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| The Tax Publishers2020 TaxPub(DT) 3970 (Karn-HC) : (2020) 275 TAXMAN 0408 INCOME TAX ACT, 1961
Section 263
Where assessee had filed all the details before AO who accepted the contention of the assessee that no expenditure was attributable to exempt income during the relevant assessment year and AO had taken one of the plausible views in allowing the claim of assessee and therefore, CIT could not have set aside order of assessment merely on the ground of inadequacy of enquiry, the order passed by CIT was not sustainable in law.
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Revision under section 263 - Erroneous and prejudicial order - AO took one of the possible view -
Assessee was engaged in business of investment and sale of filtration, equipment and spares and service. AO by an Order without considering the expenditure which was not allowable under Section 14A proceeded to complete the assessment. CIT, on examination of the records, found that assessee had earned dividend income, which was exempt from tax. AO without examining the quantum of expenditure incurred by the assessee for earning the exempt income, proceeded to complete the assessment. CIT issued a notice under section 263 to assessee and held that non-consideration of disallowable expenditure under section was erroneous and prejudicial to the interest of the revenue. Held: CIT had held that enquiry conducted by AO was inadequate and had assumed the revisional jurisdiction. Assessee had filed all the details before AO who accepted the contention of assessee that no expenditure was attributable to exempt income during the relevant assessment year. Thus, while recording the aforesaid finding, AO had taken one of the plausible views in allowing the claim of assessee and therefore, the CIT could not have set aside the order of assessment merely on the ground of inadequacy of enquiry, the order passed by CIT was not sustainable in law.
REFERRED :
FAVOUR : In assessee's favour
A.Y. : 2007-08
IN THE KARNATAKA HIGH COURT
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