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Facts
The assessee-company filed its return of income for AY 2018-19. The AO made a disallowance under Section 14A read with Rule 8D. The assessee appealed this disallowance. The PCIT later initiated revision proceedings under Section 263 on the same issue.
Held
The Tribunal held that the PCIT's revisionary power under Section 263 was not permissible as the subject matter of the revision was already pending before the CIT(A). Citing the Hon'ble Madras High Court's decision, the Tribunal concluded that the PCIT cannot revise an assessment order when a larger issue is pending before the Commissioner of Appeal.
Key Issues
Whether the PCIT has the jurisdiction to invoke revisionary power under Section 263 when the subject matter of revision is already pending before the CIT(A).
Sections Cited
263, 14A, 8D, 143(3)
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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI SS VISWANETHRA RAVI & SHRI JAGADISH
clause (c) of Explanation-1 to Section 263 of the Act, if any order passed by the A.O has been the subject matter of appeal the power of Ld. PCIT is limited only to such matter as had not been considered and decided in such appeal. In the above case, the computation of disallowance u/s. 14A of the Act as per Rule 8D of the Rules is subject matter of appeal before Ld. CIT(A) and the Ld CIT(A) appeal has all power to correct the computation as per Rule 8D . The Hon’ble Madras High Court in the case of Smt. Renuka Philip vs. ITO [2019] 409 ITR 567 (Mad.), has held that when larger issue is pending before the Commissioner of Appeal , the PCIT could not exercise power u/s 263 to revise the assessment order. We therefore, held that revision order u/s. 263 of the Act passed by Ld PCIT is bad in law and therefore, liable to be quashed.
In the result, the appeal filed by the assessee is allowed.
Order pronounced on 30th September, 2024.