M/s Super Tech Forgings (India) Pvt. Ltd, Jalandhar v. The Dy Commissioner of Income Tax, Jalandhar

ITA 178/ASR/2017 | 2012-2013
Pronouncement Date: 30-11-2017 | Result: Allowed

Appeal Details

RSA Number 17820914 RSA 2017
Assessee PAN AACCS0402M
Bench Amritsar
Appeal Number ITA 178/ASR/2017
Duration Of Justice 7 month(s) 20 day(s)
Appellant M/s Super Tech Forgings (India) Pvt. Ltd, Jalandhar
Respondent The Dy Commissioner of Income Tax, Jalandhar
Appeal Type Income Tax Appeal
Pronouncement Date 30-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 30-11-2017
Assessment Year 2012-2013
Appeal Filed On 10-04-2017
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. T. S. KAPOOR ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY JUDICIAL MEMBER I.T.A. NO. 178/(ASR)/2017 ASSESSMENT YEAR: 2012-13 PAN: AACCS0402M M/S. SUPER TECH FORGINGS (INDIA) PVT. LTD. VILL. RAOWALI JALANDHAR. VS. DY. C. I. T. CIRCLE IV JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY : SH. J. S. BHASIN (AD V.) RESPONDENT BY: SH. RAHUL DHAWAN (D. R.) DATE OF HEARING: 13.09.2017 DATE OF PRONOUNCEMENT: 30.11.201 7 ORDER PER T. S. KAPOOR (AM): THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE ORD ER OF LD. CIT JALANDHAR AND DATED 28.03.2017 FOR ASST. YEAR: 201 2-13. 2. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL. 1. THAT IN THE GIVEN FACTS OF THIS CASE THE LD.CI T-2 JALANDHAR HAS GROSSLY ERRED IN SETTING THE ASIDE THE AO'S ORDER PASSED U/ S. 143(3) DATED 27.03.2015 BY WRONGLY INVOKING THE PROVISIONS OF S ECTION 263. 2. THAT THE ID. CIT HAS GRAVELY ERRED TO INFER TH AT THE ID. AO OUGHT TO HAVE MADE A DISALLOWANCE U / S .14A EVEN WHEN ADMITTEDLY NO EXEMPT INCOME WAS EARNED DURING THE YEAR WHICH BEING CONTRARY TO SETTLED LEGAL POSITION PRONOUNCED BY VARIOUS HIGH COURTS INCLUDING THE JUR ISDICTIONAL HIGH COURT IS NOT SUSTAINABLE. 3. THAT THE ID. AO HAVING INVITED THE RELEVANT DET AILS VERIFIED FOR HIMSELF THE RELEVANT RECORDS AND CHOSEN NOT TO MAKE ANY SPE CIFIC DISALLOWANCE U / S .14A THE ID. CIT WAS NOT JUSTIFIED IN EXPECTING THE AO T O DO THE SAME IN A WAY AS CONCEIVED BY HIM TO BE MORE APPROPRIATE. 4. THAT SANS ANY FINDINGS GIVEN IN HIS ORDER UNDER APPEAL THAT THE ASSESSMENT FRAMED WAS ERRONEOUS AS ALSO PREJUDICIAL TO THE INTEREST OF ITA NO. 178(ASR)/2017 ASSESSMENT YEAR: 2012-13 2 REVENUE THE JURISDICTION U/S.263 HAS BEEN WRONGLY EXERCISED AND HENCE NOT SUSTAINABLE IN LAW. 5. THAT THE ORDER UNDER APPEAL IS WHOLLY AGAINST LAW AND FACTS OF THE CASE. 3. AT THE OUTSET THE LD. AR SUBMITTED THAT THE ASS ESSEE HAD MADE STRATEGIC INVESTMENT IN THE GROUP COMPANY AND ON WH ICH NO DIVIDEND WAS RECEIVED AND THE ASSESSING OFFICER DURING ASSES SMENT PROCEEDINGS HAD EXAMINED THIS ASPECT AND HAD MADE AN ADDITION O F RS. 5 LACS ON THIS ACCOUNT AND OUR ATTENTION WAS INVITED TO ASSESSING OFFICERS ORDERS AT PAGE 2 OF HIS ORDER. THE LD. AR SUBMITTED THAT ASSE SSING OFFICER VIDE DETAILED QUESTIONER DATED 20.10.2014 HAD REQUIRED A SSESSEE TO SUBMIT CERTAIN INFORMATION AND THE REQUIRED INFORMATION IN CLUDED INFORMATION WITH RESPECT TO DETAILS OF TAX FREE INCOME. IN THIS RESPECT OUR ATTENTION WAS INVITED TO QUESTION NO. 6 PLACED AT P.B. PAGE 6 6. THE LD. AR SUBMITTED THAT IN REPLY TO THIS QUESTION THE ASSES SEE VIDE POINT NO. 6 HAD SUBMITTED THAT THERE WAS NO TAX FREE INCOME EAR NED DURING THE YEAR. IN THIS RESPECT OUR SPECIFIC ATTENTION WAS INVITED TO P.B. PAGE 74 WHERE A COPY OF REPLY WAS PLACED. THE LD. AR FURTHER INVITE D OUR ATTENTION TO P.B. PAGE 78 WHERE A COPY OF REPLY FILED BY ASSESSEE WAS PLACED AND WHEREIN THE ASSESSEE HAD SUBMITTED THAT ASSESSEE HAD NOT MA DE ANY EXEMPTED INVESTMENT DURING THE YEAR UNDER CONSIDERATION. