JAYANT FINVEST LTD,MUMBAI vs. CIT 8, MUMBAI

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ITA 2290/MUM/2015Status: DisposedITAT Mumbai13 December 2016AY 2009-103 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal noted that the revisionary order passed by the CIT under Section 263 had already been quashed by the Tribunal in a prior appeal. Consequently, all subsequent orders passed in pursuance thereof, including the impugned order of the CIT(A), were rendered infructuous.

What were the facts?

The assessee's appeal arose from an order passed by the CIT(A) which was in pursuance of a revisionary order under Section 263. The original assessment order was cancelled by the CIT under Section 263, directing the AO to re-examine issues related to disallowance under Section 14A and interest under Section 36(1)(iii).

What were the issues?

Whether the impugned order of the CIT(A) is valid when the underlying revisionary order under Section 263 has been quashed. The validity of disallowance of interest under Section 14A and Section 36(1)(iii) were also issues, but became moot due to the quashing of the Section 263 order.

Which sections of the Income-tax Act were involved?

Section 14A,Section 8D(2)(ii),Section 36(1)(iii),Section 263

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “H” BENCH,

For Appellant: Shri Nikunj Gada, AR
For Respondent: Shri M. C. Omi Ningshen, DR

O R D E R

PER AMIT SHUKLA, JM:

1.

The aforesaid appeal has been filed by the assessee against the impugned order dated 23-01-2015 passed by the learned CIT (A)-17, Mumbai in quantum for assessment passed u/s 143(3) read with Section 263 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for the assessment year 2009-10. The assessee has raised the following grounds:- “

1. The learned Commissioner of Income Tax (Appeals) grossly erred in confirming the order passed by t he assessing officer which was bad in law as it was passed without giving the appellant an adequate opportunity. Without prejudice to above.

2. (i) On the facts and in circumstances of the case, the learned Commissioner of Income Tax (Appeal) grossly erred in confirming the disallowance of interest of Rs.47,25,985/- u/s. 14A r. w. r. 8D (2) (ii) of the Income Tax Rules, 1961 without appreciating that interest Assessment Year: 2009-10 expenditure incurred by appellant was directly related to appellant’s business income. (ii) He failed to appreciate that the loan sanctioning letter specifically debarred the appellant to utilize the loan for purposes other than those applied for. (iii) He grossly erred in observing that loan could be used for purpose of investment in the shares or any other securities even when the loan sanction letter specifically prohibited such usage.

3. On the facts and in circumstances of the case, the learned Commissioner of Income Tax (Appeal) grossly erred in confirming the disallowance of interest expenditure u/s. 36(1)(iii) of the Income Tax Act, 1961 of Rs.84,74,000/-, holding that borrowed interest bearing funds were not utilized for appellant’s business even when the borrowings were specifically used for business purposes.”

2.

At the outset, the learned Counsel for the assessee submitted that the present appeal is arising out of the proceedings in pursuance of order u/s 263 of the Act by the learned CIT. The said order u/s 263 dated 22-02-2013, has, now been quashed by the Tribunal in vide order dated 09-09-2015. Therefore, the impugned order as well as the proceedings in pursuance of such an order passed u/s 263 has been rendered infructuous. Therefore, the impugned order should be quashed.

3.

The learned DR also conceded to the fact that the order passed u/s 263 by the CIT dated 22-02-2013 has been quashed by the Tribunal.

4.

After considering the aforesaid submissions and on perusal of the impugned orders, we find that the learned CIT-8, Mumbai has cancelled the original assessment order in his revisionary jurisdiction u/s 263 and directed the AO to examine the issue of Assessment Year: 2009-10 disallowance u/s 14A read with Rule 8D of the IT Rules as well as to examine the allowability of interest u/s 36(1) (iii) of the Act. The said order of the learned CIT has, now been quashed by the Tribunal vide order dated 09-09-2015 and as a consequence, all the orders which have been passed, in pursuance thereof have become infructuous. Accordingly, the impugned order of the learned CIT (A) is quashed as infructuous.

5.

In the result, the appeal of the assessee is dismissed treating the same as infructuous. Order pronounced in the open court on 13-12-2016.

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