Reliance Brands Limited vs Principal Commissioner of Income Tax

Parties Involved

Facts Summary

The assessment for the Assessment Year 2018-19 was framed on the Appellant under Section 143(3) of the Income Tax Act, 1961 on 09/05/2021. Subsequently, the Principal Commissioner of Income Tax (PCIT) formed a view that disallowance under Section 14A should have been made in the case of the Assessee since the Assessee had made substantial investment in shares during the relevant previous year which can generate exempt income. The fact that no exempt income has been earned during the relevant previous year was not relevant for the purpose of making disallowance under Section 14A of the Act. Therefore, notice under Section 263(1) of the Act was issued to the Appellant on 12/09/2023. The Appellant filed a reply letter dated 22/09/2023, objecting to the proposed exercise of power of revision by the PCIT under Section 263 of the Act. However, the PCIT rejected the contentions raised and passed an order, dated 21/03/2024, setting aside the Assessment Order, dated 09/05/2021, passed under Section 143(3) of the Act. Being aggrieved, the Appellant has preferred the present appeal before the Tribunal.…

Legal Issues

• 1. Whether the order passed by the Learned PCIT under Section 263 of the Act is valid?
• 2. Whether disallowance under Section 14A should be made even in the absence of earning of exempt income?

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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