The Principal Commissioner invoked section 263 on the ground that the Assessing Officer had failed to make disallowance under section 14A read with rule 8D. The Tribunal held that the assessee possessed interest-free funds far in excess of the investments yielding exempt income and, therefore, no disallowance of interest was called for. As the assessment order was neither erroneous nor prejudicial to the interests of the Revenue, assumption of jurisdiction under section 263 was held to be invalid. The Principal Commissioner exercised revisional jurisdiction under section 263 in respect of disallowance under section 14A, although the same issue was pending before the Commissioner (Appeals). The Tribunal held that Explanation 1(c) to section 263 prohibits exercise of revisional jurisdiction in respect of matters which are the subject matter of appeal before the first appellate authority. Accordingly, the revision order on that issue was quashed. The Principal Commissioner revised the assessment under section 263 on the ground that the Assessing Officer had failed to refer specified domestic transactions to the Transfer Pricing Officer. The Tribunal held that none of the conditions prescribed in CBDT Instruction No. 3 of 2016 requiring mandatory reference to the Transfer Pricing Officer were satisfied. Further, after omission of section 92BA(i), no determination of arm’s length price was required in respect of such domestic transactions. Consequently, the assessment order could not be regarded as erroneous or prejudicial to the interests of the Revenue and the revision under section 263 was set aside. (A.Y. 2014-15)