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Income Tax Appellate Tribunal, BANGALORE BENCHES : “B”, BANGALORE
Before: SHRI A.K.GARODIA & SMT.BEENA PILLAI, JUDICAL MEMBER
PER BEENA PILLAI, JUDICIAL MEMBER : Present appeal has been filed by assessee against order dated 30/03/17 passed by Ld.CIT under section 263 of the Act, on following grounds of appeal:
1. That the Order of the Learned CIT, LTU, Bangalore is bad in law to the extent challenged herein.
IT(TP)A No1192(B)/2017 2 2. Having regard to the fact that the Learned CIT during the proceedings under section 263 of the Income-tax Act,1961 ['the Act'] has not been able to quantify the alleged excess deduction and has only set aside the Order of Assessing Officer (hereinafter referred to as "the AO") directing the AO to reconsider the disallowance in respect of expenses relatable to exempt income under section 10 of the Act, the Learned CIT has erred in concluding that the Order of AO is erroneous and prejudicial to the interests of revenue and consequently further erred in invoking the revision proceedings under section 263 of the Act.
3. Having regard to the fact that the Appellant dealt with only few investments during the year, the Learned CIT ought to have accepted the Appellant's contention that it has practically incurred Nil expenses for earning tax free income.
Without prejudice, the Learned CIT ought to have accepted the Appellant's contention that the rigors of Rule 8D of the Income-tax Rules, 1962, apply only to provisions of Sec 14A of the Act and does not have any application to Clause (f) of Explanation 1 to Sec 115JB of the Act.
The Learned CIT has erred in invoking the proceedings under section 263 of the Act, having regard to the fact that the Order passed by the Learned AO was made after making due inquires and verification of investment activity of the Appellant (yielding tax free income) and expenses incurred thereof.
The Appellant craves leave to add to, amend or alter the ground herein.
For these and other grounds that may be urged at the time of hearing, the appellant prays for appropriate relief.
IT(TP)A No1192(B)/2017 3 2. Brief facts of the case are as under: Assessee filed its return of income declaring total income of Rs.8,10,08,759/- on 08/10/2010. Thereafter, return was revised on 23/11/11 and the same was processed under section 143(1) on 25/08/11. Subsequently, notice under section 143(2) was issued to assessee along with notice under section 142(1) and questionnaire. In response to statutory notices, representative of assessee appeared before Ld.AO and filed requisite details. The assessment was completed under section 143(3) read with 144C of the Act, on 30/05/14 by making additions as under: TP adjustment -Rs.6,92,25,245/- 14 A addition - Rs. 42,17,912/- 2.1 Subsequently, Ld.CIT on perusal of records, observed that the addition made under section 14A was not considered for the purposes of computing book profit under section 115JB of the Act. Ld.CIT accordingly, issued notice to assessee dated 17/03/17 holding assessment order erroneous and prejudicial to the interest of revenue. Assessee filed detailed response to the notice on 28/03/17 which is being reproduced in the order passed by Ld.CIT.
Ld.CIT however, was of the opinion, that assessment order dated 30/05/14 was erroneous, as well as prejudicial to the interest of the revenue to the extent that 14A disallowance was not considered for purposes of computing book profit under section 115 JB of the Act. He accordingly, set aside and remitted the issue back to Ld.AO for considering it afresh after giving due opportunity of being heard to assessee.