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TMI Blog2025 (1) TMI 1231X X X X Extracts X X X X X X X X Extracts X X X X ..... total income at Rs. 26,55,680/- for the year under consideration assessment whereof was completed under Section 143(3) of the Act upon accepting the same. Subsequently, show cause notice dated 26.02.2024 was issued by the PCIT Central-1, Delhi on the issue that though the assessee made investment in equity shares as reflected from the balance sheet but not deducted any expenses related to such income and the Ld. AO has not disallowed any expense related to such exempt income under Section 14A of the Act, reply whereto were submitted by the assessee. However, the same was found to be not acceptable by the PCIT. The Ld. PCIT enhanced the income of the assessee to Rs. 79,34,636/- for the year under consideration and further directed the AO to recompute the total income of the assessee which is impugned before us. 3. At the time of hearing of the instant appeal, the Ld. Counsel appearing for the assessee submitted before us that the issue is squarely covered by the judgment passed by the Coordinate Bench in the case of M/s Jagriti Job Finder Private Ltd. Vs. PCIT (Central)-1, in ITA No. 2133/Del/2024 dated 14.08.2024. In fact, on the identical facts and circumstances of the matter, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed the relevant materials available on record. We find that the assessee was issued specific queries by and under the notice under Section 142(1) dated 16.01.2020 (Pages 40 to 43 of the PB) in regard to the application of Section 14A in the case of the assessee, the contents whereof is as follows: Government of India Ministry of Finance Income Tax Department Office of the Assistant Commissioner of Income Tax Central Circle 3, Delhi To, JAGRITI JOB FINDER PRIVATE LIMITED 134A, 1ST FLOOR SOMDUTTA CHAMBERS- 1,5, NEW DELHI 110066, DELHI, INDIA PAN: AABCJ5974E AY: 2018-19 Dated; 16/01/2020 DIN & Notice No: ITBA/AST/F/142(1)/2019- 20/1023924836(1) Notice under sub-section (1) of Section 142 of the Income Tax Act, 1961 Sir/Madam/ M/s In connection with the assessment for the assessment year 2018-19 you are required to: a) Furnish or cause to be furnished on or before 23/01/2020 at 11:30 AM the accounts and documents specified overleaf b) Furnish and verified in the prescribed mariner under Rule 14 of 1.7 Rules 1962 the information called for as per annexure and on the points or matters specified therein on or before 23/01/2020 at 11:30 AM c) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Brief note on the source of income of the assessee and detail of business activities carried out if any during the year and method of accounting followed during the F.Y. 2017-18. In case of deviation in method of accounting, please mention and give. 6. Please furnish all addresses where offices / godowns are situated Also give details of ownership of such properties 7. Please furnish details of the Bank Accounts including Fixed Deposits in the name of the individual/firm as well as those in the names of the partners in the following format: Name & Address of the Bank with Branch Account in the name of Account No. Account type (i) (ii) (iii) (iv) 8. If applicable, please submit true copy of assessment order passed u/s 143(3) (scrutiny assessment) of the Act during the last 3 years If there is no such assessment order, kindly mention the same 9. Complete name, addresses & bank accounts of the Directors of the company and of all the shareholders having shareholding of more than 10% along with details of shareholding of the company. 10. Please furnish the details of any income tax demand stands pending against your name 11. Please furnish all the details regarding p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Year 2,96,500/- 4. 500 Unquoted Equity Shares of Remarkable Consumer Electronic Private Limited from Shri Raj Investments & Finance Limited during the relevant Assessment Year 2,96,500/- Grand Total 10,84,000/- In this connection, copy of the relevant bank statement reflecting the payment made during the relevant Assessment Year are enclosed herewith. 1.2 As regard Your Honour's regarding applicability of section 14A read with Rule BD of the Income-tax Act 1961, In this regard, it is submitted that the Assessee Company has not earned any exempt income hence the provisions of Section 14A of the Income tax Act, 1961 are not applicable to the Assessee Company In this connection reference may be made to the following case laws including judgements of Hon'ble Supreme Court wherein it has been clearly held that in the absence of any exempt income no disallowance u/s 14A of the Income-tax Act, 1961 is called for * Principal Commissioner of Income tax, Patiala v State Bank of Patiala [2018] 99 taxmann.com 286 (SC); * Maxopp Investment Ltd v/s CIT [402 ITR 640 (SC)] * PCIT v. GVK Project and Technical Services Ltd [(2019) 106 taxmann.com 181(SC)]; * Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any Company or Companies of all kinds, for the purpose of acquiring all or any of the property. rights and liabilities of this Company or for carrying on any business which this Company is authorised to carry on or for any other purposes which may seem directly or indirectly calculated to benefit this Company or to promote or advance the interests or this Company 6. As desired, details of registered address of the Assessee Company is enclosed herewith 7. As desired, details of bank accounts along with bank statement for the relevant Assessment Year is enclosed herewith 8. As desired copy of Assessment order passed u/s 143 (3) for the Assessment year 2017-18 is enclosed herewith. 