MAHADEV ENCLAVE PVT. LTD.,JAIPUR vs. PCIT(CENTRAL), JAIPUR, JAIPUR
Facts
The assessee filed its return of income declaring total income. The case was selected for scrutiny assessment. The Pr. CIT initiated revision proceedings under Section 263 of the Income Tax Act, 1961, stating that the assessment order passed by the AO was erroneous and prejudicial to the interest of revenue.
Held
The Tribunal held that the Pr. CIT erred in invoking the provisions of Section 263 of the IT Act and passing the impugned order. The investment in agricultural land was made from own funds, and there was no proximate relation of borrowed funds with the investment. Therefore, no interest expenditure could be disallowed under Section 14A. The amendment to Section 14A by the Finance Act, 2022, is prospective and not applicable to the assessment year in question.
Key Issues
Whether the Pr. CIT was justified in invoking Section 263 to direct disallowance under Section 14A of the IT Act, when the investment was made from own funds and no exempt income was earned by the assessee.
Sections Cited
143(3), 263, 14A, 8D
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCHES,”B” JAIPUR
Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA No. 636/JP/2024
आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA No. 636/JP/2024 fu/kZkj.k o"kZ@Assessment Years : 2019-20 cuke Mahadev Enclave Private PCIT Vs. Limited, (Central), Jaipur B 37 Ayodhya Marg, Hanuman Nagar, Khatipura, S.O., Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAFCM 9213 P vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. P. C. Parwal, CA jktLo dh vksj ls@ Revenue by : Sh. Anil Dhaka (CIT) lquokbZ dh rkjh[k@ Date of Hearing : 04/07/2024 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 22/07/2024 vkns'k@ ORDER
PER: RATHOD KAMLESH JAYANTBHAI, AM
The present appeal filed by the assessee arises out of the order of the Pr. Commissioner of Income Tax (Central), Jaipur dated 18/03/2024 [here in after (ld. PCIT)] for assessment year 2019-20. That order of the PCIT arise because the ld. AO [ ACIT, Central Circle-03, Jaipur ] passed an order dated 15.06.2021 under section 143(3) of the Income Tax Act which was under revision by the PCIT as per provision of section 263 of the Act.
2 ITA No. 636/JP/2024 Mahadev Enclave Pvt. Ltd. vs. PCIT 2. In this appeal, the assessee has raised following grounds: -
“1. Under the facts and circumstances of the case, order passed by the Ld. PCIT u/s 263 is illegal & bad in law and the same be quashed. 2. The Ld. PCIT has erred on facts and in law in holding that the assessment order dt. 15.06.2021 passed u/s 143(3) is erroneous and prejudicial to the interest of revenue as the said order has been passed without invoking the provision of section 14A of IT Act, 1961 read with Rule 8D of IT Rules, 1962 and thereby not disallowing the expenditure incurred on funds borrowed for investment of Rs.1,42,84,360/- in agriculture land without appreciating that the assessee had not earned any exempt agriculture income during the year under consideration, the agriculture land was purchased in AY 2012-13 and 2014-15 and no material is brought on record that investment in agriculture land is made from the borrowed funds by ignoring that the interest free funds of the assessee is much more than the investment in the agricultural land.
Succinctly, the fact as culled out from the records is that the
assessee e-filed its return of income on 19.10.2019 declaring total income
at Rs. 31,90,06,190/-. The assessee is trading of sand excavation and
stone mining. Further, the assessee company was covered/assessed as
part of search and seizure operation carried out at the residential as well as
the various business premises connected with GRP, Mughalsarai (Pandit
Deen Dayal Nagar), Chandauli, Uttar Pradesh on 21.07.2018.
Subsequently, scrutiny assessment for A.Y 2019-20 was made u/s 143(3)
r.w.s 153(B)(1)(b) of the Act after accepting the return income of the
assessee on 15.06.2021.
