FUTURE CORPORATE RESOURCES LTD.(FORMERLY KNOWN AS SIMPLETON INVESTRADE PVT. LTD.), MUMBAI V. PR.CIT -9, MUMBAI

ITA 3061/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1228 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2011-2012
• Appeal Filed On: 27-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S PADMAJA
• Keywords: Business income; Business expenditure; Opportunity of being heard; Principle of natural justice; Earning of tax free income; Assessment record; Commercial expediency
• Section: 143(3); 14A; 6; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'F' BENCH, MUMBAI BEFORE SHRI JASON P. BOAZ, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA NO. 3061/MUM/2016 (ASSESSMENT YEAR: 2011-12) FUT U RE CORPORATE RESOURCES LTD. VS. PRINCIPAL CIT 9 (FORMERLY SIMPLETON INVESTRADE P. LTD.) KNOWLEDGE HOUSE, SHYAM NAGAR OFF JOGESHWARI VIKROLI LINK RD. JOGESHWARI (E), MUMBAI 400060 2 ND FLOOR, ROOM NO. 214 AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400020 PAN AAJCS3979E APPELLANT RESPONDENT APPELLANT BY: SHRI VIPUL JOSHI & MS. DINKLE HARIYA RESPONDENT BY: MS. S. PADMAJA DATE OF HEARING: 07.04.2017 DATE OF PRONOUNCEMENT: 12.04.2017 O R D E R PER JASON P. BOAZ, A.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE PRINCIPAL CIT 9, MUMBAI PASSED UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') VIDE ORDER DATED 14.03.20 16 FOR A.Y. 2011-12. 2. THE FACTS OF THE CASE, BRIEFLY, ARE AS UNDER: - 2.1 THE ASSESSEE, A COMPANY ENGAGED IN THE BUSINESS OF MEDIA AND ADVERTISEMENT AGENCY, MANAGEMENT CONSULTANCY SERVIC ES AND PRE-PAID MOBILE SERVICES, FILED ITS RETURN OF INCOME FOR A.Y . 2011-12 ON 29.09.2011 DECLARING TOTAL INCOME OF ` 3,43,65,050/-. THE RETURN OF INCOME WAS PROCESSED UNDER SECTION 143(1) OF THE ACT AND THE CASE WAS SU BSEQUENTLY TAKEN UP FOR SCRUTINY. THE ASSESSMENT WAS COMPLETED UNDER SECTIO N 143(3) OF THE ACT VIDE ORDER DATED 24.03.2014 WHEREIN THE ASSESSEES INCOM E UNDER THE NORMAL PROVISIONS WAS DETERMINED AT ` 6,79,93,050/-; IN VIEW OF THE DISALLOWANCE OF ` 3,36,28,000/- UNDER SECTION 14A OF THE ACT R.W. RUL E 8D(2) (III) OF THE I.T. RULES 1962 (IN SHORT THE RULES). ON APPE AL, THE LEARNED CIT(A) ITA NO. 3061/MUM/2016 FUTRE CORPORATE RESOURCES LTD. 2 UPHELD THE DISALLOWANCE MADE BY THE ASSESSING OFFIC ER (AO) UNDER SECTION 14A R.W. RULE 8D(2)(III) OF THE RULES. WHILE MAKING THE AFORESAID DISALLOWANCE UNDER RULE 8D(2)(III), THE AO AT PARA 4.3 OF THE OR DER OF ASSESSMENT, AFTER CONSIDERING THE ASSESSEES DETAILED SUBMISSION/ EXP LANATIONS ALSO HELD THAT NO DISALLOWANCE OF INTEREST EXPENDITURE CLAIMED IS CALLED FOR UNDER SECTION 14A R.W. RULE 8D AS STRATEGIC INVESTMENT BY THE AS SESSEE IN ASSOCIATE AND SUBSIDIARY CONCERNS ACCOUNT FOR APPROXIMATELY 96% O F INVESTMENTS MADE; FROM WHICH BUSINESS INCOME ARISES TO THE ASSESSEE A ND AS THE SAME HAVE BEEN UTILISED FOR BUSINESS PURPOSES OF THE ASSESSEE . 3. SUBSEQUENTLY, THE PRINCIPAL CIT -9, MUMBAI INITIATE D REVISIONARY PROCEEDINGS UNDER SECTION 263 OF THE ACT BY ISSUE O F SHOW CAUSE NOTICE DATED 16.12.2015 STATING THAT WHILE THE AO HAD DISA LLOWED AN AMOUNT OF ` 3,36,28,000/- UNDER SECTION 14A R.W. RULE 8D(2)(III ) OF THE RULES, THE AO HAD NOT WORKED OUT DISALLOWANCE UNDER RULE 8D(2)(II ) OF THE RULES THOUGH INTEREST EXPENSES WERE DEBITED TO THE PROFIT & LOSS ACCOUNT. IN THE SAID SHOW CAUSE NOTICE IT WAS FURTHER STATED THAT DISALL OWANCE UNDER RULE 8D(2)(II) IS TO BE MADE IN THE CASE ON HAND AND THA T IN VIEW OF THE AOS FAILURE TO DO SO, THE ORDER OF ASSESSMENT PASSED UN DER SECTION 143(3) OF THE ACT VIDE ORDER DATED 24.03.2014 IS ERRONEOUS AND PR EJUDICIAL TO THE INTERESTS OF REVENUE WITHIN THE MEANING OF THE PROV ISIONS OF SECTION 263 OF THE ACT. IN RESPONSE TO THE SHOW CAUSE NOTICE DATED 16.12.2015, THE ASSESSEE FILED WRITTEN SUBMISSION BEFORE THE LEARNE D PRINCIPAL CIT ON 06.01.2016 AND 22.02.2016 OBJECTING TO THE REVISION PROCEEDINGS INITIATED, PUTTING FORTH ARGUMENTS AND CITING VARIOUS JUDICIAL