2023 (9) TMI 551

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..... ch in ITA No. 257/Coch/2020, pertaining to the assessment year 2015-2016. For the previous year pertaining to the said assessment year, the appellant herein had filed a loss return. By Annexure A assessment order, however, while the interest income of the appellant was accepted, the interest expenses on fixed deposits from investors was disallowed on the ground that the appellant had not carried out any actual business activities during the said year. Aggrieved by the assessment order, the appellant preferred an appeal before the Commissioner of Income Tax (Appeals), which is stated to be pending. In the meanwhile, however, the Principal Commissioner of Income Tax, by an order under Section 263 of the Income Tax Act, set aside the assessmen .....

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..... y enquiry with respect to the issue in question and therefore the Commissioner was justified in invoking the jurisdiction under Section 263 of the lT Act 3) Whether on the facts and in the circumstances of the case and in view of the pendency of the Appeal against Annexure A assessment before the Commissioner (Appeals), the Commissioner has exceeded his jurisdiction in revising Annexure-A assessment order and accordingly Annexures D and E are vitiated? 4) Whether on the facts and in the circumstances of the case when the Appellant had already filed an Appeal before the Commissioner of Income Tax (Appeals) against Annexure A, claiming that pro rata interest had to be allowed and the same issue would arise even if the income was assesse .....

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..... The effect of Annexure E order of the Principal Commissioner is to effectively preclude the assessing authority from enquiring into whether or not there was a causal link between the incurring of the expenditure and the earning of interest income that was assessed in the hands of the appellant during the year in question. In our view, this ought not to have been done, especially when, in the ultimate analysis, what the Principal Commissioner did, in the exercise of its powers under Section 263 of the Income Tax Act, was to set aside the assessment order on this issue and remand it to the assessing authority for a de novo consideration on merits. As a matter of fact, a perusal of the consequential order passed by the assessing authority, pur .....

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