TMI Blog2022 (1) TMI 876X X X X Extracts X X X X X X X X Extracts X X X X ..... de in purchase of shares amounting to ₹ 19,19,96,254/- are available. Once these funds are available which are more than investment made, neither the AO nor PCIT proves any nexus, in that eventuality only presumption can be drawn that the assessee might have invested these funds out of interest free funds available with him. This presumption is supported by Hon ble Bombay High Court in the case of HDFC Bank Ltd. [ 2014 (8) TMI 119 - BOMBAY HIGH COURT] - Hence, we find that the revision order passed by PCIT is without any basis on this issue and hence, deserves to be quashed. Disallowance of club expenses - We noted that there is no finding by PCIT that these are not incurred for the purpose of business and PCIT himself noted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO u/s.143(3) of the Act under limited scrutiny under CASS by issuing notice u/s.143(2) of the Act dated 31.08.2015. The assessee has challenged this issue on jurisdiction as well as on merits i.e., disallowance of expenses relatable to exempt income by invoking the provisions of Section 14A of the Act, read with Rule 8D(2)(ii) (iii) of the Income Tax Rules, 1962 (hereinafter the Rules ) i.e., interest disallowance and disallowance of club expenses. 3. Brief facts are that the assessment was framed originally by the AO u/s.143(3) of the Act. As the case of assessee was selected under limited scrutiny scheme under CASS, the AO issued notice u/s.142(1) of the Act on 01.04.2016, whereby the assessee was required to submit details of cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was to the tune of ₹ 19,19,96,254/-. But, PCIT has not gone into the details nor into the accounts of the assessee but suo-motto applied formula prescribed under Rule 8D(2) of the Rules and directed the AO to revise the assessment. Aggrieved, now the assessee is in appeal before the Tribunal. 4. Before us, the ld.AR for the assessee drew our attention to the assessment order enclosed at page 29 of assessee s paper-book dated 30.06.2016 and also reply to notice u/s.142(1) of the Act, which was submitted to the AO vide letter dated 28.06.2016, which includes the disallowance suo-motto made by the assessee under Rule 8D(2)(ii) (iii) at ₹ 5,13,580/-. The relevant details are enclosed in assessee s paper-book at page 35 as Annex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conducted all enquiries and moreover this was a limited scrutiny assessment and assessee filed relevant details before the AO during the course of assessment proceedings vide letter dated 28.06.2016. Moreover on merits of both the issues, i.e., disallowance u/s.14A of the Act and allowability of club expenses, both are genuine and reasonable expenses. 5. On the other hand, the ld. CIT-DR, Shri Abani Kanta Nayak, argued that on merits, the assessee case should be examined by the AO because as per the assessment order, no enquiry has been conducted by the AO while framing assessment and once there is no enquiry conducted by the AO, the PCIT is within his right u/s.263 of the Act to direct the AO in revision proceedings to reframe the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn of income. Admitted facts are that first of all this is a limited scrutiny assessment and assessee has filed reply to query raised by AO under notice issued u/s.142(1) of the Act. Further, the assessee before AO as well as before PCIT during revision proceedings filed complete details i.e., balance sheet and schedules forming part of balance sheet where complete details of own funds of ₹ 27,95,58,933/- and investments made in purchase of shares amounting to ₹ 19,19,96,254/- are available. Once these funds are available which are more than investment made, neither the AO nor PCIT proves any nexus, in that eventuality only presumption can be drawn that the assessee might have invested these funds out of interest free funds ava ..... X X X X Extracts X X X X X X X X Extracts X X X X
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