Black Rock Financial Services Pvt. Ltd. vs. The Principal Commissioner of Income Tax-1, Ahmedabad

Parties Involved

Facts Summary

The assessee, Black Rock Financial Services Pvt. Ltd., filed an appeal against the order passed by the Principal Commissioner of Income Tax, Ahmedabad for the Assessment Year 2018-19. The assessee raised issues regarding the initiation of proceedings under Section 263, the observation that the Assessing Officer passed an order under Section 143(3) without proper verification, and the jurisdiction of the Principal Commissioner of Income Tax to pass the order under Section 263. The assessee filed a return of income on 06.09.2018 declaring a total loss of Rs.11,80,550/-. The assessment was completed on 22.02.2021 determining total income at Rs.2,07,60,084/-. The Principal Commissioner of Income Tax observed that the assessee accepted short term borrowing of Rs.1,72,76,00,000/- from Fortune Broking Intermediary Pvt. Ltd. However, the assessee did not show any interest income in Profit & Loss Account and, therefore, the proportionate disallowance of interest expenditure should have been made under Section 36(1)(iii) of the Act. The Principal Commissioner of Income Tax further observed that the assessee had non-current investments of Rs.25,00,00,000/- in shares and the assessee earned exempt income of Rs.2,11,807/-. However, the disallowance under Section 14A read with Rule 8D was made during the current Assessment Year to the extent of exempt income i.e. Rs.2,11,807/- and, therefore, the Assessing Officer should have applied the amended provisions of Section 14A read with Rule 8D.…

Legal Issues

• 1. The Ld. Principal Commissioner of Income Tax erred in initiating proceedings under Section 263.
• 2. The Ld. Principal Commissioner of Income Tax erred in observing that the Assessing Officer has passed an order under Section 143(3) without proper verification and it is erroneous and prejudicial to the interest of revenue.
• 3. The Ld. Principal Commissioner of Income Tax has no jurisdiction to pass the order under Section 263.

Judgment Outcome

Decided in favour of Assessee.

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