RASHLEELA ENTERPRISES PRIVATE LIMITED,JAIPUR vs. THE PCIT (CENTRAL), JAIPUR

per rule 8D(2)(ii) of the Income Tax Rules, 1962. Similarly, Hon’ble

High Court of Calcutta in case of Principal Commissioner of Income

Tax, Central 1, Kolkata vs. M/s Shalimar Pellet Feeds Ltd. on

22.02.2022 held that disallowance as per Rule 8D by taking into

consideration only those shares which have yielded dividend

37 ITA No. 461/JP/2024 Rashleela Enterprises Pvt. Ltd. vs. PCIT income in the year under consideration to be considered. The ld.

DR did not controvert this basic factual aspect of the matter and

also did not deal with the fact that there is no expense directly

incurred for the purpose of earning exempt income but as

contended by the assessee that the same shall be worked out at

Rs. 2,118/- only. Since as is evident that no expenses were

actually incurred for earning exempt income the dividend income of

the ITC shares no disallowance can be made and alternatively it

has to be made for an amount of Rs. Rs. 2,118/- only as against

what is proposed by Ld. PCIT of Rs. 58,18,692/-. Thus, even on

merits also the order of the ld. PCIT is not sustainable.

inadequacy of the enquiry conducted by an AO as against the no

enquiry cannot form a basis for setting aside an assessment order

which has been passed by AO. In the instance case as discussed

herein above the issue raised and ld. AO takes a plausible view so

as to establish that on that issue the order is not erroneous. Thus,

when based on the submission and discussion so recorded at is

evident that the inquiry has been made and considering the

submission of the assessee ld. AO considered the submission of

the assessee and has not disallowed the interest as alleged by the

38 ITA No. 461/JP/2024 Rashleela Enterprises Pvt. Ltd. vs. PCIT PCIT. Thus, the contention made by the ld. AO is one of the views

based on the submission placed on record cannot be considered

as erroneous and prejudicial to the interest of the revenue.

Therefore, the order passed by the ld. PCIT dated 21.03.2024

cannot be sustained in law merely because the original

assessment order does not exactly advert to the issue which the ld.

PCIT is seeing. Hence, the PCIT could not have exercised the

powers conferred upon her u/s. 263 of the Act only on the reasons

that she had a different view or perspective in the matter. The

principle of law enunciated by the Supreme Court in Malabar

Industrial Co. Ltd. has set up a standard concerning the width and

amplitude of power vested for exercising revisionary jurisdiction

under Section 263 of the Act. While exercising power under the

said provision, the concerned officer must be satisfied that the twin

conditions provided therein stand fulfilled, i.e., the order passed by

the AO, which is sought to be revised, is erroneous and is also

prejudicial to the interest of the revenue. In other words, if one of

the two conditions is not satisfied, the revisionary power under the

said provision cannot be invoked.

Jaipur.

39 ITA No. 461/JP/2024 Rashleela Enterprises Pvt. Ltd. vs. PCIT In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 05/09/2024.

Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 05/09/2024 *Ganesh Kumar, Sr. PS आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- Rashleela Enterprises Pvt. Ltd., Jaipur 2. izR;FkhZ@ The Respondent- PCIT (Central), Jaipur 3. vk;dj vk;qDr@ CIT vk;dj vk;qDr@ CIT(A) 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत. 5. xkMZ QkbZy@ Guard File {ITA No. 461/JP/2024} 6. vkns'kkuqlkj@ By order, सहायक पंजीकार@Aेेज. त्महपेजतंत