LAKSHMI ELECTRICAL DRIVES LTD,COIMBATORE vs. DCIT CORPORATE CIRCLE 2, COIMBATORE

Brief facts of the case are that the assessee filed its return of income for the assessment year 2013-14 on 13.09.2013 declaring total income of ₹.5,28,57,940/- under normal provision and ₹.3,63,37,554/- under MAT computation. The return was processed under section 143(1) of the Act and since the case was selected for scrutiny, notice under section 143(2) of the Act was issued and served on the assessee. After considering the details furnished by the assessee, the assessment under section 143(3) of the Act was completed. Since the assessee had received ₹.4,44,899/- as interest on income tax refund under section 244A of the Act for the assessment year 2011-12 during the financial year relevant to the assessment year 2013-14 and not included in the total income, the same was brought to tax.

Against the revision order under section 263 of the Act, the assessee preferred the present appeal before the Tribunal. By filing copy of the computation of income from business, the ld. Counsel for the assessee has submitted that the assessee has already computed the expenses incurred under section 14A of the Act towards earning of exempt income, which was duly verified by the Assessing Officer before concluding the assessment and thus, the ld. PCIT was incorrect to pass the revision order under section 263 of the Act. On the other hand, the ld. DR strongly supported the order passed under section 263 of the Act.

We have heard both the parties, perused the materials available on record and gone through the orders of authorities below. On verification of records, the ld. PCIT has observed that the Assessing Officer has not determined expenditure component under section 14A r.w. Rule 8D(2)(ii) and thereby after determining the disallowance to be made, the Assessing Officer was directed to redo the assessment afresh. On perusal of the computation of income from business filed by the assessee, we find that the assessee has voluntarily disallowed the expenses under section 14A r.w. Rule 8D(2)(iii), which was not disputed by the ld. PCIT while passing the revision order under section 263 of the Act. Further, the assessee has not filed its financials by way of paper book. Under these facts and circumstances, we direct the Assessing Officer to examine as to whether the assessee had sufficient funds for investment, any interest bearing funds were diverted for the purpose of investment, etc. and pass a detailed speaking order in accordance with law keeping in mind the decision of the Hon’ble Delhi High Court in the case of Joint Investments Pvt. Ltd. v. CIT 372 ITR 694 after affording an opportunity of being heard to the assessee.

In the result, the appeal filed by the assessee is partly allowed for statistical purposes.