3 ITA No. 636/JP/2024 Mahadev Enclave Pvt. Ltd. vs. PCIT 4. On culmination of the assessment proceeding the ld. PCIT called for
the assessment records and upon verification the PCIT issued show cause
notice dated 07.03.2024 as per provision of section 263 of the Act stating
that assessee has made investment of Rs.1,42,84,360/- in agriculture land,
income from that source would be exempt from tax. This investment
attracts provision of section 14A of IT Act, 1961 r.w.r. 8D of IT Rules, 1962
but the AO neither made any query in this regard nor otherwise issue was
examined. The interest cost directly attributable to the investment in
agriculture land in terms of Rule 8D(2)(i) works out to Rs.7,94,683/- and
disallowance under Rule 8D(2)(ii) works out to Rs.1,42,843/-, totaling to
Rs.9,37,526/-. Since no such disallowance was made by ld. AO, the action
of AO is erroneous and such action has caused prejudice to the interest of
revenue.
4.1 In response to the said show cause notice assessee filed the reply on
13.03.2024 stating that during the year under consideration the assessee
had not claimed any income exempt u/s 10 of the Act. Since company has
not earned any exempt income, provision of section 14A is not applicable.
After considering the issues raised and the reply filed by the assessee the
ld. PCIT has passed an order u/s. 263 of the Act on 18.03.2024 holding as
under :
4 ITA No. 636/JP/2024 Mahadev Enclave Pvt. Ltd. vs. PCIT “11. I have examined the facts at hand, it is clear to that the AO has failed to make the requests additions/disallowances on the issues that had remained unexplained as detailed in the Show Cause Notice reproduced above, causing prejudice to the interests of revenue. As such, the assessment order dated 15.06.2021 passed under section 143(3) r.w.s 153B(1)(b) for the AY 2019-20, is erroneous in so far in terms of not invoking the provisions of section 14A of the I.T. Act, 1961 r.w.r. 8D of the I.T. Act, 1962 and thereby not disallowing the expenditure incurred on funds borrowed for investment in agriculture land and hence the assessment order passed by the AO is prejudicial to the interests of revenue. Accordingly, in exercise of powers conferred upon the undersigned as per provisions of section 263 of the IT Act 1961, I hereby set aside the assessment carried out under section 143(3) r.w.s. 153B(1)(b) dated 15.06.2021, and direct a fresh assessment to be made in accordance with provisions of law and on the observation made in the order.
Feeling dissatisfied from finding so recorded in the order of the ld.
PCIT, the assessee has preferred the present appeal. In support of the two
grounds so raised by the ld. AR of the assessee, he has relied on the
written submissions so filed. The written submission so in support of the
grounds raised reads as under :
The assessee company is engaged in the business of mining and quarrying, real estate, trading of agriculture produce, etc. It filed the return of income on 19.10.2019 declaring total income of Rs.31,90,06,190/-. The assessment was framed u/s 143(3) of the Act vide order dt. 15.06.2021 at returned income.
The Ld. PCIT issued show cause notice dt. 07.03.2024 u/s 263 of the Act stating that assessee has made investment of Rs.1,42,84,360/- in agriculture land income from which would be exempt from tax. This investment attracts provision of section 14A of IT Act, 1961 r.w.r. 8D of IT Rules, 1962 but the AO neither made any query in this regard nor otherwise issue was examined. The interest cost directly attributable to the investment in agriculture land in terms of Rule 8D(2)(i) works out to Rs.7,94,683/- and disallowance under Rule 8D(2)(ii) works out to Rs.1,42,843/-, totaling to Rs.9,37,526/-. Since no such disallowance has been made by AO, the action of AO is erroneous and such action has caused prejudice to the interest of revenue. In response to the same assessee
5 ITA No. 636/JP/2024 Mahadev Enclave Pvt. Ltd. vs. PCIT filed the reply on 13.03.2024 stating that during the year under consideration it has not claimed any income exempt u/s 10 of the Act. Since company has not earned any income, hence provision of section 14A is not applicable.
The Ld. PCIT held that the expenses incurred on investment, income from which is exempt from taxation are to be disallowed irrespective of the fact that the assessee has earned any exempt income during the year or not. Further the assessee company has failed to produce any documentary evidence that the investment in agricultural land was made from its own funds. Also the assessee has failed to prove that it has not incurred expenses on borrowing funds and that borrowed funds have not been utilized in such assets from which assessee earns certain income. Hence in absence of clarity of funds used for investment in land, it is considered that the assessee company has utilized its interest bearing funds for investment in land. The AO has failed to apply his mind on the material available of record and has failed to disallow the expenditure incurred on investment in agriculture land in terms of provision of section 14A of IT Act r.w.r. 8D. Accordingly the order of AO is held erroneous in so far as prejudicial to the interest of revenue and the same was set aside to be made afresh in light of the observation made in the order.