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES THE LD. AR SUBMITTED THAT THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS HAD EXAMINED THE ASPE CT OF DISALLOWANCE U/S 14A AND HAD MADE AN ADDITION OF RS. 5 LACS IN T HIS RESPECT AND THEREFORE ASSESSING OFFICER HAD TAKEN A PLAUSIBLE V IEW AND THEREFORE ITA NO. 178(ASR)/2017 ASSESSMENT YEAR: 2012-13 3 ACTION OF LD. CIT IN PASSING ORDER U/S 263 ON THE S AME ISSUE WAS NOT JUSTIFIED. THE LD. AR FURTHER SUBMITTED THAT IT IS AN ADMITTED FACT THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE H AD NOT RECEIVED ANY EXEMPT INCOME AND THEREFORE THE DISALLOWANCE U/S 14 A WAS NOT WARRANTED AS HAS BEEN HELD BY VARIOUS COURTS. SPECI FIC RELIANCE WAS PLACED ON AN ORDER OF HON'BLE MADRAS HIGH COURT IN THE CASE OF REDINGTON (INDIA) LTD. VS. ACIT 392 ITR 633 WHEREIN IT HAS BEEN HELD THAT IN THE ABSENCE OF EXEMPT INCOME THE PROVISION S OF SECTION 14A READ WITH RULE 8D ARE NOT APPLICABLE. THE LD. AR FURTHER PLACED HIS RELIANCE ON AN ORDER OF DELHI HIGH COURT IN THE CASE OF CIT VS. M/S DLF LTD. WHEREIN UNDER SIMILAR FACTS AND CIRCUMSTANCES THE CIT HAD PASSED ORDER U/S 263 AND APPEAL FILED BY REVENUE AGAINST THE ORDER OF THE HON'BLE TRIBUNAL WAS DISMISSED. THE HON'BLE COURT HAD DISMI SSED THE APPEAL OF REVENUE ON THE BASIS THAT THE DISALLOWANCE U/S 14A WAS A DEBATABLE ISSUE AND THEREFORE HELD THAT THE HON'BLE TRIBUNAL HAD RIGHTLY ALLOWED THE APPEAL OF ASSESSEE. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES THE LD. AR SUBMITTED THAT THE ORDER PASSED BY LD. CIT I S NOT SUSTAINABLE. 4. THE LD. DR ON THE OTHER HAND RELIED ON THE ORDE R OF PUNJAB & HARYANA HIGH COURT IN THE CASE OF M/S JINDAL STEEL AND POWER LTD. VS. PR. CIT WHEREIN IT HAS BEEN HELD THAT DEPARTMENT OF FICERS ARE BOUND BY THE CBDT CIRCULARS. THE LD. DR FURTHER RELIED ON A JUDGMENT OF PUNJAB & HARYANA HIGH COURT IN THE CASE OF PUNJAB TRACTORS L TD. VS. CIT. ITA NO. 178(ASR)/2017 ASSESSMENT YEAR: 2012-13 4 5. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH OUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT DURING ASSESSMENT PR OCEEDINGS THE ASSESSING OFFICER DID ENQUIRE ABOUT THE DISALLOWANC E U/S 14A THOUGH HE MENTIONED THE DISALLOWANCE OUT OF INTEREST PAID AND IN FACT ALSO DISALLOWED AN AMOUNT OF RS. 5 LACS. THE FINDINGS OF THE ASSESSING OFFICER IN THIS RESPECT ARE REPRODUCED BELOW: AFTER DISCUSSION AND CONSIDERING THE SUBMISSION AS ABOVE IT BECOMES CRYSTAL CLEAR THAT SOME OF LOANS RAISED FOR THE BUSINESS ON WHICH INTE REST IS PAID HAVE BEEN MIS-UTILIZED FOR MEETING- PERSONAL O BLIGATIONS. SO THE RAISING | OF LOANS & PAYMENT OF INTEREST TO SOME EXTENT IS NOT INCIDENTAL TO THE RUNNING OF THE BUSINESS. IT WILL BE APPROPRIATE TO POINT OUT THAT ASSESSEE HAS PAID INTEREST OF RS. 11863699/- ON SEC URED LOANS & AN INTEREST OF RS 2055124/- ON INTT TO DEPOSITORS. TH E ASSESSEE MAINLY PLEADS THAT THERE IS NO NEXUS BETWEEN RAISING OF LO ANS & THE ADVANCES .WITHOUT INTEREST. HE FURTHER SUBMITS THAT NO SECUR ED LOANS ARE RAISED DURING THE YEAR WHEREAS MAIN INTEREST FREE ADVANCE OF RS. 22685000/- HAS GONE OUT DURING THE YEAR WHEREAS MAIN INTEREST FREE ADVANCE OF RS. 22685000/- HAS GONE OUT DURING THE YEAR. THE ISSUE WAS: DISCUSSED IN DETAIL WITH ASSESSEE'S COUNSEL & CONSIDERING THE FA CTS SUCH AS BF ADVANCES OF RS. 50 LAC ETC THE ASSESSEE ULTIMATELY AGREED FOR A DISALLOWANCE OF RS. 5 LACS FROM INTEREST PAID I AM SATISFIED THAT THE CASE IS FIT FOR INITIATING PENALTY PROCEEDING U/S 271(L) (C). PENALTY PROCEEDING ARE BEING INITIATED SEPARATELY. ADDITION RS. 500000/- THEREFORE THERE IS NO DISPUTE ABOUT THE FACT THAT ASSESSING OFFICER HAS ALREADY EXAMINED THIS FACT AND HAS CARRIED OUT NECESSARY INVESTIGATIONS AS WERE REQUIRED TO BE DONE. THE LD. CIT HAS HELD THAT THE DISALLOWANCE U/S 14A WAS MANDATORY IN VIEW OF THE CIRCULAR NO. 5 OF 2014 AND THEREFORE HE SET ASIDE THE ISSUE TO THE AS SESSING OFFICER TO EXAMINE THE DISALLOWANCE U/S 14A OF THE ACT. IN OUR VIEW THE ORDER PASSED BY LD. CIT IS NOT SUSTAINABLE IN VIEW OF THE FACT THAT ASSESSING OFFICER HAS ALREADY EXAMINED THIS ASPECT AND HAS AL READY MADE A DISALLOWANCE. THE PROVISIONS OF SECTION 263 ARE NOT APPLICABLE IN A CASE ITA NO. 178(ASR)/2017 ASSESSMENT YEAR: 2012-13 5 WHERE THE ASSESSING OFFICER HAD EXAMINED A PARTICUL AR ISSUE AND HAD TAKEN A PLAUSIBLE VIEW. MOREOVER WE FIND THAT IT I S AN ADMITTED FACT THAT ASSESSEE HAD NOT RECEIVED ANY EXEMPT INCOME DURING THE YEAR. THERE ARE MANY JUDGMENTS OF VARIOUS HON'BLE COURTS WHEREIN IT HAS BEEN HELD THAT WHERE THE