, Pr. CIT has erred in invoking the provision of Section 263 in reference to mismatch of ₹ 1,34,82,973/-in sale/turnover reported in Audit report and 1TR without appreciating that the same is interest income offered for taxation. 8. That the assessment order passed after detailed enquiries does not become erroneous merely because CIT feels further enquiries should have been made. Hence the notice issued U/s 263 and the order passed u/s 263 is illegal, bad in law and without jurisdiction. 9. That without prejudice, the PCIT has wrongly and illegally held that the order passed by AO is erroneous and prejudicial to the interest when independent enquiry has been made by PCIT. Hence the notice issued U/s 263 and the order passed u/s 263 is illegal and bad in law. 10. That the evidence filed and material available on the record have not been properly construed and judiciously interpreted, Hence the addition/ disallowance made is uncalled for. 11. The Appellant craves leave to add, to alter to amend the above Ground of Appeal at the time of hearing, 3. The brief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidering relevant submissions of the assessee and also by relied upon various judicial precedents observed that in respect of Part B and C of show cause notice regarding interest income of Rs. Nil shown under income from other sources, which is lesser than gross interest receipts of ₹ 1,34,82,973/- and mismatch of ₹ 1,34,82,973/- in sales turnover reported in audit report and ITR, the explanations of the assessee seems to be prima-facie correct and acceptable. However, in respect of Part A ie. large interest expenses of ₹ 70,76,669/- relatable to exempt income u/s 14A of the Act, the Ld.PCIT held that on perusal of relevant assessment records, it was noticed that the claim of the assessee that the AO had duly examined and analyzed the applicability of section 14A r.w.Rule 8D does not support its contention. The PCIT, further observed that it is seen that notice u/s 142(1) of the Act, dated 12/09/2016, was issued by the AO containing questions of very general nature, intended to ascertain, the nature of the business of the assessee and obtained an over all view of the financial. It is pertinent to note that no specific question has been asked by the AO, with re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der of the Ld.PCIT submitted that assessment order passed by the AO is erroneous, in so far as, it is prejudicial to the interest of the revenue, in respect of two issues taken up by the PCIT, which is evident from the fact that the Ld.PCIT has brought out various facts in its order, in respect of non application mind by the AO, while completing assessment, on the facts of present case and in light of provision of section 14A of the Act, 1961, even though, the assessee has claimed large interest expenses. The Ld. DR, further submitted that although, the Ld.PCIT had accepted the expenses of the assessee with regard to part B and C of show cause notice, regarding Nil interest income and mismatch of turnover reported in audit report and ITR, but because of insufficient record, the AO might not have verified above facts and accordingly, set aside the order passed by the AO to re-do assessment. 8. The Ld. DR, further submitted that the Ld.PCIT has not given any specific findings on two issues and its taxability, but only pointed out mistakes committed by the AO, while completing assessment. Therefore, it is incorrect to interfere in the proceedings of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for year under consideration. Once, the AO has examined the issue, during the course of assessment proceedings and after being satisfied with explanation offered by the assesse chosen not to make any additions, then the Ld.PCIT cannot assume jurisdiction to revise assessment order, on the ground that the AO ought to have carried out further enquiries or there is a lack of enquiry, on the part of AO to examine the issue, which he ought to have verified. Similarly, in respect of Part B and C of show cause notice regarding Nil interest income declared under the head income from other sources and mismatch between turnover reported in audit report and ITR, the Ld.PCIT himself, in his order at para 3 had admitted the fact that in respect of Part B and C, it seems prima-facie, the explanation offered by the assessee is correct and acceptable. The Ld.PCIT having accepted the fact that there is no prejudicial to the interest of the revenue, in respect of Part B and C of show cause notice regarding turnover mismatch and interest income, he ought not to have revise the assessment order at least on this ground. We, further noted that if, you go through the points taken up by the Ld.PCIT for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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