PRONOUNCEMENTS AND REQUESTED THE LEARNED PRINCIPAL CIT TO DROP THE PRO CEEDINGS INITIATED UNDER SECTION 263 OF THE ACT. THE ASSESSEES ARGUMENTS/SU BMISSIONS, HOWEVER, DID NOT FIND FAVOUR WITH THE LEARNED PRINCIPAL CIT AND HE PROCEEDED TO PASS THE IMPUGNED ORDER OF REVISION UNDER SECTION 263 OF THE ACT DATED 14.03.2016 HOLDING THAT THE ORDER OF ASSESSMENT PAS SED BY THE AO UNDER SECTION 143(3) OF THE ACT DATED 24.03.2014 TO BE ER RONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE AND ACCORDINGLY SET ASI DE/CANCELLED THE SAME, DIRECTING THE AO TO FRAME A FRESH ASSESSMENT ORDER, AFTER DETERMINING IN ACCORDANCE WITH LAW AND RELEVANT JUDICIAL PRONOUNCE MENTS, THE HEAD UNDER ITA NO. 3061/MUM/2016 FUTRE CORPORATE RESOURCES LTD. 3 WHICH THE INTEREST DEBITED IN THE PROFIT & LOSS ACC OUNT IS ALLOWABLE AND/OR CONSIDERING THE DISALLOWANCE, IF ANY, REQUIRED TO B E MADE IN DETERMINING THE TOTAL INCOME OF THE ASSESSEE UNDER SECTION 14A OF THE ACT R.W. RULE 8D(2)(II) OF THE RULES. 4.1 AGGRIEVED BY THE ORDER OF THE PRINCIPAL CIT-9, MUMBAI PASSED UNDER SECTION 263 OF THE ACT, THE ASSESSEE HAS PREFERRED THIS APPEAL RAISING THE FOLLOWING GROUNDS: - 1. BREACH OF THE PRINCIPLES OF NATURAL JUSTICE 1.1 THE LEARNED COMMISSIONER OF INCOME - TAX - 9, M UMBAI ['LD. CIT'], ERRED IN FRAMING THE REVISION ORDER U/S. 263 OF THE INCOME - TAX ACT, 1961 ['THE ACT'] BY NOT GIVING PROPER, SUF FICIENT AND EFFECTIVE OPPORTUNITY OF BEING HEARD TO THE APPELLA NT. 1.2 IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCU MSTANCES OF THE CASE, AND IN LAW, THE ORDER IS REQUIRED TO BE HELD AS BAD AND ILLEGAL IN BREACH OF THE PRINCIPLES OF NATURAL JUST ICE, AS WELL AS NON-APPLICATION OF MIND TO THE FACTS AND THE CONTEN TIONS BROUGHT ON RECORD BY THE APPELLANT. 2. REVISION ILLEGAL 2.1 THE LD. CIT ERRED IN PASSING THE ORDER U/S. 263 OF THE ACT, REVISING THE ASSESSMENT ORDER PASSED BY THE A.O. U/ S. 143 (3) OF THE ACT. 2.2 IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCU MSTANCES OF THE CASE, AND IN LAW, THE ORDER IS BAD, ILLEGAL AND VOI D AS NECESSARY PRE - CONDITIONS FOR INITIATING THE REVISION PROCEE DING AS WELL AS THE COMPLETION THEREOF WERE NOT FULFILLED. 2.3 WITHOUT PREJUDICE TO THE GENERALITY OF THE ABOV E, THE CIT FAILED TO APPRECIATE THAT: (I) THE ORDER WHICH HE WAS SEEKING TO REVISE HAD AL READY MERGED WITH THE APPELLATE ORDER AND, ACCORDINGLY, W AS NOT THE 'RECORD' WITHIN THE MEANING OF SECTION 263 OF T HE ACT; (II) IN ANY CASE, THE ASSESSMENT ORDER FRAMED WAS N OT 'ERRONEOUS' WITHIN THE MEANING OF SECTION 263 OF TH E ACT; AND (III) THE ASSESSMENT ORDER WAS NOT 'PREJUDICIAL TO THE INTEREST OF THE REVENUE' WITHIN THE MEANING OF SECTION 263 OF T HE ACT. 2.4 THE LD. CIT ERRED IN HOLDING THAT THE A.O. HAD FAILED TO MAKE DISALLOWANCE OF INTEREST U/S. 14A OF THE ACT READ W ITH RULE 8D OF THE RULES AND, THEREFORE, THE ORDER OF THE A.O. WAS ERRONEOUS AND JUDICIAL TO THE INTEREST OF THE REVENUE. ITA NO. 3061/MUM/2016 FUTRE CORPORATE RESOURCES LTD. 4 2.5 THE LD. CIT ERRED IN GIVING DIRECTION TO THE A. O. TO CONSIDER THE ISSUE OF THE DISALLOWABLE U/S. 14A OF THE ACT READ WITH RULE 8D (II) OF THE INCOME TAX RULES, 1962 ['THE RULES']. 2.6 IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCU MSTANCES OF THE CASE, AND IN LAW, NO REVISION U/S. 263 OF THE ACT W AS CALLED FOR. ON MERITS 3.1 THE LD. CIT FAILED TO APPRECIATE THAT: (I) THE INTEREST PAYMENT WAS FULLY ALLOWABLE U/S. 3 6 (1) (III) OF THE ACT; AND (II) EVEN ASSUMING AND OTHERWISE ALSO, JUST BECAUSE THE INTEREST EXPENSES IS ALLOWABLE U/S. 57 (III) OF THE ACT, THERE IS NO AUTOMATIC APPLICATION OF SECTION 14A OF THE A CT. 3.2 IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCU MSTANCES OF THE CASE, AND IN LAW, NO SUCH REVISION WAS CALLED FOR E VEN ON MERITS ALSO. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, DELETE OR MODIFY ALL OR ANY THE ABOVE GROUND AT THE TIME OF HEARING. 