ASSESSEE DID NOT RECEIVE ANY EXEMPT INCOM E DURING A PARTICULAR YEAR NO DISALLOWANCE CAN BE MADE U/S 14 A OF THE ACT. THE CASE LAWS RELIED ON BY LD. AR IN SUPPORT OF HIS CON TENTION THAT IN VIEW OF NOT RECEIVING ANY DIVIDEND INCOME THE DISALLOWANCE U/S 14A WAS NOT WARRANTED. THE HON'BLE MADRAS HIGH COURT IN THE CAS E OF REDINGTON (INDIA) LTD. HAS DECIDED IN FAVOUR OF ASSESSEE AFTE R CONSIDERING THE CIRCULAR NO. 5/2014 BY ALLOWING APPEAL OF THE ASSES SEE. THE FINDINGS OF THE HON'BLE COURT ARE REPRODUCED BELOW: PER CONTRA SRI T. RAVIKUMAR APPEARING ON BEHALF O F THE REVENUE DREW OUR ATTENTION TO THE MARGINAL NOTES OF SECTION 14A POINTING OUT THAT THE PROVISION WOULD APPLY NOT ONLY WHERE EXEMPTED INCOME IS 'INCLUDED' IN THE TOTAL INCOME BUT ALSO WHERE EXEMPT INCOME I S 'INCLUDABLE' IN TOTAL INCOME. HE RELIED UPON A CIRCULAR ISSUED BY THE CENTRAL BOA RD OF DIRECT TAXES IN CIRCULAR NO. 5 OF 2014 DATED FEBRUARY 11 2014 (SEE [2014] 361 ITR (ST.) 94) TO THE EFFECT THAT SECTION 14A WAS IN TENDED TO COVER EVEN THOSE SITUATIONS WHETHER THERE IS A POSSIBILITY OF EXEMPT INCOME BEING EARNED IN FUTURE. THE CIRCULAR AT PARAGRAPH 4 STATES THAT I T IS NOT NECESSARY FOR EXEMPT INCOME TO HAVE BEEN INCLUDED IN THE INCOME O F A PARTICULAR YEAR FOR THE DISALLOWANCE TO BE TRIGGERED. ACCORDING TO THE LEARNED STANDING COUNSEL THE PROVISIONS OF SECTION 14A ARE MADE APP LICABLE IN TERMS OF SUB-SECTION (1) THEREOF TO INCOME 'UNDER THE ACT' A ND NOT 'OF THE YEAR' AND A DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D CAN THUS BE EFFECTED EVEN IN A SITUATION WHERE A TAXPAYER HAS NOT EARNED ANY TAXABLE INCOME IN A PARTICULAR YEAR. WE ARE NOT ABLE TO SUBSCRIBE TO THE AFORESAID VIEW. THE PROVISIONS OF SECTION 14A WERE INSERTED AS A RESPONSE TO THE JUDG MENTS OF THE SUPREME COURT IN CIT V. MAHARASHTRA SUGAR MILLS LID. [1971] 82 ITR 452 (SC) AND RAJASTHAN STATE WAREHOUSING CORPORATION V. CIT [200 0) 242 ITR 450 (SC) IN TERMS OF WHICH EXPENDITURE INCURRED BY AN ASSES SEE CARRYING ON A COM- POSITE BUSINESS GIVING RISE TO BOTH TAXABLE AS WELL AS NON-TAXABLE INCOME ITA NO. 178(ASR)/2017 ASSESSMENT YEAR: 2012-13 6 WAS ALLOWABLE M ENTIRETY WITHOUT APPORTIONMENT IT WAS THUS THAT SECTION 14A WAS INSERTED PROVIDING THAT NO DEDUCTION SHALL BE ALLOWABLE IN RESPECT OF EXPENDITURE INCURRED IN RELATION TO THE EARNING OF INCOME EXEMPT FROM TAXATION. AS OBSERVED BY THE SUPREME COURT IN THE J UDGMENT IN THE CASE OF CIT V. WALFORT SHARE AND STOCK BROKERS (P.)' LTD. [ 2010] 326 HR 1 (SC) (PAGE 16) : THE MANDATE OF SECTION 14A IS CLEAR. IT DESIRES TO CURB THE PRACTICE TO CLAIM DEDUCTION OF EXPENSES INCURRED IN RELATION TO EXEMPT INCOME AGAINST TAXABLE INCOME AND AT THE SAME TIME AVAIL O F THE TAX INCENTIVE BY WAY OF AN EXEMPTION OF EXEMPT INCOME WITHOUT MAKING ANY APPORTIONMENT OF EXPENSES INCURRED IN RELATION TO EXEMPT INCOME.' THE PROVISION THUS IS CLEARLY RELATABLE TO THE EARN ING OF ACTUAL INCOME AND NOT NOTIONAL OR ANTICIPATED INCOME. THE SUBMISSION OF THE DEPARTMENT TO THE EFFECT THAT SECTION 14A WOULD BE ATTRACTED EVEN TO EXEMPT INCOME INCLUDABLE IN TOTAL INCOME WOULD ENTA IL THE ASSESSMENT OF NOTIONAL INCOME ASSUMED TO BE EXEMPT IN THE FUTURE IN THE PRESENT ASSESSMENT YEAR. THE COMPUTATION OF TOTAL INCOME IN TERMS OF SECTION 5 OF THE ACT IS ON REAL INCOME AND THERE IS NO SANCTION IN LAW FOR THE ASSESSMENT OF ADMITTEDLY NOTIONAL INCOME PARTICULA RLY IN THE CONTEXT OF EFFECTING A DISALLOWANCE IN CONNECTION THEREWITH. THE COMPUTATION OF DISALLOWANCE IN TERMS OF RULE 8D IS BY WAY OF A DETERMINATION INVOLVING DIRECT AS WELL AS INDIRECT ATTRIBUTION. THUS ACCEPT- ING THE SUBMISSION OF THE REVENUE WOULD RESULT IN T HE IMPOSITION OF AN ARTIFICIAL METHOD OF COMPUTATION ON NOTIONAL AND AS SUMED INCOME. WE BELIEVE THIS WOULD BE CARRYING THE ARTIFICE TOO FAR . THE LEARNED STANDING COUNSEL RELIES ON THE DECISION S OF TIRE DIVISION BENCH OF THE KERALA HIGH COURT IN SOUTH INDIAN BANK LTD. V. CIT [2014] 363 ITR 111 (KER); [2014] 49 TAXMANN.COM 100 (KER) AND CIT V. CATHOLIC SYRIAN BANK LTD. [2012] 344 ITR 259 (KER) AS WELL A S THE DECISION OF THE DIVISION BENCH OF THE CALCUTTA