Submission:-
At the outset it is submitted that assessee has not made any investment in agriculture land during the year under consideration. The investment of Rs.16,26,500/- was made in AY 2012-13 & investment of Rs.1,26,57,860/- was made in AY 2014-15 as evident from the ledger account enclosed. Further from the Balance Sheet of AY 2012-13 (copy enclosed) it can be noted that assessee is having share capital and reserve & surplus of Rs.2.61 crores whereas investment in agriculture land is only Rs.16.26 lacs. Similarly from the Balance Sheet of AY 2014-15 (copy enclosed) it can be noted that assessee is having share capital and reserve & surplus of Rs.6.70 crores whereas investment in agriculture land is only Rs.1.43 crores (1.27+0.16). Thus interest free funds are much more than the investment in agriculture land. It is not the case of the AO that interest bearing funds have been used in making the investment. Therefore, in the absence of any proximate relation of borrowed funds with investment in agriculture land, no interest expenditure can be disallowed u/s 14A. In various cases, it has been held that if there are funds available both interest free and borrowed funds, then a presumption would arise that investment would be out of the interest free funds generated or available with the company, if the interest free funds were sufficient to meet the investments. For this purpose reliance is placed on the following judicial precedents:-
CIT Vs. UTI Bank Ltd. (2022) 289 Taxman 238 (SC) Where interest free own funds available with assessee exceeded their investments in tax free securities, investment would be presumed to be made out
6 ITA No. 636/JP/2024 Mahadev Enclave Pvt. Ltd. vs. PCIT of assessee’s own funds and proportionate disallowance was not warranted u/s 14A.
South Indian Bank Ltd. Vs. CIT (2021) 205 DTR 337/ 283 Taxman 178 (SC) If investment in tax free securities is made out of common funds and the assessee has available non interest bearing funds larger than the investment made in tax free securities, in such cases disallowance of interest u/s 14A cannot be made.
It is further submitted that investment in agriculture land was made during AY 2012-13 to 2014-15. In those years section 14A was not invoked. In the year under consideration there is no investment in the agricultural land. In all earlier years no disallowance was made u/s 14A. Hence by following the rule of consistency, if the AO has not made any enquiry on this issue, his order cannot be held erroneous. Reliance in this connection is placed on the decision of Hon’ble Supreme Court in case of Radhasaomi Satsang vs. CIT 193 ITR 321 where it is observed as under:-
"Parties are not permitted to begin fresh litigations because of new views they may entertain of the law of the case, or new versions as to what should be a proper apprehension by the Court of the legal result either of the construction of the documents or the weight of certain circumstances. If this were permitted litigation would have no end, except when legal ingenuity is exhausted. It is a principle of law that this cannot be permitted, and there is abundant authority reiterating that principle. Thirdly, the same principle—namely, that of a setting to rest rights of litigants, applies to the case where a point, fundamental to the decision taken or assumed by the plaintiff and traversable by the defendant, has not been traversed. In that case also a defendant is bound by the judgment, although it may be true enough that subsequent light or ingenuity might suggest some traverse which had not been taken."
Again Hon’ble Supreme Court in case of Parashuram Pottery Works Co. Ltd. Vs. ITO 1977 CTR 32 / (1977) 106 ITR 1 held as under:- "At the same time, we have to bear in mind that the policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity."
It is further submitted that during the year under consideration assessee has not earned any agricultural income. It is a settled law that provisions of section 14A would not be applicable if no exempt income was received during relevant PY. For this purpose reliance is placed on the following judicial precedents:-
7 ITA No. 636/JP/2024 Mahadev Enclave Pvt. Ltd. vs. PCIT
PCIT Vs. Oil Industry Development Board (2019) 262 Taxman 102 (SC) Where High Court upheld Tribunal’s order that in absence of any exempt income, disallowance u/s 14A of any amount was not permissible, SLP filed against said decision was to be dismissed.
PCIT Vs. GVK Project & Technical Services Ltd. (2019) 264 Taxman 76 (SC) Where High Court upheld Tribunal’s order holding that in absence of any exempt income reported by assessee, disallowance could not be made u/s 14A, SLP filed against said order was to be dismissed.
