Ramco Industries Ltd. vs. The Asst. Commissioner of Income Tax

Parties Involved

Facts Summary

The assessee-company filed its return of income on 03.10.2018 declaring total income of Rs.15,38,59,210/-. The assessment was taken up for scrutiny and the Assessing Officer (A.O) issued a show cause notice proposing disallowance of Rs. 2,32,34,210/- under section 14A of the Income-tax Act, 1961 (hereinafter “the Act”) as per Rule 8D of the Income tax Rules, 1962 (hereinafter “the Rules”). The A.O passed an order under section 143(3) of the Act making disallowance of Rs. 1,98,74,810/-. The assessee filed an appeal before the Commissioner of Income Tax (Appeals) (CIT(A)) on 30.04.2021 objecting the disallowance made under section 14A of the Act. Meanwhile, the Principal Commissioner of Income Tax (PCIT) issued a show-cause notice proposing revision under section 263 of the Act on the same issue to re-work the disallowance under section 14A of the Act based on the fair value of investment as reflected in the balance sheet of the company as per the formula in Rule 8D(2). The assessee objected to the proposal raising the ground that the same subject matter of disallowance was pending before the CIT(A). The PCIT rejected the assessee’s objection and held the order passed by the A.O was erroneous in so far as it was prejudicial to the interest of Revenue as the A.O had taken the cost of investment instead of considering the full value of investment. The assessee is in appeal against the order of PCIT on the issue of jurisdiction as this issue is pending before the CIT(A).…

Legal Issues

• 1. Whether the Principal Commissioner of Income Tax (PCIT) has jurisdiction to invoke revisionary power under section 263 of the Act when the subject matter of the revision, namely disallowances under section 14A of the Act as per Rule 8D, was pending before the Commissioner of Income Tax (Appeals) (CIT(A)).

Judgment Outcome

Decided in favour of Assessee.

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