HIGH COURT IN DHANUK A AND SONS V. CIT [2011] 339 FIR 319 (CAL); [2011] 12 TAXMAMR.COM 227 (CAL) IN ALL OF WHICH TIRE ASSESSEE DID AS A MATTER OF FACT EARN DIVIDE ND INCOME. THE AFORESAID DECISIONS ARE THUS FACTUALLY DISTINGUISHABLE AND DO NOT ADVANCE THIS PRO- POSITION OF THE REVENUE. RELIANCE IS ALSO PLACED ON A DECISION OF THE JURISD ICTIONAL HIGH COURT IN THE CASE OF BEACH MINERALS CO. PVT. LTD. V. ASST . CIT IN TCA NO. 681 OF 2013 DATED DECEMBER 2 2013. IN THAT CASE PAYMENT S OF INTEREST BY THE ASSESSEE WERE SOUGHT TO BE DISALLOWED INVOKING THE PROVISIONS OF SECTION 14A ON THE PREMISE THAT THE SAME RELATED TO BORROWI NGS THAT HAD BEEN INVESTED AND WOULD YIELD EXEMPT RETURNS. THE ASSESS EE CONTESTED THE DIS- ALLOWANCE UNDER SECTION 14A ON MULTIPLE GROUNDS. IT WAS CONTENDED THAT THERE WERE SUFFICIENT RESERVES AND SURPLUSES AVAILA BLE FOR THE PURPOSE OF INVESTMENTS AND BORROWED FUNDS FOR WHICH THE PAYM ENT OF INTEREST HAD BEEN INCURRED HAD NOT BEEN INVESTED. THE ASSESSEE SOUGHT TO DRAW A NEXUS BETWEEN THE BORROWED FUNDS AND THE INTEREST P AYMENTS HIGHLIGHTING THE POSITION THAT THE QUANTUM OF AVAIL ABLE FREE FUNDS WAS FAR IN EXCESS OF THE INVESTMENTS MADE. THE BENCH IN TH E LIGHT OF THE ABOVE SUBMISSIONS REMANDED THE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO BE ITA NO. 178(ASR)/2017 ASSESSMENT YEAR: 2012-13 7 CONSIDERED DE NOVO AND AFTER CONDUCTING A PROPER EN QUIRY. INTER ALIA A DIRECTION WAS ISSUED TO THE ASSESSEE TO TENDER A PR OPER EXPLANATION FOR THE INTEREST PAYMENTS. THE OPEN REMAND WAS MADE IN THE FACTS AND CIRCUMSTANCES OF THAT CASE AND NO CONCLUSION WAS DR AWN BY THE BENCH ON THE POSITION OF LAW INVOLVED. IN FACT THE SUBSTANT IAL QUESTION OF LAW RAISED IN THAT CASE FOR THE CONSIDERATION OF THE COURT WAS COUCHED IN GENERAL TERMS AS FOLLOWS: 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE INCOME-TAX APPELLATE TRIBUNAL IS RIGHT IN LAW 7 IN CONFIRMING THE DISALLOWANCE UNDER SECTION 14A OF THE INCOME-TAX ACT OF AN AMOUNT OF RS. 55 00 000 IN RELATION TO THE ASSESSMENT YEAR 2007-2008 ?' NOTHING MUCH TURNS ON THE USE OF THE WORD INCLUDABL E AND THE PHRASE UNDER THE ACT IN SECTION 14A AND WE ARE NOT PERSUAD ED TO ACCEPT THE EMPHASIS LAID OR THE INTERPRETATION OF TIRE SAME BY THE REVENUE. AN ASSESSMENT IN TERMS OF THE INCOME-TAX ACT IS SPECIF IC TO AN ASSESSMENT YEAR AND THE RELATED PREVIOUS YEAR. SECTION 4 OF TH E ACT WHICH IMPOSES THE CHARGE TO TAX READS THUS: '4. CHARGE OF INCOME-TAX.(1) WHERE ANY CENTRAL ACT ENACTS THAL INCOME- TAX SHALL BE CHARGED FOR ANY ASSESSMENT YEAR AT ANY RATE OR RATES INCOME- TAX AT THAT RATE OR THOSE RATES SHALL BE CHARGED FO R THAT YEAR IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS (INCLUDING PROV ISIONS FOR THE LEVY OF ADDITIONAL INCOME-TAX) OF THIS ACT IN RESPECT OF T HE TOTAL INCOME OF THE PREVIOUS YEAR OF EVERY PERSON: PROVIDED THAT WHERE BY VIRTUE OF ANY PROVISION OF T HIS ACT INCOME- TAX IS TO BE CHARGED IN RESPECT OF THE INCOME OF A PERIOD OTH ER THAN THE PREVIOUS YEAR INCOME-TAX SHALL BE CHARGED ACCORDINGLY.' THUS WHERE THE STATUTE INDENTED THAT INCOME SHALL BE RECOGNIZED FOR TAXATION IN RESPECT OF ANY PREVIOUS YEAR OTHER THAN THAT IMMEDIATELY PRECEDING THE RELEVANT ASSESSMENT YEAR THE PROVISI ON SHALL EXPRESSLY STATE SO. THE PROVISIONS OF SECTION 10 IN CHAPTER I II OF THE ACT DEALING WITH 'INCOMES NOT INCLUDED IN TOTAL INCOME 'COMMENCES WI TH THE PHRASE'. IN COMPUTING THE TOTAL INCOME OF A PREVIOUS YEAR ANY INCOME FALLING WITHIN ANY OF THE FOLLOWING CLAUSES SHALL NOT BE INCLUDED . . .' THE EXEMPTION EXTENDED TO DIVIDEND INCOME WOULD REL ATE ONLY TO TIRE PREVIOUS YEAR WHEN THE INCOME WAS EARNED AND NONE O THER AND CONSE- QUENTLY THE EXPENDITURE INCURRED IN CONNECTION THER EWITH SHOULD ALSO BE DEALT WITH IN THE SAME PREVIOUS YEAR. THUS BY APPL ICATION OF THE MATCHING CONCEPT IN A YEAR WHERE THERE IS NO EXEMPT INCOME THERE CANNOT BE A DIS- ALLOWANCE OF EXPENDITURE IN RELATION TO SUCH ASSUME D INCOME. (MADRAS INDUSTRIAL INVESTMENT CORPORATION LTD. V. CIT [1997 ] 225 ITR 802 (SC). THE LANGUAGE OF SECTION 14A(1) SHOULD BE READ IN TH AT CONTEXT AND