TMI Blog2022 (7) TMI 958X X X X Extracts X X X X X X X X Extracts X X X X ..... f mind. Merely just because the view taken by the AO was not found acceptable does not mean that the AO has failed to make requisite enquiries. Thus, the view taken by the AO was plausible view, which cannot be disturbed by the Ld. Pr.CIT. Therefore, we find that twin condition were not satisfied for invoking the jurisdiction under section 263 of the Act. Therefore, in absence of the same the Id. Pr.CIT was not correct in exercise the jurisdiction under section 263 - Decided in favour of assessee. - R/TAX APPEAL NO. 273 of 2022 - - - Dated:- 13-6-2022 - HONOURABLE MR. JUSTICE A. J. DESAI And HONOURABLE MR. JUSTICE BHARGAV D. KARIA MRS KALPANAK RAVAL ( 1046 ) for the Appellant (s) No. 1 ORDER ( PER : HONOURABLE MR. JUSTICE A. J. DESAI ) 1. Revenue has filed this appeal under section 260A of the Income Tax Act, 1961 (For short the Act, 1961 ) for the assessment year 2014-2015 challenging the judgment and order dated 10.12.2019 passed by the Income Tax Appellate Tribunal, Surat Bench, Surat in I.T.A. No.219/SRT/2019. 2. Following substantial questions of law are proposed by the Revenue : (i) Whether on the facts and in the circumstances of the case and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lary, profits and gains from business and profession, income from other sources and profit from partnership firm. The respondent-assessee filed his return of income on 5.11.2014 declaring nil income. The case of the assessee was selected for scrutiny and order under section 143(3) of the Act, 1961 was passed by the Assessing Officer on 28.12.2016 assessing total income of the assessee at Rs. Nil. 4. The Principal Commissioner of Incometax- 2 (For short PCIT ), noticed on examination of profit and loss account, balance sheet and computation of income that the assessee had claimed exempt income of Rs. 53,14,838/- on account of profit from partnership firm and Rs. 9,900/- on account of dividend and further that the assessee had claimed deduction of interest expenses of Rs. 2,91,18,343/-. On perusal of the balance-sheet, it was further found that the assessee had invested a total sum of Rs.26,55,56,360/- as on 31.03.2013 and Rs. 27,17,19,263/- as on 31.03.2014 and therefore, as per the provisions of section 14A of the Act, 1961 read with Rule 8D of the Income Tax Rules,1962 the expenses pertaining to earning exempt income was required to be disallowed and added to the total inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal. The Tribunal after considering the submissions made by the Revenue as well as assessee held as under: 8. We have heard the rival submissions of both the parties and perused the material available on record. We have gone through all the judgements cited by the parties before us. We note that section 263 of the Act enables supervisory jurisdiction to the Pr. CIT over the AO. The Pr.CIT is empowered to act under section 263 of the Act when he considers that AO's order is erroneous in so far as it is prejudicial to the interest of Revenue. It is a settled position of law that the aforesaid twin condition i.e. AO's order is erroneous and prejudicial to the interest of revenue is sine qua non for assumption of revisionary jurisdiction by Pr.CIT. As per the scheme of the Act, AO has a dual role to discharge while assessing the income of an assessee. He is both an investigator as well as an adjudicator. If the AO fails in discharging any of the two said duties i.e. as an investigator or that of an independent/impartial adjudicator, the Pr.CIT's supervisory jurisdiction is attracted because the order of the AO would be erroneous for lack of inquiry. Thus, if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that basis the Tribunal held that disallowance under section 14A could not be made. In the process tribunal relied on the decision of Division Bench of Punjab And Haryana High Court in the case of CIT v. Winsome Textile Industries Ltd. [2009] 319 ITR 204 in which also the Court had had observed that where the assessee did not make any claim for exem tion, section 14A could have no application. Similar findings was given by the Hon ble Supreme Court in the case of Maxopp Investment Ltd. v. CIT [2018] 91 taxmann.com 154 SC holding that only expenses proportionate to earning exempt income could be disallowed. We are of the view that the provisions of Section 57(iii) lays down that the expenditure must be laid wholly and exclusively for the purpose of earning income and not that s income must have been earne The plain requirement of section is that the purpose for which the expenditure is incurred should fructi into any benefit by way of return in the shape of income. This view is further, supported .by the decision of Hon ble Supreme Court in the case of CIT v. Rajendra Prasad Moody [1978] 115 ITR 579 (SC) wherein it was held that interest paid on money borrowed for investment in shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s found acceptable by the Id. CIT (A) in preceding assessment year Where two views are possible even then revision jurisdiction cannot be invoked as held by the Hon ble Supreme Court in the case of Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83 (SC) 109 Taxman 66 (SC) had interpreted the provisions of section 263(1) in the following words : A bare reading of this provision makes it clear that the prerequisite to the exercise of jurisdiction by the Commissioner suomotomoto under it, is that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absentif the order of the Income-tax Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue-recourse cannot be had to section 263(1) of the Act. There can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer, it is only whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of mind. Merely just because the view taken by the AO was not found acceptable does not mean that the AO has failed to make requisite enquiries. Thus, the view taken by the AO was plausible view, which cannot be disturbed by the Ld. Pr.CIT. Therefore, we find that twin condition were not satisfied for invoking the jurisdiction under section 263 of the Act. Therefore, in absence of the same the Id. Pr.CIT was not correct in exercise the jurisdiction under section 263 of the Act. In view of these facts and circumstances, wequash the impugned order passed under section 263 of the Act and allow the appeal of the assessee. 12. In the result, the appeal of the assessee is allowed. 11. In view of above findings of fact arrived at by the Tribunal and in view of settled legal position considered in the aforesaid findings, we are of the opinion that there is no infirmity in the impugned order passed by the Tribunal so as to give rise to any substantial question of law much-less any question of law as proposed or otherwise. 12. Tax Appeal therefore, stands dismissed. 4. In view of above order passed in case of husband of the petitioner for the same assessment ye ..... X X X X Extracts X X X X X X X X Extracts X X X X
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