CIT Vs. Chettinad Logistics (P.) Ltd. (2018) 257 Taxman 2 (SC) SLP dismissed against High Court ruling that section 14A cannot be invoked where no exempt income was earned by assessee in relevant assessment year.
PCIT Vs. Delhi International Airport (P.) Ltd. (2023) 291 Taxman 490 (Delhi) (HC) Provisions of section 14A would not be applicable if no exempt income was received or was receivable during relevant PY.
PCIT Vs. Era Infrastructure (India) Ltd. (2022) 216 DTR 191/ 288 Taxman 384 (Del.) (HC) No disallowance u/s 14A can be made if the assessee had not earned any exempt income. Insertion of Explanation of sec. 14A by the Finance Act, 2022 which is "for removal of doubts" cannot be presumed to be retrospective even where such language is used, if it alters or changes the law as it earlier stood.
PCIT & Anr. Vs. Novell Software Development (India) (P) Ltd. (2021) 202 DTR 370 (Kar.) (HC) If no exempt income has accrued to the assessee, the provisions of sec. 14A do not apply.
PCIT Vs. Kohinoor Project Pvt. Ltd. (2021) 276 Taxman 180 (Bom.) (HC) Section 14A would not apply if no exempt income was received or was receivable during relevant previous year.
CIT Vs. Visual Graphics Computing Services India Pvt. Ltd. (2020) 195 DTR 397 (Mad.) (HC) Section 14A cannot be invoked when no exempt income was earned by the assessee in the relevant year.
Further Circular No.5 of 2014 issued by the CBDT on 11.02.2014 is not applicable. The various courts including the Supreme Court of India has clarified the above position that in order to attract disallowance under section 14A of the Act, it is necessary that exempt income is earned by the assessee during the previous year. Thus, the Circular issued by CBDT do not lay out the correct position of law. This has specifically been clarified by the Delhi High Court in
8 ITA No. 636/JP/2024 Mahadev Enclave Pvt. Ltd. vs. PCIT case of PCIT Vs. IL & FS Energy Development Company Ltd. (2017) 399 ITR 483 wherein it was held as under:-
“18. The CBDT Circular upon which extensive reliance is placed by Mr. Hossain does not refer to Rule 8D (1) of the Rules at all but only refers to the word “includible” occurring in the title to Rule 8D as well as the title to Section 14A. The Circular concludes that it is not necessary that exempt income should necessarily be included in a particular year’s income for the disallowance to be triggered.
In the considered view of the Court, this will be a truncated reading of Section 14 A and Rule 8D particularly when Rule 8D (1) uses the expression ‘such previous year’. Further, it does not account for the concept of ‘real income’. It does not note that under Section 5 of the Act, the question of taxation of ‘notional income’ does not arise. As explained in Commissioner of Income Tax v. Walfort Share and Stock Brokers Pvt. Ltd [2010] 326 ITR 1 (SC), the mandate of Section 14A of the Act is to curb the practice of claiming deduction of expenses incurred in relation to exempt income being taxable income and at the same time avail of the tax incentives by way of exemption of exempt income without making any apportionment of expenses incurred in relation to exempt income. Consequently, the Court is not persuaded that in view of the Circular of the CBDT dated 11th May 2014, the decision of this Court in Cheminvest Ltd. (supra) requires reconsideration. ….. 24. For all of the aforementioned reasons, this Court is of the view that the CBDT Circular dated 11th May 2014 cannot override the expressed provisions of Section 14A read with Rule 8D.”