SUCH THAT IT ADVANCES THE SCHEME OF THE ACT RATHER THAN DISTORT IT. IN CONCLUSION WE ARE OF THE VIEW THAT THE PROVISIO NS OF SECTION 14A READ WITH RULE 8D OF THE RULES CANNOT BE MADE APPLI CABLE IN A -VACUUM I.E. IN THE ABSENCE OF EXEMPT INCOME. THE QUESTION S OF LAW ARE ANSWERED ITA NO. 178(ASR)/2017 ASSESSMENT YEAR: 2012-13 8 IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEPARTMEN T AND THE APPEAL ALLOWED. NO COSTS. THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS . DLF LTD. WHILE DECIDING THE APPEAL FILED BY REVENUE AGAINST THE TR IBUNAL ORDER QUASHING THE ORDER U/S 263 HAS AGAIN HELD THAT WHERE THERE I S NO EXEMPT INCOME NO DISALLOWANCE CAN BE MADE U/S 14A OF THE ACT. IN THIS CASE THE ASSESSEE HAD EVEN RECEIVED SOME EXEMPT INCOME ALSO EVEN THEN THE HON'BLE COURT HELD THAT THE DISALLOWANCE U/S 14A WA S A DEBATABLE ISSUE AND THEREFORE THE VIEW TAKEN BY THE ASSESSING OFFIC ER WAS SUSTAINABLE ONE AND THEREFORE SECTION 263 WAS NOT APPLICABLE. F OR THE SAKE OF COMPLETENESS THE FINDINGS OF THE HON'BLE COURT ARE REPRODUCED BELOW: 4. IN ITA-236/2010 THE FACTS ARE THAT THE TRIBUNA L FOLLOWED ITS PREVIOUS ORDERS SETTING ASIDE THE REVISIONAL ORDER OF THE CI T. THE TRIBUNAL HAD TO CONSIDER THE CORRECTNESS OF THE ORDER MADE PURSUANT TO THE FRESH PROCEEDINGS DIRECTED BY THE CIT. THE TRIBUNAL MEREL Y FOLLOWED ITS PREVIOUS ORDER OBSERVING THAT THE AO WHILE GIVING EFFECT TO THE ORDER MADE BY THE CIT UNDER SECTION-263 HAD DISALLOWED THE PROPORTION ATE EXPENDITURE AND THAT SINCE THE REVISIONAL ORDER ITSELF HAD BEEN SET ASIDE THE APPEAL AGAINST THE AO'S ORDER ALSO HAD TO BE SET ASIDE. 5. IT IS A RGUED BY COUNSEL FOR THE REVENUE THAT THE TRIBUNAL FELL INTO ERROR IN NOT SA YING THAT SECTION-14-A MANDATES THE AO TO DETERMINE PROPORTIONATE EXPENDIT URE IN RELATION TO EXEMPT INCOME SUCH AS DIVIDEND INCOME. NEITHER THE ORDER NOR THE PROCEEDINGS REFLECTED ANY APPLICATION OF MIND TO TH IS MANDATORY PROVISION. IT WAS URGED IN THIS CONTEXT THAT THE OBSERVATIONS OF THE ITAT PROCEED ON THE ASSUMPTION THAT THE AO TOOK INTO ACCOUNT ALL TH E NECESSARY FACTORS AND HAD IMPLIEDLY ACCEPTED THE FACT THAT NO SUCH DEDUCT ION COULD BE MADE. IT WAS HIGHLIGHTED IN THIS CONTEXT THAT THE EXPRESSION 'PREJUDICIAL TO THE INTEREST OF REVENUE' HAS TO BE SEEN IN THE BACKGROU ND OF AN ERRONEOUS ORDER BY THE AO. ACCORDING TO SETTLED PRINCIPLES IT IS ONLY IN CASES WHERE TWO VIEWS ARE POSSIBLE THAT REVISIONAL ORDER UNDER SECTION-263 CANNOT BE MADE. COUNSEL RELIED UPON THE JUDGMENT OF THE SUPRE ME COURT REPORTED AS MALABAR INDUSTRIAL COMPANY LTD V. CIT 243 ITR 83 = (2002-TIOL-491- SC-IT) . LEARNED COUNSEL ALSO RELIED UPON THE QUESTIONNAIR E FURNISHED TO THE ASSESSE DATED 21.9.2004 WHICH DID NOT REFLECT A NY APPLICATION OF MIND AS FAR AS THE QUESTION OF SECTION-14A OR ITS APPLIC ABILITY WAS CONCERNED. IT WAS SUBMITTED THAT EVEN THE ORDER SHEET MERELY SHOW ED THAT A BREAKUP OF INTEREST AND DIVIDEND INCOME HAD BEEN SOUGHT ON 6.1 2.2004. IN THESE CIRCUMSTANCES THERE COULD NOT HAVE BEEN ANY ASSUMP TION THAT THE AO HAD EVER CONSIDERED THE QUESTION OF PROPORTIONATE EXPEN DITURE AND ACCEPTED THE ITA NO. 178(ASR)/2017 ASSESSMENT YEAR: 2012-13 9 ASSESSEE'S ARGUMENT. 6. LEARNED COUNSEL FOR THE ASS ESSEE EMPHASIZED THAT THE FACTS OF THE PRESENT CASE WOULD REVEAL THA T THE ASSESSEE HAD RECEIVED A SINGLE DIVIDEND CHEQUE OF RS. 6 93 69 4 02/-. THE MATERIALS ON RECORD CLEARLY SHOWED THAT THE AO HAD CALLED FOR PA RTICULARS AND HELD PROCEEDINGS ON A NUMBER OF OCCASIONS. THE MATERIALS WERE CLEARLY BEFORE HIM AS ALSO WAS IN THE NATURE OF INVESTMENT I.E. IN A SUBSIDIARY COMPANY FOR A PURPOSE OF BUSINESS. SUCH BEING A CASE THE Q UESTION OF THERE BEING ANY ERROR MUCH LESS ONE PREJUDICIAL TO THE INTEREST OF REVENUE DID NOT ARISE. 