9.(a) As desired, details of directors as on 31.03.2018 is enclosed herewith (b) As desired, details of shareholders with their shareholding pattern for the relevant Assessment Year is enclosed herewith 10. As regard your Honour's query regarding details of income tax demand. It is submitted that demand of Rs 2287 is due for the Assessment year 2010-11 11. As regard Your Honour's query regarding properties/ premises/ assets held by the company, it is submitted that the Assessee Company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncluded by the ITAT in the impugned order as under: "16. We have carefully considered the submissions and arguments made by the learned counsel of the assessee as well as the learned CJT(O.R.) and heard both the parties at length. We find that the Assessing Officer had made detailed inquiries and examined the entire block of fixed assets. A brief note on capital work in progress was also filed and queries regarding the manner in which the depreciation was claimed was also raised. Further the assessee is following a settled accounting policy/principle for capitalization of expenses including interest expenses to both the fixed assets as well as capital work in progress. This method was forming part of the audited financial statements which were filed before the Assessing Officer as well. We also find that the free reserves were also more than sufficient to cover up the investment in fixed assets/capital work in progress. Further the assessee society has generated sufficient internal cash flows to meet with the cost of fixed assets as well as capital work in progress. In spite of this fact the assessee has capitalized a sum of Rs. 7.09 crores in the books of accounts. The learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pex Court of India. Accordingly the order passed by the AO cannot be regarded as deemed to be erroneous or prejudicial to the interest of the Revenue under Explanation 2 of the Act." 12. For the above reasons, this Court is of the considered view that no substantial question of law arises for consideration from the impugned order of the ITAT. The appeal is, accordingly, dismissed but in the circumstances, with no orders as to costs." 14. So far as the invocation of Explanation 2 of Section 263 is concerned we find that the judgment relied upon by the Ld. A.R in the case of PCIT Vs. Era Infrastructure reported in (2022) 141 taxmann.com 289 (Delhi) holds the field. It is categorically decided that amendment by Finance Act, 2022 to Section 14A by inserting a non-obstante clause and Explanation will take effect from 01.04.2022 and the same cannot be presumed to have retrospective effect. Thus, having regard to the entire aspect of matter we find that the issue raised and decided by the Ld. PCIT in the order impugned under Section 263 of the Act has already been enquired and examined/verified by the Ld. AO during the course of assessment proceedings and only upon which the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evisionary proceedings. The said interpretation and position of law is not only clear from a plain and basic reading of the said section but also has been emphatically upheld by the Hon'ble Supreme Court in the case of Malabar Industrial Company Ltd. Vs. CIT, reported in (2000) 243 ITR 83 (SC) also relied upon by the Ld. A.R. 18. Thus, having regard to the entire aspect of the matter the order passed by the Ld. CIT(A) is found to be bad in law in holding the order passed by the Ld. A.O erroneous so far as it is prejudicial to the interest of the revenue not only on merit considering the aspect of not having been any exempt income earned by the assessee in the year under consideration but also on wrong invocation of Explanation 2 of Section 263 of the Act in view of the Judgment passed by the Hon'ble Delhi High Court in the case of Era Infrastructure (India) Ltd. (supra) as discussed above. The Ld. Assessing Officer when already had discharged its statutory duty cast upon him by making inquiry on the same proposal as made by the Ld. PCIT during the course of assessment proceedings, branding the same as erroneous so far as it is prejudicial to the interest of revenue made by the Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X
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