4.2.1 THE LEARNED A.R. OF THE ASSESSEE ARGUED AND C ONTENDED THAT THE LEARNED PRINCIPAL CIT HAD ERRONEOUSLY AND ILLEGALLY INVOKED THE REVISIONARY JURISDICTION UNDER SECTION 263 OF THE ACT. ACCORDIN G TO THE LEARNED A.R., A PERUSAL OF PARAS 4 TO 4.2 OF THE ORDER OF ASSESSMEN T, TO WHICH HE DREW THE ATTENTION OF THE BENCH, WOULD ESTABLISH THAT THE EX ERCISE OF SCRUTINY PROCEEDINGS WAS ALMOST ENTIRELY AND IN DETAIL DEVOT ED TO THE CONSIDERATION OF THE ISSUE OF THE DISALLOWANCE UNDER SECTION 14A R.W. RULE 8D TO BE MADE IN THE CASE ON HAND FOR THE YEAR UNDER CONSIDERATIO N. IT WAS SUBMITTED THAT DETAILS CALLED BY THE AO WERE FILED BY THE ASS ESSEE, INQUIRIES THEREON WERE MADE BY THE AO SPECIFICALLY WITH REGARD TO THE ISSUE OF DISALLOWANCE UNDER SECTION 14A R.W. RULE 8D AND MUCH OF THIS FIN DS MENTION IN THE ORDER OF ASSESSMENT SOUGHT TO BE REVISED. IT WAS FU RTHER SUBMITTED THAT DETAILS OF INVESTMENT IN ASSOCIATE AND SUBSIDIARY C ONCERNS AS PROMOTERS WHICH AMOUNTED TO ALMOST 96% WERE EXAMINED ALONGWIT H REASONS FOR SUCH INVESTMENT; AS WAS THE DETAILS OF BUSINESS TRANSACT IONS BETWEEN THESE CONCERNS AND THE ASSESSEE RESULTING IN INCOME TO TH E ASSESSEE. THIS, IT IS CONTENDED, CLEARLY ESTABLISHED THE FACT THAT THE IN VESTMENTS IN GROUP/SUBSIDIARY CONCERNS ARE STRATEGIC INVESTMENTS , MADE OUT OF COMMERCIAL EXPEDIENCY AND NOT FOR EARNING OF PROFIT S; WERE MADE SOLELY FOR ITA NO. 3061/MUM/2016 FUTRE CORPORATE RESOURCES LTD. 5 THE PURPOSE OF ITS BUSINESS AND THEREFORE THE AO HE LD THAT THE INTEREST INCURRED IS TO BE EXCLUDED FROM THE AMBIT OF DISALL OWANCE UNDER SECTION 14 R.W. RULE 8D(2)(II). IT IS SUBMITTED THAT THE ABOVE ESTABLISHED BEYOND DOUBT THAT THE AO HAS EXAMINED AND VERIFIED IN DETAIL THE ASPECT OF DISALLOWANCE UNDER SECTION 14A R.W. RULE 8D(2)(II) OF THE RULES, BEFORE REACHING THE CONCLUSION AND RENDERING THE FINDING THAT NO DISALL OWANCE WAS CALLED FOR FROM INTEREST, AS ALMOST THE ENTIRE INVESTMENT WAS MADE IN ASSOCIATE AND SUBSIDIARY CONCERNS FOR BUSINESS PURPOSES OF THE AS SESSEE. IT IS AFTER COMPLETE EXAMINATION OF THE ABOVE IN DETAIL THAT HE REJECTED THE ASSESSEES CLAIM THAT IT HAD NOT INCURRED ANY EXPENDITURE FOR EARNING OF EXEMPT INCOME AND MADE THE DISALLOWANCE OF ` 3,36,28,000/- UNDER SECTION 14A OF THE ACT R.W. RULE 8D(2)(III) OF THE RULES. THEREFOR E, IT IS CLEAR THAT THE AO HAS DULY APPLIED HIS MIND TO THE APPLICABILITY OF R ULE 8D(2) AND HAD ARRIVED AT DEFINITE CONCLUSIONS THAT DISALLOWANCE W AS NOT CALLED FOR UNDER RULE 8D(2)(II), BUT WAS CALLED FOR UNDER RULE 8D(2) (III) OF THE RULES. 4.2.2 ACCORDING TO THE LEARNED A.R. A PERUSAL OF TH E SHOW CAUSE NOTICE INDICATES THAT PROCEEDINGS UNDER SECTION 263 OF THE ACT WERE INITIATED ON THE BASIS OF THE RECORDS OF ASSESSMENT AND DOES NOT ALLEGE THAT THE ASSESSMENT RECORDS, DETAILS/EXPLANATIONS FILED BY T HE ASSESSEE WERE INSUFFICIENT, INADEQUATE OR NOT EXISTENT FOR THE PU RPOSE OF CONSIDERING THE ISSUE OF DISALLOWANCE UNDER SECTION 14A R.W. RULE 8 D OF THE RULES. THERE IS NOT EVEN A WHISPER IN THE IMPUGNED ORDER ABOUT THER E BEING NO INQUIRY OR INADEQUATE INQUIRY ON THE PART OF THE AO OR ANY LAP SE ON HIS PART, EITHER IN THE SHOW CAUSE NOTICE OR IN THE IMPUGNED ORDER PASS ED UNDER SECTION 263 OF THE ACT. IN FACT IN THE IMPUGNED ORDER ALSO, IT APPEARS THAT NO FURTHER INQUIRY OR VERIFICATION WAS REQUIRED BY THE LEARNED PRINCIPAL CIT AND HE PROCEEDED DIRECTLY TO CONCLUDE ON THE BASIS OF THE VERY SAME RECORDS THAT DISALLOWANCE UNDER RULE 8D(2)(II) OF THE RULES WAS CALLED FOR; WITHOUT ASSIGNING ANY REASONS WHY SUCH DISALLOWANCE WAS CAL LED FOR, AS IF IT WAS TO BE APPLIED AUTOMATICALLY WITHOUT HAVING REGARD TO T HE PARTICULAR FACTS OF THE CASE. ITA NO. 3061/MUM/2016 FUTRE CORPORATE RESOURCES LTD. 6 4.2.3 IT HAS BEEN CONTENDED THAT THE IMPUGNED ORDER UNDER SECTION 263 OF THE ACT IS BAD IN LAW, AS THE LEARNED PRINCIPAL CIT HAS TRAVELLED BEYOND THE ISSUE ON THE BASIS OF WHICH THE SHOW CAUSE NOTICE W AS ISSUED. AS CAN BE SEEN FROM THE IMPUGNED ORDER, THE LEARNED PRINCIPAL CIT HAS TAKEN A TOTALLY NEW GROUND, I.E. THE APPLICABILITY OF THE P ROVISIONS OF SECTION 36(I)(III)/SECTION 57(III) OF THE ACT; OF WHICH THE RE WAS NOT EVEN A DIRECT OR INDIRECT MENTION IN THE SHOW CAUSE NOTICE DATED 16. 