It is further submitted that the explanation inserted in section 14A of the Act by Finance Act, 2022 w.e.f. 01.04.2022 is prospective in nature and cannot be treated as retrospective in nature even though the language used is “For the removal of doubts” or “deemed to have always applied”. Reliance in this regard is placed on the following decisions:-
Sedco Forex International Drill Inc. Vs. CIT (2005) 279 ITR 310 (SC) Relevant extract of the decision is as under:-
“18. As was affirmed by this Court in Goslino Mario [(2000) 10 SCC 165] a cardinal principle of the tax law is that the law to be applied is that which is in force in the relevant assessment year unless otherwise provided expressly or by necessary implication (see also: Reliance Jute and Industries Ltd. v. CIT [(1980) 1 SCC 139].) An Explanation to a statutory provision may fulfil the purpose of clearing up an ambiguity in the main provision or an Explanation can add to and widen the scope of the main section [See Sonia Bhatia v. State of U.P., (1981) 2 SCC 585]. If it is in its nature clarificatory then the Explanation must be read into
9 ITA No. 636/JP/2024 Mahadev Enclave Pvt. Ltd. vs. PCIT the main provision with effect from the time that the main provision came into force [See Shyam Sunder v. Ram Kumar, (2001) 8 SCC 24; Brij Mohan Das Laxman Das v. CIT, (1997) 1 SCC 352; CIT v. Podar Cement (P) Ltd., (1997) 5 SCC 482]. But if it changes the law it is not presumed to be retrospective, irrespective of the fact that the phrases used are “it is declared” or “for the removal of doubts”.
PCIT Vs. Era Infrastructure (India) Ltd. (2022) 448 ITR 674 (Del) (HC)
PCIT Vs. Oil Industry Development Board (2022) 115 CCH 245 (Del.) (HC)
Graphite India Ltd. Vs. PCIT (2023) 68 CCH 0183 (Kol.) (Trib.)
This is further explained in the Memorandum explaining the Finance Bill, 2022 wherein it has been specifically mentioned that the amendment is applicable from 1 April 2022. The relevant extracts of the memorandum are as under:-
“4. In order to make the intention of the legislation clear and to make it free from any misinterpretation, it is proposed to insert an Explanation to section 14A of the Act to clarify that notwithstanding anything to the contrary contained in this Act, the provisions of this section shall apply and shall be deemed to have always applied in a case where exempt income has not accrued or arisen or has not been received during the previous year relevant to an assessment year and the expenditure has been incurred during the said previous year in relation to such exempt income.
This amendment will take effect from 1st April, 2022”
Thus, the observation of Ld. PCIT at Pg 5-7 of the order relying upon the aforesaid circular and amendment is misplaced and incorrect.
This issue has been decided by Hon’ble ITAT, Jaipur Bench in case of Girnar Software Pvt. Ltd. Vs. PCIT in ITA No.330/JP/2023 for AY 2018-19 vide order dt. 28.08.2023 where also the Ld. PCIT passed order u/s 263 on the ground that since AO has not invoked section 14A of the Act, his order is erroneous and prejudicial to the interest of revenue but after considering the detailed submission of assessee it is held that the assessment order cannot be regarded as erroneous being prejudicial to the interest of revenue more so when no exempt income has been earned to attract any disallowance u/s 14A of the Act.
In view of above, order passed by Ld. PCIT is illegal & bad in law and the same be quashed.”
10 ITA No. 636/JP/2024 Mahadev Enclave Pvt. Ltd. vs. PCIT 6. The ld. AR of the assessee vehemently argued that the agricultural
land were purchased in the 11-12 and 13-14. The present assessment year
is 2019-20. In the past year no such disallowance were made. The assets
in question is capital assets and part of fixed assets and not a investment of
the assessee company. When the assets purchased the assessee has
sufficient fund and the assessee was having the share capital and reserve
and surplus as on 31.03.2012 & 31.03.2013 are Rs. 2,61,46,089/- & Rs.
4,33,97,792/- respectively. Thus, the investment of agricultural land for an
amount of Rs. 1,42,84,360/-, is out of own fund and not from the borrowed
fund. Thus, on this aspect and other various aspect mentioned in the written
submission the ld. AR of the assessee supported the order of the ld. AO.
The ld. DR is heard who relied on the findings of the ld. PCIT
recorded in her order. The ld. DR supported the order of the PCIT based on
the fact that the assessee invested in agricultural land and income of the
same being exempt, considering the amendment in the law and circular of
board the order of the ld. AO is erroneous and prejudicial to the interest of
the revenue and has rightly been set aside by the PCIT.
We have heard the rival contentions and perused the material placed
on record and the citations relied on by both the parties to drive home to the
11 ITA No. 636/JP/2024 Mahadev Enclave Pvt. Ltd. vs. PCIT respective contentions so raised. The short issue in this case is whether the
ld. Pr. CIT was justified in invoking jurisdiction under section 263 of the I.T.