7. IT WAS ARGUED NEXT THAT THE TRIBUNAL'S ORDER SHO ULD NOT BE INTERFERED WITH BECAUSE IF ENQUIRIES ARE CONDUCTED BY THE COMM ISSIONER HE CANNOT GO INTO OR SCRUTINIZE THE QUESTION OF APPROPRIATENE SS OF THE PREVIOUS PROCEEDINGS BEFORE THE AO. IT WAS SUBMITTED IN THIS REGARD THAT THE JUDGMENT OF THIS COURT IN CIT V. M/S SUNBEAM AUTO L TD 332 ITR 167 = (2009-TIOL-552-HC-IT) SHOWS THAT THERE CAN BE NO ROVING AND FISHING ENQUIRY BY THE COMMISSIONER AND HE HAS TO MERELY CO NFINE HIMSELF TO THE MATERIALS ON RECORD OF THE PROCEEDINGS CALLED FOR B Y HIM. IN OTHER WORDS IF THE AO MAKES AN ASSESSMENT ACTING IN ACCORDANCE WIT H LAW THAT CANNOT BE BRANDED AS ERRONEOUS. RELIANCE WAS ALSO PLACED U PON THE JUDGMENT REPORTED AS CIT V. ANIL KUMAR SHARMA 335 ITR 72 (D EL) = (2010-TOIL-267- HC-DEL-IT) . IT WAS FURTHER ARGUED THAT WHEREVER TWO VIEWS ARE POSSIBLE THE COMMISSIONER IS NOT JUSTIFIED IN INVOKING THE P OWER OF REVISION UNDER SECTION-263. IN SUPPORT OF THIS CONTENTION THE ASS ESSEE'S COUNSEL RELIED UPON CIT V. MAX INDIA LTD. 295 ITR 282 (SC) = (200 7-TIOL-203-SC-IT) . IT WAS LASTLY URGED THAT ANY ORDER OF REVISION WHICH D OES NOT SPECIFY THE PRIMA FACIE ERROR IN THE ORDER OR APPROACH OF THE A O WOULD BE BEYOND JURISDICTION. FOR THIS PROPOSITION RELIANCE WAS PL ACED UPON COMMISSIONER OF WEALTH TAX V. PRITHVI RAJ AND COMPANY 199 ITR 4 24. 8. SECTION 263 TO THE EXTENT RELEVANT FOR THE PRESENT PURPOSES IS EX TRACTED BELOW; '263. (1) THE COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDING UNDER THIS ACT AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE HE MAY AFTER GIVING T HE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUS ING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY PASS SUCH ORDER THER EON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY INCLUDING AN ORD ER ENHANCING OR MODIFYING THE ASSESSMENT OR CANCELLING THE ASSESSM ENT AND DIRECTING A FRESH ASSESSMENT.' 9. IN MALABAR (SUPRA) THE SUPREME COURT EXPLAINED T HE SCOPE AND CONTENT OF REVISIONAL POWER OF COMMISSIONER UNDER SECTION 2 63 AS FOLLOWS: 'A BARE READING OF THIS PROVISION MAKES IT CLEAR TH AT THE PREREQUISITE TO EXERCISE OF JURISDICTION BY THE COMMISSIONER SUO MO TO UNDER IT IS THAT THE ORDER OF THE INCOME TAX OFFICER IS ERRONEOUS INSOFA R AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE COMMISSIONER HAS TO BE SATISFIED OF TWIN CONDITIONS NAMELY (I) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS; AND (II) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSENT - IF THE ORDER OF THE INCO ME TAX OFFICER IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS N OT ERRONEOUS BUT IS PREJUDICIAL TO THE REVENUE - RECOURSE CANNOT BE HAD TO SECTION 263(1) OF THE ACT. THE PROVISION CANNOT BE INVOKED TO CORRECT EAC H AND EVERY TYPE OF ITA NO. 178(ASR)/2017 ASSESSMENT YEAR: 2012-13 10 MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER ; IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACT ED. AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. IN THE SA ME CATEGORY FALL ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL J USTICE OR WITHOUT APPLICATION OF MIND. THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE REVENUE' IS NOT AN EXPRESSION OF ART AND IS NOT DEFINED IN T HE ACT. UNDERSTOOD IN ITS ORDINARY MEANING IT IS OF WIDE IMPORT I AND IS NOT CONFERRED TO LOSS OF TAX. THE SCHEME OF THE ACT IS TO LEVY AND COLLECT' TAX I N ACCORDANCE WITH THE PROVISIONS OF THE ACT AND THIS TASK IS ENTRUSTED TO THE REVENUE. IF DUE TO AN ERRONEOUS ORDER OF THE INCOME TAX OFFICER THE REVE NUE IS LOSING TAX LAWFULLY PAYABLE BY A PERSON IT WILL CERTAINLY BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE PHRASE 'PREJUDICIAL TO THE INTE RESTS OF THE REVENUE' HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER P ASSED BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF ASSESSING OFFICER CANNOT BE TREATED AS PREJUDICIAL TO THE INT ERESTS OF THE REVENUE FOR EXAMPLE WHEN AN INCOME TAX OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF R EVENUE; OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME TAX OFFICER HAS T AKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE INCOME TAX OFFICER IS UNSUSTAINABLE IN LAW.' IN CIT VS MAX INDIA LTD 295 ITR 282 (S.C) = (2007- TIOL-203-SC-IT) AFTER NOTICING THE JUDGMENT IN MALABAR THE SUPREME COURT APPLIED THE LAW DECLARED BY IT AND ALSO CLARIFIED THAT: 'THE PHRASE 'PREJUDICIAL TO THE INTEREST OF THE REV ENUE' IN