12.2015 OR IN THE COURSE OF REVISION PROCEEDINGS. THIS, THE LEARNED A .R. ARGUES, IS CLEARLY CONTRARY TO THE SETTLED LEGAL POSITION THAT A REVIS ION ORDER CANNOT BE PASSED ON AN ISSUE DIFFERENT FROM THE ISSUE MENTIONED IN T HE SHOW CAUSE NOTICE. IN SUPPORT OF THIS PROPOSITION, THE LEARNED A.R., I NTER ALIA, PLACED RELIANCE ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS: - (I) CIT VS. SMT. R.G. UMARANEE (2003) 265 ITR 507 ( MAD) (II) CIT VS. CONTIMETERS ELECTRICALS P. LTD. (2009) 317 ITR 249 (DEL) (III) COLORCRAFT VS. INCOME TAX OFFICER (2007) 105 ITD 599 (MUM) (IV) CIT VS. G.K. KABRA COOPERATIVE INDUSTRIAL ESTA TE (1995) 211 ITR 336 (AP) 4.2.4 THE LEARNED A.R. SUBMITTED THAT THE RELIANCE PLACED BY THE LEARNED PRINCIPAL CIT ON THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. SUJANI TEXTILES P. LTD. (1985) 151 ITR 6 53 (MAD) IS NOT TENABLE AS IT IS CLEARLY DISTINGUISHABLE ON FACTS FROM THE FAC TS ON HAND. IT WAS A CASE WHERE THE ASSESSEE THEREIN HAD ADVANCED SOME AMOUNT TO A BROKER, WHO IN TURN LOANED IT TO A DIRECTOR OF THE ASSESSEE COMPAN Y. THE ASSESSEE STOPPED RECEIVING INTEREST INCOME ON SUCH AMOUNT. IT WAS IN THAT FACTUAL CIRCUMSTANCES THAT THE CLAIM OF THE ASSESSEE FOR DE DUCTION OF THE INTEREST EXPENSES ON THE AMOUNT BORROWED TO GIVE SUCH LOAN W AS HELD TO BE DISALLOWABLE BOTH UNDER THE HEAD BUSINESS INCOME AS WELL AS UNDER THE ALTERNATE CLAIM UNDER SECTION 57(II) OF THE ACT. IT IS SUBMITTED THAT THE FACTS AND ISSUES OF THE ASSESSEE IN THE CASE ON HAND ARE TOTALLY DIFFERENT. 4.2.5 THE LEARNED A.R. OF THE ASSESSEE FURTHER SUBM ITS THAT NO REVISION UNDER SECTION 263 OF THE ACT IS PERMISSIBLE BY CIT IF ENQUIRY HAS ALREADY BEEN CONDUCTED BY THE AO IN THE COURSE OF ASSESSMEN T PROCEEDINGS; AS HAS ITA NO. 3061/MUM/2016 FUTRE CORPORATE RESOURCES LTD. 7 BEEN CARRIED OUT BY THE AO IN THE CASE ON HAND. IN THE CASE ON HAND IT IS EVIDENT FROM THE ORDER OF ASSESSMENT THAT THE AO CO NDUCTED ENQUIRIES IN RESPECT OF DISALLOWANCE TO BE MADE UNDER SECTION 14 A R.W. RULE 8D OF THE RULES AND HAS APPLIED HIS MIND TO THIS ISSUE. IT IS WELL SETTLED POSITION THAT IF SOME INQUIRY HAS BEEN MADE BY THE AO IN THE ASSE SSMENT PROCEEDINGS, EVEN IF INADEQUATE, THAT CANNOT CLOTHE THE CIT WITH JURISDICTION UNDER SECTION 263 OF THE ACT MERELY BECAUSE HE CAN FORM A DIFFERENT OPINION IN THE MATTER. IN SUPPORT OF THE PROPOSITION THAT, SIN CE THE AO HAS MADE INQUIRIES IN THE COURSE OF ASSESSMENT PROCEEDINGS I N RESPECT OF THE DISALLOWANCE TO BE MADE UNDER SECTION 14A R.W. RULE 8D OF THE RULES AND APPLIED HIS MIND TO RENDER FINDINGS THAT NO DISALLO WANCE WAS CALLED FOR IN RESPECT OF INTEREST EXPENDITURE ON INVESTMENTS WITH GROUP/SUBSIDIARY CONCERNS WHICH WAS FOR BUSINESS PURPOSES, BUT DISAL LOWANCE WAS CALLED FOR UNDER RULE 8D(2)(III) OF THE RULES, THE LEARNED CIT COULD NOT ASSUME JURISDICTION UNDER SECTION 263 OF THE ACT MERELY BE CAUSE HE HAD A DIFFERENT OPINION IN THE MATTER. RELIANCE WAS, INTER ALIA, PL ACED ON: - (I) SUNBEAM AUTO LTD. (2011) 332 ITR 167 (DEL) (II) CIT VS. ANIL KUMAR SHARMA (2011) 335 ITR 83 (D EL) (III) CIT VS. NEW DELHI TELEVISION LTD. (2014) 360 ITR 44 (DEL) 4.26 IT WAS FURTHER ARGUED THAT WITHOUT PREJUDICE T O THE MAIN OBJECTIONS, THE PROVISIONS OF SECTION 14A AND SECTION 36(I)(III ) OF THE ACT ARE MUTUALLY EXCLUSIVE. IN AS MUCH AS, TO THE EXTENT INTEREST EX PENDITURE IS FOUND TO BE INCURRED NOT FOR THE PURPOSE OF BUSINESS, BUT INCUR RED FOR THE PURPOSE OF EARNING TAX FREE INCOME, TO THAT EXTENT SECTION 14A OF THE ACT GETS ATTRACTED. CONVERSELY, TO THE EXTENT THE INTEREST E XPENDITURE IS FOUND TO BE RELATED NOT TO THE EARNING OF EXEMPT INCOME, THE SA ME WOULD BE ALLOWABLE UNDER SECTION 36(I)(III) OF THE ACT IF THE SAME IS INCURRED FOR THE PURPOSES OF ASSESSEES BUSINESS. IT IS CONTENDED THAT THERE IS NO SCOPE FOR INVOKING BOTH