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TMI Blog2020 (4) TMI 663X X X X Extracts X X X X X X X X Extracts X X X X ..... IT without satisfying the condition precedent as laid down in the statute. 3. The main reason of the ld. PCIT to exercise his revisional jurisdiction u/s. 263 of the Act is that the AO has not disallowed the interest expenses for earning exempt income u/s. 14A read with Rule 8D of the Income Tax Rules, 1962 ( in short, the ' Rules'). Since the AO has not disallowed the interest expenses to earn exempt income by applying the provisions of section 14A r.w.r 8D of the Rules, according to the ld. PCIT the assessment order of the AO dt. 30-06-2016 passed u/s. 143(3) of the Act is erroneous in so far as prejudicial to the interest of the revenue. Therefore, he invoked revisional jurisdiction u/s. 263 of the Act and was pleased to set aside the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per return of income. However, this order of the AO has been interfered by the ld. PCIT (Pr. CIT) on the ground that the AO has not made any verification on the issue of interest expenses relatable to exempt income for disallowance. Therefore, he set aside the assessment order of the AO passed u/s. 143(3) of the Act dt. 30-08-2016 and directed the AO to make fresh assessment on this specific issue by making proper enquiries with regard to expenses incurred against the exempt income and whether the interest expenses unclaimed was more than the disallowance under section 14A read with Rule 8D of Rules. 5. It was brought to our notice by the ld.AR that during the revisional proceedings u/s. 263 of the Act before the ld. Pr. CIT the assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case was selected for scrutiny for verification of large interest expenses relatable to exempt income and during the assessment proceedings when the assessee explained the aforesaid facts, the AO agreed with the assessee that it had not incurred any interest expenditure for earning the exempt income. In the light of the discussion (supra therefore, we are of the view that the AO has rightly not disallowed/made any disallowance/expenses especially the interest expenditure for earning any exempt income which is a plausible view. The order of the AO passed u/s. 143(3) of the Act cannot be faulted with for non-invocation of section 14A/r.w.r 8D for such disallowance. Moreover the conditions precedent for invoking Rule 8D is that if the AO is n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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