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TMI Blog2025 (3) TMI 1043X X X X Extracts X X X X X X X X Extracts X X X X ..... edings. 3. The Pr. Commissioner of Income Tax erred in passing an order u/s. 263 on issues where two views were possible and the Assessing Officer had taken a plausible view. 4. The Pr. Commissioner of Income Tax erred in passing the order u/s. 263 of the Act when the assessment order passed under section 143(3) r.w.s. 144B was neither erroneous nor prejudicial to the interest of Revenue. 5. The Pr. Commissioner of Income Tax erred in directing the Assessing Officer to compute the disallowance under section 14A by invoking with Rule 8D. 6. The Pr. Commissioner of Income Tax erred in directing the Assessing Officer to disallow the depreciation u/s. 32 in respect of the office premises acquired by the Appellant in the preceding Assessment Year 2016-17. 7. The Pr. Commissioner of Income Tax erred in assuming jurisdiction u/s. 263 to deny the weighted deduction u/s. 35CCC." 3. In the present appeal, the assessee is aggrieved against the invocation of revisionary proceedings under section 263 of the Act by the learned PCIT. 4. The brief facts of the case pertaining to this issue, as emanated from the record, are: The assessee is engaged in the business of manufacturing of ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlooked the aspect that the assessee gave up its claim for weighted deduction and requested the AO to restrict the deduction in respect of the expenditure incurred on agriculture extension activity to the actual expenditure incurred. Accordingly, the learned PCIT held that the assessment order passed by the AO under section 143(3) read with section 144B of the Act is erroneous insofar as it is prejudicial to the interest of the Revenue on the aforenoted issues and directed the AO to re-assess the income after providing an opportunity of being heard to the assessee. Being aggrieved, the assessee is in appeal before us. 7. We have considered the rival submissions and perused the material available on record. The impugned revisionary proceedings under section 263 of the Act were initiated with respect to three issues. Vide impugned order, inter-alia, it was held that in its computation of income for the year under consideration, the assessee claimed a weighted deduction under section 35CCC of the Act @150% of the expenses incurred on agriculture extension activity. However, the assessee vide letter dated 12/04/2021, filed during the assessment proceedings, gave up its claim for weigh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the CBDT's Circular No. 5 of 2014, which mandates the AO to compute the disallowance under section 14A of the Act in accordance with the method prescribed in Rule 8D of the Rules. Accordingly, the learned PCIT held that the case falls under the purview of clause (c) of Explanation-2 to section 263 of the Act. 9. From the perusal of the factual paper book placed on record by the assessee, we find that the return filed by the assessee was selected for scrutiny through CASS, and notice under section 143(2) of the Act was issued on 23/09/2019, inter-alia, for examining the expenses incurred by the assessee for earning exempt income. In this regard, the AO issued a notice under section 142(1) of the Act on 06/03/2020, forming part of the paper book from pages 5-11, inter-alia seeking the details of investments and claim of exempt income and applicability of section 14A read with Rule 8D of the Rules. We further find that vide this notice the AO also sought a chart from the assessee showing the monthly average of opening and closing balance of value of investments for the year under consideration, detail of exempt income earned during the year under consideration, detail of expendit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the AO on this issue from time to time during the assessment proceedings, it cannot be concluded that this aspect was not examined by the AO or there was no application of mind. We find that the Hon'ble Jurisdictional High Court in CIT v/s Reliance Communication Ltd, reported in [2016] 69 taxmann.com 103 (Bom.), held that the fact that the AO did not make any reference in the assessment order cannot make the order erroneous when the issues were indeed looked into. 11. Further, as regards the non-compliance with the CBDT's Circular No. 5 of 2014, we find that the said Circular was issued in the backdrop of controversy as to whether disallowance can be made by invoking the provisions of section 14A of the Act even in those cases where no income has been earned by the assessee which has been claimed as exempt during the financial year. Accordingly, the CBDT clarified that Rule 8D read with section 14A of the Act provides for disallowance of the expenditure even where a taxpayer in a particular year has not earned any exempt income. However, in the present case, there is no dispute regarding the fact that the assessee received dividend income during the year under consideration, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shed by the assessee along with its reply, submitted that it purchased an under-construction office premises, possession of which was given in the financial year 2015-16. The assessee submitted that on receipt of the possession, it has capitalised the said office premises and the cost of acquisition and other incidental expenses aggregating to INR 82, 96, 65, 374 are added to the block of asset "Building". Accordingly, the depreciation under section 32 of the Act was claimed at the rate of 10% on the cost of acquisition shown under the head "Building". It is evident from the reply of the assessee that specific reference was made to the queries raised by the AO, during the assessment proceedings for the assessment year 2016-17, wherein the AO denied the depreciation on the amount allegedly attributable to the land. The assessee referred to various clauses of the sale agreement to make good its submission that what was acquired is an office premises and the assessee did not acquire any land, which is owned by the seller/developer. The assessee also referred to various case laws as well as the findings of the learned DRP in the case of sister concern, wherein identical disallowance of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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