THE SECTIONS 14A AND 36(I)(III) OF THE ACT SIM ULTANEOUSLY AS THIS WOULD AMOUNT TO MAKING DOUBLE DISALLOWANCE. IN THE CASE O N HAND, THE ORDER OF ASSESSMENT CLEARLY ESTABLISHES THAT THE AO AFTER CO NSIDERING AND VERIFYING THE ASSESSEES SUBMISSIONS IN THIS REGARD, AT PARA 4.2 OF THE ORDER OF ITA NO. 3061/MUM/2016 FUTRE CORPORATE RESOURCES LTD. 8 ASSESSMENT HAD ARRIVED AT A DEFINITE CONCLUSION THA T THE INTEREST EXPENSE WAS INCURRED FOR THE ASSESSEES BUSINESS PURPOSES. IT IS CONTENDED THAT AS DECIDED IN THE CASE OF PHIL CORPORATION LTD. (2011 TIOL-432-HC-MUM-IT) THIS IS IN CONSONANCE WITH SETTLED LEGAL POSITION T HAT THE STRATEGIC INVESTMENTS MADE BY AN ASSESSEE IN GROUP CONCERNS F OR THE PURPOSE OF BUSINESS DOES NOT ATTRACT ANY DISALLOWANCE UNDER SE CTION 14A OF THE ACT. ACCORDING TO THE LEARNED A.R. OF THE ASSESSEE, IT I S ALSO SETTLED LEGAL POSITION THAT INTEREST EXPENDITURE INCURRED IN RESPECT OF LO ANS USED FOR THE PURPOSE OF MAKING STRATEGIC INVESTMENTS IN GROUP CONCERNS I S ALLOWABLE AS BUSINESS EXPENDITURE UNDER SECTION 36(I)(III) OF THE ACT. IN SUPPORT OF THIS CONTENTION, RELIANCE WAS, INTER ALIA, PLACED ON THE DECISIONS O F THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. SPENCERS & CO. LTD. (2 013) 359 ITR 644 (MAD) AND CIT VS. RPG TRANSMISSION LTD. (2013) 359 ITR 67 3 (MAD). 4.2.7 THE LEARNED A.R. OF THE ASSESSEE FURTHER CONT ENDED THAT WITHOUT PREJUDICE TO THE ABOVE SUBMISSIONS, NO REVISION IS PERMISSIBLE UNDER SECTION 263 OF THE ACT, IF THE AO ADOPTS ONE OF THE POSSIBLE METHODS/ COURSES OF ACTION/CONCLUSIONS PERMISSIBLE IN LAW. T HE MERE FACT THAT THE CIT IS NOT IN AGREEMENT WITH THE VIEW TAKEN/CONCLUS ION REACHED BY THE AO, WHICH IS PERMISSIBLE IN LAW, WOULD NOT RENDER THE O RDER OF ASSESSMENT ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVEN UE. EVEN OTHERWISE, WHERE TWO VIEWS ARE POSSIBLE AND THE AO HAS TAKEN O NE VIEW WITH WHICH THE CIT DOES NOT AGREE, IT CANNOT RENDER THE ORDER OF ASSESSMENT ERRONEOUS OR PREJUDICIAL TO THE INTERESTS OF REVENUE, UNLESS THE VIEW TAKEN BY THE AO IS UNSUSTAINABLE IN LAW. IN SUPPORT OF THIS PROPORT ION RELIANCE WAS, INTER ALIA, PLACED ON THE FOLLOWING JUDICIAL PRONOUNCEMEN TS: - (I) MALABAR INDUSTRIAL CO. LTD. (2000) 243 ITR 83 (SC) (II) CIT VS. MAX INDIA LTD. (2007) 295 ITR 282 (SC) (III) CIT VS. DESIGN AND AUTOMATION ENGINEERS (BOMB AY) P. LTD. (2010) 323 ITR 632 (BOM) (IV) GRASIM INDUSTRY LTD. (2010) 221 ITR 92 (BOM) 4.2.8 THE LEARNED A.R. OF THE ASSESSEE SUBMITTED TH AT IT IS WELL SETTLED THAT IF ANY ENQUIRY IS CONDUCTED BY THE AO IN ASSESSMENT PROCEEDINGS, IT WILL ITA NO. 3061/MUM/2016 FUTRE CORPORATE RESOURCES LTD. 9 NOT GIVE JURISDICTION TO THE CIT TO PASS REVISIONAR Y ORDERS MERELY BECAUSE HE HAS A DIFFERENT VIEW OR OPINION IN THE MATTER. H E HAS TO DEMONSTRATE THAT A PATENT ERROR HAS BEEN COMMITTED IN ASSESSMEN T PROCEEDINGS RESULTING IN PREJUDICE TO REVENUE, OTHERWISE IT WIL L TANTAMOUNT TO GIVING THE AO A SECOND INNINGS TO RE-EXAMINE AND RE-ADJUDI CATE CONCLUDED ISSUES. THE LEARNED A.R. SUBMITS THAT THE HON'BLE B OMBAY HIGH COURT IN THE CASE OF GABRIEL INDIA LTD. (1993) 203 ITR 108 ( BOM) HAS OBSERVED THAT WHERE IT IS FOUND THAT THE AO HAD EXAMINED AND CONS IDERED THE RELEVANT ISSUE AND MATERIAL IN THE COURSE OF ASSESSMENT PROC EEDINGS, AS HAS BEEN EVIDENTLY DONE BY THE AO IN THE CASE ON HAND, IT WO ULD NOT BE OPEN TO THE CIT TO INVOKE REVISIONARY POWERS JUST TO RE-EXAMINE ISSUES ON THE GROUND THAT THE AO HAD NOT INQUIRED INTO THE MATTER PROPER LY. 4.2.9 THE LEARNED A.R. SUBMITTED THAT IDENTICAL ISS UE OF REVISION UNDER SECTION 263 OF THE ACT WAS CONSIDERED BY A COORDINA TE BENCH OF THIS TRIBUNAL IN ONE OF THE ASSESSEES GROUP COMPANIES, I.E. M/S. FUTURE CORPORATE RESOURCES LTD. REGARDING DISALLOWANCE UND ER SECTION 14A R.W. RULE 8D IN THE VERY SAME ASSESSMENT YEAR AND THE CO ORDINATE BENCH IN ITS ORDER IN ITA NO. 3160/MUM/2016 FOR A.Y. 2011-12 DAT ED 26.10.2016 HELD THAT THE ORDER UNDER SECTION 263 OF THE ACT WAS UNS