Gujarat Power Corporation Ltd. Vs PCIT (ITAT Ahmedabad)
ITAT Ahmedabad held that order passed u/s. 263 of the Income Tax Act is liable to be set aside since PCIT failed to consider or deal with any arguments or submission filed by the assessee.
Facts- PCIT observed that the assessee company made investment in listed and unlisted equity shares for Rs. 197,74,06,788/- and earned exempt income of Rs. 1,42,39,767/- from share of profit and debited an amount of Rs. 1,00,000/- as expenses related to exempt income. On perusal of assessment order the PCIT observed that the AO made disallowance under Section 14A considering investment made in quoted shares of other companies, however, investment made in subsidiaries, Joint Venture and Associated concerns were not taken into account.
According to the PCIT the quantum of disallowance as per Rule 8D works out to 1,98,36,285/- as against which the AO made disallowance of Rs. 86,88,523/- which has resulted into under assessment of income. Further, the PCIT pointed out that the assessee had claimed interest on grant of a sum of Rs. 4,18,06,612/- as revenue expenditure. PCIT was of the view that the assessee failed to explain the nature of interest on grant and even the AO has failed to verify as to how his expenditure is allowable as revenue expenditure since grants are not in the nature of loan.