SECTION 263 OF THE INCOME- TAX ACT 1961 HAS TO BE READ IN CONJUNC TION WITH THE EXPRESSION 'ERRONEOUS' ORDER PASSED BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFIC ER CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. FOR EXA MPLE WHEN THE ASSESSING OFFICER ADOPTS ONE OF TWO COURSES PERMISSIBLE IN LA W AND IT HAS RESULTED IN LOSS OF REVENUE OR WHERE TWO VIEWS ARE POSSIBLE AN D THE ASSESSING OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE REVENUE UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABL E IN LAW.' 10. IT IS THUS NOT MERE PREJUDICE TO THE REVENUE OR A MERE ERRONEOUS VIEW WHICH CAN BE REVISED UNDER SECTION 263. THERE SHOU LD (POST MAX INDIA) BE THE ADDED ELEMENT OF 'UNSUSTAINABILITY' IN THE ORDE R OF THE ASSESSING OFFICER WHICH CLOTHES THE COMMISSIONER WITH JURISD ICTION TO ISSUE NOTICE AND PROCEED TO MAKE APPROPRIATE ORDERS. 11. IN THIS CASE THE RECORD REVEALS THAT THE AO HAD ISSUED NOTICE AND HELD PRO CEEDINGS ON SEVERAL DATES (OF HEARING) BEFORE PROCEEDING TO FRAME THE A SSESSMENT. HE ADDED NEARLY RS. 2 CRORES TO THE INCOME AT THAT TIME. THE COMMISSIONER TOOK THE VIEW THAT THE ASSESSMENT ORDER DISCLOSED AN ERROR IN THAT THE DEDUCTION UNDER SECTION 14-A HAD NOT BEEN MADE. NOW WHILE TH E STATUTORY DIRECTION TO THE ASSESSING OFFICER TO CALCULATE PROPORTIONAT ELY THE EXPENDITURE WHICH AN ASSESSEE MAY INCUR TO OBTAIN DIVIDEND INCO ME FOR PURPOSES OF DISALLOWANCE CANNOT BE LOST SIGHT OF EQUALLY SUC H A REQUIREMENT HAS TO BE VIEWED IN THE CONTEXT AND CIRCUMSTANCES OF EACH GIV EN CASE. IN THE PRESENT ITA NO. 178(ASR)/2017 ASSESSMENT YEAR: 2012-13 11 CASE IT WAS REPEATEDLY EMPHASIZED THAT THE ASSESSE E DIVIDEND INCOME WAS CONFINED TO WHAT IT RECEIVED FROM INVESTMENT MA DE IN A SISTER CONCERN AND THAT ONLY ONE DIVIDEND WARRANT WAS RECEIVED. TH ESE FACTS IN THE OPINION OF THIS COURT WERE MATERIAL AND HAD BEEN GIVEN WEIGHTAGE BY THE TRIBUNAL IN ITS IMPUGNED ORDER. THERE IS NO DISPUTE THAT THE INVESTMENT TO THE SISTER CONCERN WAS NOT QUESTIONED; EVEN THE CO MMISSIONER HAS NOT SOUGHT TO UNDERMINE THIS ASPECT. EQUALLY THERE IS NO MATERIAL TO SAY THAT APART FROM THAT SINGLE DIVIDEND WARRANT ANY OTHER DIVIDEND INCOME WAS RECEIVED. FURTHERMORE THERE IS NOTHING ON RECORD T O SAY THAT THE ASSESSEE HAD TO EXPEND EFFORT OR SPECIALLY ALLOCATE RESOURC ES TO KEEP TRACK OF ITS INVESTMENTS ESPECIALLY DIVIDEND YIELDING ONES. IN THESE CIRCUMSTANCES IT CAN BE SAID THAT WHETHER TIP DEDUCTION UNDER SECTIO N 14-A WAS WARRANTED WAS A DEBATABLE FACT. IN ANY EVENT EVEN IF IT WERE NOT DEBATABLE THE ERROR BY THE AO IS NOT 'UNSUSTAINABLE'. POSSIBLY HE COULD HAVE TAKEN ANOTHER VIEW; YET THAT HE DID NOT DO SO WOULD NOT RENDER HIS OPINION AN UNSUSTAINABLE ONE WARRANTING EXERCISE OF SECTION 2 63. 12. FOR THE ABOVE REASONS THE QUESTION OF LAW IS A NSWERED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. CONSEQUENTL Y THE APPEALS FAIL AND ARE DISMISSED. THE AMRITSAR BENCH OF THE HON'BLE TRIBUNAL IN THE CASE OF DABWALI TRANSPORT CO. LTD. VS. DCIT VIDE ITS ORDER DATED JU NE 17 2016 HAD ALSO DECIDED THE SIMILAR ISSUE BY HOLDING AS UNDER: 32. IN THIS REGARD THE ID. COUNSEL FOR THE ASSESSE E HAS CONTENDED THAT THE ISSUE RESPECT TO DISALLOWANCE U/S 14A CANNOT BE RAI SED IN THE PROCEEDINGS 63 OF THE ACT. RELIANCE HAS BEEN PLACED ON CIT V. D LF LTD [2013] 350 ITR 214 TAXMAN 555/214 TAXMAN 91/31 TAXMANN.COM 158 (DE LHI) WHERE IT HAS BEEN HELD THAT TO MAKE A DISALLOWANCE U/S 14A POWERS U/S 263 CANNOT BE EXERCISED. IT HAS FURTHER BEEN SUBMITTED THAT SINCE DURING THE RELEVANT YEARS THE ASSESSEE DID NOT ENJOY ANY EXEM PT INCOME ON MERITS ALSO NO DISALLOWANCE WAS WARRANTED 4A. FOR THIS PR OPOSITION RELIANCE HAS BEEN PLACED ON THE FOLLOWING CASE (1) CIT V. LAKHANI MARKETING INC. [2014] 49 TAXMANN .COM 257/226 TAXMAN 45 PUNJ & HAR.) (2) CIT V. HOLCIM INDIA (P.) LTD [2015] 57 TAXMANN. COM 28 (DELHI) (3) CIT V. CORRTECH ENERGY (P) LTD. [2015] 372 ITR 97/[2014] 223 TAXMAN 130/45 TAXMANN.COM 116 (GUJ.) (4) CIT V. SHIVAM MOTORS(P.)LTD [2015]55TAXMANN.CO M 262/230TAXMAN 63 (ALL.) (5) CHEMINVEST LTD V. C1T-IV [2015] 378 ITR 33/234 TAXMAN 