USTAINABLE AND WAS SET ASIDE AS THE LEARNED CIT HAD EXCEEDED HIS JURISDICT ION WHILE INVOKING THE PROVISIONS UNDER SECTION 263 OF THE ACT. 4.3.1 PER CONTRA, THE LEARNED D.R. SUBMITTED THAT T HE LEARNED PRINCIPAL CIT HAS EXERCISED HIS REVISIONARY POWERS UNDER SECTION 263 OF THE ACT CORRECTLY AND IN ACCORDANCE WITH LAW. IT WAS SUBMITTED THAT A S PER THE PROVISIONS OF SECTION 263 OF THE ACT AND EXPLANATION 2 THEREOF, T HE CIT WAS EMPOWERED TO CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDIN GS UNDER THE ACT AND THE ORDER CAN BE HELD TO BE ERRONEOUS AND PREJUDICI AL TO THE INTEREST OF REVENUE IF IN THE OPINION OF THE CIT, THE ORDER HAS BEEN PASSED WITHOUT MAKING INQUIRIES OR VERIFICATIONS WHICH SHOULD HAVE BEEN MADE OR THAT IN THE ORDER THE AO HAS ALLOWED ANY RELIEF WITHOUT INQ UIRING INTO THE CLAIM. IT WAS CONTENDED THAT EXPLANATION 2 IS CLARIFICATORY I N NATURE AND CAN BE ITA NO. 3061/MUM/2016 FUTRE CORPORATE RESOURCES LTD. 10 APPLIED RETROSPECTIVELY. IT WAS PRAYED THAT THE IMP UGNED ORDER OF THE LEARNED PRINCIPAL CIT BE UPHELD. 4.4.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JU DICIAL PRONOUNCEMENTS CITED. THE MANDATE OF THE PROVISIONS OF SECTION 263 OF THE ACT IS THAT THE CIT MAY CALL FOR AND EXAMINE THE RECORD OF ANY PROC EEDINGS UNDER THE ACT AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN B Y THE AO IS ERRONEOUS, IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF REVENUE, HE MAY THEN, AFTER AFFORDING THE ASSESSEE AN OPPORTUNITY OF BEING HEAR D AND AFTER MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSA RY, PASS SUCH ORDER THEREON AS THE FACTS AND CIRCUMSTANCES OF THE CASE SO WARRANT; INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT OR C ANCELLING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. IT IS TRITE LAW THAT THE POWERS UNDER SECTION 263 OF THE ACT CAN BE EXERCISE D BY THE CIT ONLY ON SATISFACTION OF THE TWIN CONDITION, VIZ., THE ASSES SMENT ORDER SHOULD BE (I) ERRONEOUS AND (II) PREJUDICIAL TO THE INTEREST OF R EVENUE. IT IS, THEREFORE, AMPLY CLEAR THAT THE CIT CANNOT EXERCISE THE REVISI ONARY POWER UNDER SECTION 263 OF THE ACT UNLESS HE IS ABLE TO ESTABLI SH THAT THE ORDER OF THE AO IS BOTH ERRONEOUS AND PREJUDICIAL TO THE INTERES T OF REVENUE. IF, HOWEVER, THERE ARE TWO POSSIBLE VIEWS ON AN ISSUE A ND THE AO HAS TAKEN ONE OF THE POSSIBLE VIEWS, THEN THERE IS NO OCCASIO N FOR THE CIT TO EXERCISE THE POWERS OF REVISION. FURTHER, THE REVISIONARY PO WERS UNDER SECTION 263 OF THE ACT CANNOT BE EXERCISED BY THE CIT FOR DIREC TING A FULL INQUIRY TO FIND OUT IF THE VIEW TAKEN BY THE AO IS ERRONEOUS, WHEN A VIEW HAS ALREADY BEEN TAKEN IN THE MATTER AFTER AN INQUIRY HAS BEEN UNDER TAKEN. THE POWER OF REVISION CAN BE EXERCISES ONLY WHEN NO INQUIRY, AS REQUIRED UNDER LAW, IS CARRIED OUT. HOWEVER, EVEN IN CASE OF INADEQUATE IN QUIRY BY THE AO, THE ORDER OF THE AO CANNOT BE REVIEWED. 4.4.2 WE HAVE CAREFULLY PERUSED THE ORDER OF ASSESS MENT PASSED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 24.03.20 14 FOR A.Y. 2011-12. ON PERUSAL THEREOF, WE FIND THAT THE ISSUE OF DISALLOW ANCE UNDER SECTION 14A R.W RULE 8D OF THE RULES HAS CERTAINLY BEEN THE SUB JECT MATTER OF INQUIRY ITA NO. 3061/MUM/2016 FUTRE CORPORATE RESOURCES LTD. 11 AND WAS TAKEN UP IN DETAIL BY THE AO IN ASSESSMENT PROCEEDINGS AS CAN BE SEEN AT PARAS 4 TO 4.2 OF THE ORDER. IN FACT, IT AP PEARS TO US THAT THE SCRUTINY PROCEEDINGS WAS ENTIRELY DEVOTED TO THE CO NSIDERATION OF THE ISSUE OF THE DISALLOWANCE TO BE MADE UNDER SECTION 14A R. W. RULE 8D OF THE RULES. WE FIND THAT DETAILS CALLED FOR BY THE AO, W HILE INQUIRING INTO THIS ISSUE, WERE FILED BY THE ASSESSEE; INQUIRIES AND EX AMINATION THEREOF WERE MADE BY THE AO AND MUCH OF THIS FINDS MENTION AT PA RAS 4 TO 4.2 OF THE ORDER OF ASSESSMENT THAT IS SOUGHT TO BE REVISED. A FTER NOTING THE FACTS OF THE CASE, THE DETAILS CALLED FOR, SUBMISSIONS OF TH E ASSESSEE AND AN EXAMINATION AND CONSIDERATION THEREOF, THE AO PROCE EDED TO RENDER