Act, 1961 and thereby directing to the ld. AO to made the disallowance of
Rs 9,37,526/- under section 14A of the Act read with Rule 8D of IT Rules,
1962. As the assessee has made investment in the agricultural land of
Rs.16,26,500/- in AY 2012-13 & investment of Rs.1,26,57,860/- was made
in AY 2014-15 as evident from the ledger account placed on record. Further
from the Balance Sheet the share capital and reserve and surplus as on
31.03.2012 & 31.03.2013 are Rs. 2,61,46,089/- & Rs. 4,33,97,792/-
respectively and the investment in agriculture land is only Rs.1.43 crores
(1.27+0.16). Thus interest free funds are much more than the investment in
agriculture land. It is not the case of the AO that interest bearing funds have
been used in making the investment. Therefore, in the absence of any
proximate relation of borrowed funds with investment in agriculture land, no
interest expenditure can be disallowed u/s 14A. The view so advanced by
the assessee has not been considered by the PCIT on ground that circular
no. 5/2014 issued by the CBDT followed by the amendment in section 14A
vide finance bill 2022 the contention raised are not acceptable. The bench
noted that CBDT Circular No. 5/2014 dated 11-02-2014 relied upon by Ld.
PCIT is already set aside by judiciary in catena of judgements as it cannot
12 ITA No. 636/JP/2024 Mahadev Enclave Pvt. Ltd. vs. PCIT override Section 14A. The decisions are PCIT v. IL & FS Energy
Development Company Ltd. [2017] 84 taxmann.com 186 (Delhi), PCIT v.
TV Today Network Ltd. [2022] 141 taxman.com 275 (Delhi), PCIT v.
Amadeus India (P.) Ltd. [2022] 145 taxmann.com 311 (Delhi). In light of
these set of fact the contention raised by the CBDT Circular No. 5/2014
Dated 11-02-2014 is not applicable because it is set aside by Hon’ble High
Court in the above landmark judgements being contrary to Section 14A. As
regards the contention of the oc change in law w.e.f. 01.04.2022 the same
is inserted w.e.f. 01.04.2022 by Finance Act, 2022. As per explanation to
Section 14A of the Act, any expenditure incurred in relation to an exempted
income which has neither accrued nor arisen during the current year shall
also be considered for disallowance under this section. The relevant extract
of the Section 14A of the Act is reproduced hereinunder:
Explanation.—For the removal of doubts, it is hereby clarified that notwithstanding anything to the contrary contained in this Act, the provisions of this section shall apply and shall be deemed to have always applied in a case where the income, not forming part of the total income under this Act, has not accrued or arisen or has not been received during the previous year relevant to an assessment year and the expenditure has been incurred during the said previous year in relation to such income not forming part of the total income.
On the bare perusal of the above explanation, it has been clarified that any
expenditure incurred in relation to exempted income which was neither
accrued nor received, shall be deemed to applied for earning such income
13 ITA No. 636/JP/2024 Mahadev Enclave Pvt. Ltd. vs. PCIT and the said explanation is inserted w.e.f. 01.04.2022. In the present case,
the year under consideration is A. Y. 2019-20 and the explanation is not
applicable to the year under consideration.
From the above discussion, in our considered opinion, the assessment
order cannot be regarded as erroneous, or being prejudicial to the interests
of the Revenue more so when no exempt income has been earned to
attract any disallowance u/s 14A of the Act. Thus we are of the view the ld.
PCIT has erred in invoking the provisions of Section 263 of the IT Act and in
passing the impugned order. Accordingly, we find merit in the grievance
raised by the assessee, accordingly we held that the ld. PCIT is not justified
in directing the AO to make addition under section 14A of the IT Act, 1961.
The impugned order is accordingly quashed.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 22/07/2024.
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:- 22/07/2024
14 ITA No. 636/JP/2024 Mahadev Enclave Pvt. Ltd. vs. PCIT *Ganesh Kumar, Sr. PS आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- Mahadev Enclave Pvt. Ltd., Jaipur 2. izR;FkhZ@ The Respondent- PCIT (Central), Jaipur 3. vk;dj vk;qDr@ The ld CIT vk;dj vk;qDr¼vihy½@The ld CIT(A) 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. 6. xkMZ QkbZy@ Guard File (ITA No. 636/JP/2024) vkns'kkuqlkj@ By order,
सहायक पंजीकार@Aेेज. त्महपेजतंत