761/61 TAXMANN.COM 118 (DELHI) ITA NO. 178(ASR)/2017 ASSESSMENT YEAR: 2012-13 12 33. IT HAS BEEN CONTENDED THAT SO FAR AS REGARDS TH E ASSESSMENT YEARS 2008-09 TO 2011-12 THE ASSESSMENTS FOR THE SAID YE ARS HAVE BEEN FRAMED PRIOR TO 31.03.2012 WHEREAS THE NOTICES U/S 263 OF THE ACT HAD BEEN ISSUED MUCH AFTER THE STATUTORY PERIOD OF TWO YEARS FROM THE END OF THE PREVIOUS YEAR IN WHICH THE ASSESSMENT WAS FRAMED I .E. IN NOV 2015.THEREFORE ACCORDING TO THE ASSESSEE THE ISSU E OF DISALLOWANCE U/S 14A OF THE ACT OUGHT NOT TO HAVE BEEN RAISED BY HAS NOT BEEN DISCUSSED IN THE REASSESSMENT PROCEEDI NGS FOR ALL THESE YEARS. FOR THIS RELIANCE HAS BEEN PLACED ON CHEMIN VEST LTD (SUPRA) AND. CIT V. ALAGENDRAN FINANCE LTD.[ 2007] 293ITR 1/162 TAXMAN 465 (SC) AND CIT V. ICICI BANK LTD [2012] 343 ITR 74/212 TAX MAN 130/J2012] 19 TAXMANN.COM 142 (SC). 34. CONCERNING THE ASSESSMENT YEAR 2012-13 THE STA ND OF THE ASSESSEE IS THAT THE ISSUE WAS DISCUSSED IN DETAIL BY THE AO WH ILE PASSING THE ASSESSMENT ORDER. AN INQUIRY LETTER DATED 18.11.201 4 (APB-78) WAS ISSUED. THE ASSESSEE FILED REPLY DATED 17.12.2014 ( APB79 TO 97). THE AO MADE FULL APPLICATION OF MIND WHILE FRAMING THE AS SESSMENT. 35. THE ID. DR ON THE OTHER HAND HAS STRONGLY REL IED ON THE ORDER UNDER APPEALS. 36. IN THIS REGARD THE PROPOSITION SETTLED IN DLF LTD (SUPRA) IS THAT THE POWERS U/S 263 OF THE ACT CANNOT BE INVOKED FOR MAK ING DISALLOWANCE U/S 14A OF THE ACT. WHILE OBSERVING SO IT WAS HELD THA T IT IS NOT MERE PREJUDICE TO THE REVENUE OR A MERE ERRONEOUS VIEW WHICH CAN BE REVISED U /S 263 OF THE ACT AND THAT THERE SHOULD EXIST THE ADDED ELEME NT OF SUSTAINABILITY IN THE ORDER OF THE AO WHICH CLOTHES THE CIT (HERE T HE PR. CIT) WITH JURISDICTION TO ISSUE NOTICE AND PROCEED TO MAKE AP PROPRIATE ORDER. 37. BEFORE US NOTHING IS AVAILABLE EITHER IN THE I MPUGNED ORDERS OR BY WAY OF ANY OTHER MATERIAL ON RECORD TO SUGGEST THA T THE ASSESSMENT ORDERS WERE UNSUSTAINABLE IN LAW. AS OBSERVED IN DL F LTD (SUPRA) POSSIBLY THE AO COULD HAVE TAKEN A VIEW DIFFERENT FROM THE ONE TAKEN BY HIM BUT HE DID NOT DO SO AND THIS WOULD NOT RENDER HIS OPINION AS AN UNSUSTAINABLE OPINION WARRANTING EXERCISE OF REVISI ONAL POWERS. THE UNDISPUTED STAND OF THE ASSESSEE IS THAT IT DID NOT EARN ANY EXEMPT INCOME DURING THE RELEVANT YEARS. THEREFORE ALSO N O DISALLOWANCE U/S 14A WAS CALLED FOR. THE DECISION IN LAKHANI MARKETING I NC. (SUPRA) HOLCIM INDIA (P.) LTD (SUPRA) CORRTECH ENERGY (P) LTD (SU PRA) AND SHIVAM MOTORS (P.) LTD (SUPRA) ARE TO THE SAME EFFECT. WE DO NOT DIFFER WITH LD. DR AS REGARDS HIS RELIAN CE IN THE CASE OF JINDAL STEEL AND POWER LTD. DECIDED BY HON'BLE PUNJ AB & HARYANA HIGH COURT HOLDING THAT DEPARTMENTAL OFFICERS ARE BOUND TO FOLLOW DEPARTMENTAL CIRCULARS BUT THE ISSUE HERE IS AS TO WHETHER THE ORDER PASSED BY ASSESSING OFFICER WAS ERRONEOUS AND PREJU DICIAL TO THE INTEREST ITA NO. 178(ASR)/2017 ASSESSMENT YEAR: 2012-13 13 OF REVENUE WHERE IN THE ABSENCE OF EXEMPT INCOME TH E ASSESSING OFFICER DID NOT MAKE ANY DISALLOWANCE. IN OUR OPINION SUCH ORDER IS NOT PREJUDICIAL TO THE INTEREST OF REVENUE AS NO DISALL OWANCE U/S 14A WAS WARRANTED IN THE ABSENCE OF EXEMPT INCOME. THE OTHER CASE LAW RELIED ON BY LD. DR IS NOT APPL ICABLE AS IN THAT CASE THE HON'BLE COURT HAS DECIDED THE ISSUE OF APP LICABILITY OF PROVISIONS OF RULE 8D WHEREIN THE ASSESSING OFFICER IS NOT SAT ISFIED. THEREFORE IN VIEW OF THE ABOVE FACTS AND CIRCUMST ANCES AND IN VIEW OF THE JUDICIAL PRECEDENT WE FIND THAT THE ORDER P ASSED BY LD. CIT U/S 263 IS NOT SUSTAINABLE AND THEREFORE IT IS QUASHED. 6. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES AND KEEPING IN VIEW THE JUDICIAL PRECEDENTS WE QUASH THE ORDER PASSED B Y LD. CIT U/S 263 OF THE ACT. 7. IN NUTSHELL THE APPEAL FILED BY ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.11.2017 SD/- SD/- (N. K. CHOUDHRY) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30.11.2017. /GP/SR. PS . COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A) (4) THE CIT (5) THE SR DR I.T.A.T. ITA NO. 178(ASR)/2017 ASSESSMENT YEAR: 2012-13 14 TRUE COPY BY ORDER