HIS DECISION FOR MAKING DISALLOWANCE UNDER SECTION 14A R.W. RULE 8D OF THE RULES AS UNDER AT PARAS 4.2 AND 4.3 THEREOF: - 4.2 THE SUBMISSION FILED BY THE AR OF THE ASSESSE E HAS BEEN CAREFULLY CONSIDERED BUT THE SAME WAS NOT ACCEPTED A COMPANY CANNOT EARN DIVIDEND WITHOUT ITS EXISTENCE AND MANAGEMENT INVESTMENT DECISIONS ARE VERY COMPLEX IN NATURE THEY REQUIRE S UBSTANTIAL MARKET RESEARCH, DAY- TO-DAY ANALYSIS OF MARKET TRENDS AND DECISIONS WITH REGARD TO ACQUISITION, RETENTION AND SALE OF SHARES AT THE MOST APPROPRIATE TIME FROM THE DETAIL SUBMITTED BY THE A SSESSEE AND EXPLANATION GIVEN BY HIM, IT IS OBSERVED THAT ASSES SEE HAS REGULAR BUSINESS CONNECTION WITH THE COMPANIES IN WHICH INV ESTMENTS HAS BEEN MADE AND ALSO THERE ARE BUSINESS INCOMES TO AS SESSEE FROM THEM THEREFORE, INTEREST EXPENSE DEBITED BY ASSESSEE HAS NOT BEEN CONSIDERED FOR THE PURPOSE OF CALCULATION OF DISALL OWANCE U/S 14A BECAUSE SAME HAS BEEN INCURRED FOR THE PURPOSE OF B USINESS. BUT IT IS NOT CORRECT TO SAY THAT NO ANY PERSONAL COST, ADMIN ISTRATIVE COST HAS BEEN INCURRED FOR MAINTAINING THE INVESTMENTS, THER EFORE DISALLOWANCE OF 0.5% OF AVERAGE VALUE OF INVESTMENT HAS BEEN MAD E, CONSIDERING THE FACT THAT THERE WAS DAY TO DAY ADMINISTRATIVE COST, PERSONAL COST HAS BEEN INCURRED BY THE ASSESSEE FOR MAINTAINING THE I NVESTMENTS. 4.3 ACCORDINGLY, DISALLOWANCE OF RS. 3,36,28,000/- (0.5% OF [(2465.47+ 132046.19)/2] BEING AVERAGE VALUE OF OPENING INVEST MENT AND COST VALUE OF CLOSING INVESTMENT IS HEREBY DISALLOWED U/ S 14A AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE COMPANY. T HE AMOUNT OF RS.3,36,28,000/- LAC IS ALSO ADDED TO THE BOOK PROF IT AS PER CLAUSE (F) TO EXPLANATION 1 BELOW SECTION 115JB(2) OF THE ACT. 4.4.3 A PERUSAL OF PARAS 4.2 AND 4.3 OF THE ORDER O F ASSESSMENT FOR A.Y. 2011-12 (EXTRACTED SUPRA) CLEARLY ESTABLISHES THAT AFTER CONSIDERATION OF THE ASSESSEES EXPLANATIONS THE AO HAS NOT ACCEPTED THE ASSESSEES CONTENTION THAT NO DISALLOWANCE UNDER SECTION 14A R .W. RULE 8D OF THE ITA NO. 3061/MUM/2016 FUTRE CORPORATE RESOURCES LTD. 12 RULES IS CALLED FOR. THE AO OBSERVES THAT FROM THE DETAILS FILED AND EXPLANATIONS PUT FORTH BY THE ASSESSEE, THAT THERE WERE SUBSTANTIAL INVESTMENTS MADE IN ITS GROUP/SUBSIDIARY CONCERNS ( I.E. UPTO ALMOST 96% OF THE INVESTMENTS MADE) FOR THE PURPOSES OF ITS BU SINESS AND THEREFORE PROCEEDED TO HOLD THAT THE INTEREST INCURRED/DEBITE D BY THE ASSESSEE AGAINST LOANS TAKEN FOR THE PURPOSE OF SUCH STRATEG IC INVESTMENTS ARE NOT TO BE CONSIDERED FOR THE PURPOSE OF DISALLOWANCE UN DER SECTION 14A R.W. RULE 8D OF THE RULES. IN OUR VIEW, THIS ESTABLISHES BEYOND DOUBT THAT THE AO, IN FACT, CALLED FOR, EXAMINED AND VERIFIED THE DETAILS/SUBMISSIONS FILED BY THE ASSESSEE, BEFORE HOLDING THAT NO DISALLOWANC E IS TO BE MADE FROM OUT OF INTEREST DEBITED BY THE ON LOANS TAKEN, OSTE NSIBLY UNDER RULE 8D(2)(II) OF THE RULES, AS APPROXIMATELY 96% OF THE INVESTMENT THEREOF HAS BEEN STRATEGICALLY INVESTED IN ITS ASSOCIATE/SUBSID IARY CONCERNS FOR THE PURPOSES OF THE ASSESSEES BUSINESS. WE ALSO FIND T HAT AFTER HOLDING SO, THE AO PROCEEDED TO MAKE A DISALLOWANCE OF ` 3,36,28,000/- UNDER SECTION 14A R.W. RULE 8D(2)(III) OF THE RULES AS ADMINISTRATIVE COSTS INCURRED FOR MAINTAINING THE INVESTMENTS AND EARNING EXEMPT INCO ME @0.5% OF THE AVERAGE VALUE OF OPENING INVESTMENT AND CLOSING INV ESTMENT. 4.4.4 AN IMPORTANT ASPECT THAT WE OBSERVE IN THE CA SE ON HAND, IS THAT THE LEARNED CIT HAS NOT DISPUTED THE BASIC FACT THAT TH E NATURE OF INVESTMENTS BEING STRATEGIC INVESTMENTS, WERE MADE FOR THE PURP OSE AND IN THE COURSE OF THE ASSESSEES BUSINESS. IT IS ALSO SEEN THAT TH E LEARNED CIT(A) HAS NOT DISPUTED, CONTROVERTED OR FOUND ANY DISCREPANCY IN THE SUBMISSIONS, EXPLANATIONS AND FACTUAL DETAILS BROUGHT ON RECORD BY THE ASSESSEE, WHICH HAVE BEEN CONSIDERED, EXAMINED AND VERIFIED BY THE AO. WE FIND THAT IN REVISONARY PROCEEDINGS, THE LEARNED CIT, APART FROM THE FACTS ALREADY ON RECORD, HAS NOT FOUND ANY FRESH OR DIFFERENT FACTS. THE LEARNED CIT HAS MERELY TAKEN A DIFFERENT VIEW ON THE SAME SET OF FA CTS. IN OUR CONSIDERED VIEW, IF THE ACTIONS/FINDING OF THE AO ARE EVALUATE D IN THE FACTUAL MATRIX AS LAID OUT ABOVE AND THE SETTLED LEGAL POSITION, IT I S CLEAR THAT THERE IS NO INFIRMITY IN THE ORDER OF THE AO AS IT WAS IN ACCOR DANCE WITH LAW IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, RENDERED AFTER DUE APPLICATION OF MIND ON THE ISSUE OF DISALLOWANCE UNDER SECTION 14A R.W. RULE 8D. ITA NO. 3061/MUM/2016 FUTRE CORPORATE RESOURCES LTD. 13 4.4.5 FOR THE PURPOSE OF REVISION UNDER SECTION 263 OF THE ACT, WHAT IS RELEVANT IS TO DECIDE WHETHER THE VIEW ADOPTED BY T HE AO IN THE ORDER OF ASSESSMENT, WHILE CONSIDERING THE ISSUE OF DISALLOW ANCE UNDER SECTION 14A R.W. RULE 8D OF THE RULES, WAS A POSSIBLE VIEW, NOT WITHSTANDING THE FACT THAT THE LEARNED CIT ENTERTAINS A DIFFERENT VIEW/OP INION ON THE SAME SET OF FACTS. IN THE CASE ON HAND, AS SPELT OUT EARLIER IN THIS ORDER, AND WHICH WE AGAIN REITERATE, THAT THE LEARNED CIT HAS NOT CONTR OVERTED THE FACTUAL ASPECTS OF THE AOS FINDING THAT NO DISALLOWANCE OF INTEREST ON LOANS DEBITED BY THE ASSESSEE IS CALLED FOR THEREON (OSTE NSIBLY UNDER RULE 8D(2)(II) OF THE RULES) SINCE ALMOST THE ENTIRE INVESTMENT WA S MADE STRATEGICALLY IN GROUP CONCERNS FOR THE PURPOSES OF THE ASSESSEES B USINESS, BUT PROCEEDED BEYOND THE SHOW CAUSE NOTICE HE ISSUED TO THE ASSES SEE BY DIRECTING INQUIRY TO BE CARRIED OUT UNDER SECTION 57(II) OF T HE ACT ALSO ALONGWITH THE DISALLOWANCE TO BE MADE UNDER RULE 8D(2)(II) OF THE RULES. WE ALSO FIND THAT THE LEARNED CIT/LEARNED D.R. FOR REVENUE HAVE ALSO NOT CONTROVERTED THE JUDICIAL PRONOUNCEMENTS CITED BY THE ASSESSEE IN SU PPORT OF ITS VARIOUS CONTENTIONS, ON JURISDICTION AS WELL AS ON MERITS. IN THIS FACTUAL AND LEGAL MATRIX OF THE CASE AS LAID OUT ABOVE, WE ARE OF THE OPINION THAT, SINCE IT IS CLEAR TO US THAT INQUIRY IN RESPECT OF THE REQUIREM ENT OF DISALLOWANCE OF INTEREST UNDER SECTION 14A R.W. RULE 8D OF THE RULE S WAS CONDUCTED BY THE AO IN THE ASSESSMENT PROCEEDINGS, AS IS EVIDENT FRO M THE ORDER OF ASSESSMENT FOR A.Y. 2011-12, AND HE TOOK A POSSIBLE VIEW THAT NO DISALLOWANCE WAS CALLED FOR ON INTEREST EXPENDITURE , OSTENSIBLY IN RESPECT OF RULE 8D(2)(II) OF THE RULES AND THAT DISALLOWANCE W AS CALLED FOR UNDER RULE 8D(2)(III) OF THE RULES; THE MERE FACT THAT THE CIT IS NOT IN AGREEMENT WITH THE VIEW ADOPTED BY THE AO, WOULD NOT RENDER THE OR DER OF ASSESSMENT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. IN COMING TO THIS VIEW, WE DRAW SUPPORT FROM, INTER ALIA, THE DECISIO NS OF THE HON'BLE COURTS IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. (243 ITR 83) (SC), CIT VS. MAX INDIA LTD. (295 ITR 282) (SC) AND DESIGN AND AUTOMA TION ENGINEERS (BOMBAY) P. LTD. (323 ITR 632) (BOM). IN THIS FACTU AL AND LEGAL MATRIX OF THE CASE AND CONSIDERING THE AFORESAID JUDICIAL PRO NOUNCEMENTS, WE ARE OF THE VIEW THAT SINCE THE AO HAS COME TO A FINDING AN D TAKEN A POSSIBLE ITA NO. 3061/MUM/2016 FUTRE CORPORATE RESOURCES LTD. 14 VIEW IN THE MATTER AFTER APPLICATION OF MIND, THE C ONDITIONS PRECEDENT FOR THE LEARNED CIT FOR INVOKING JURISDICTION UNDER SEC TION 263 OF THE ACT DID NOT EXIST AND THEREFORE THE LEARNED CIT EXCEEDED HI S JURISDICTION UNDER SECTION 263 OF THE ACT. IN THIS VIEW OF THE MATTER, WE HOLD THAT THE IMPUGNED ORDER OF THE LEARNED CIT IS UNSUSTAINABLE IN LAW AND ACCORDINGLY SET ASIDE/QUASH THE ORDER OF THE LEARNED CIT PASSED UNDER SECTION 263 OF THE ACT ON 14.03.2016 FOR A.Y. 2011-12. WE HOLD AND DIRECT ACCORDINGLY. 5. IN THE RESULT, THE ASSESSEES APPEAL FOR A.Y. 2011- 12 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH APRIL, 2017. SD/ - SD/ - (SANDEEP GOSAIN) (JASON P. BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 12 TH APRIL, 2017 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE PR. CIT - 9, MUMBAI 4. THE DR, F BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.