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2011 (1) TMI 1375 - ITAT HYDERABADAllowability of deduction u/s 80-IA - Carry forward of losses relating to the industrial undertaking which are already absorbed against other income - brought forward against the profit of the current year while allowing the deduction u/s 80-IA - HELD THAT:- The issue relating to computation of s. 80-IA deduction that it has to be computed after deduction of the notional brought forward losses and depreciation of business even though they have been allowed set off against other income in earlier years has been dealt by the Special Bench in the case of ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE - 4, AHMEDABAD. VERSUS GOLDMINE SHARES AND FINANCE (P.) LIMITED. [2008 (4) TMI 405 - ITAT AHMEDABAD] and decided the issue against the assessee. While delivering this order, the Special Bench considered all the arguments what the assessee has placed in the instant case - The Tribunal also considered the judgment in the case of COMMISSIONER OF INCOME-TAX VERSUS MEWAR OIL AND GENERAL MILLS LTD. [2003 (10) TMI 12 - RAJASTHAN HIGH COURT] and observed that this case has not noticed the non obstante provisions of s. 80-I(6)/80-IA(5) and, therefore, there is no discussion on this point in that decision. It would similarly, therefore, be not of any help to present case. The judgment of Special Bench in the case of Goldmine Shares & Finance (P) Ltd. is squarely applicable to the facts of the present case and applying the ratio laid down by this order of the Special Bench of this Tribunal, the issue is decided against the assessee relating to allowability of deduction under s. 80-IA that in terms of provisions of under s. 80-IA(5) of the IT Act, the profit from the eligible business for the purpose of determination of the quantum of deduction under s. 80-IA of the Act has to be computed after deduction of the notional brought forward losses and depreciation of eligible business even though they have been allowed set off against other income in earlier years. Revision u/s 263 - Jurisdiction/power of CIT to invoke the provisions of s. 263 when the original assessment was completed u/s 143(3) of the Act and all the relevant informations at the point of s. 80-IA are furnished before the AO - HELD THAT:- The prejudicial to the interest of Revenue appearing s. 263 is conjunction with the expression ‘erroneous’ and that every loss of revenue as a consequence of an order of the AO cannot prejudice to the interest of Revenue. In case, where the AO adopts one of the courses permissible in law where two views are plausible the CIT cannot exercise his power under s. 263 to defer with the AO even if there has been a loss of revenue. On the other hand, when the AO takes a view which is patently unsustainable, the CIT can exercise his powers where the loss of revenue results as a consequence of the view taken by the AO. It is also clear that while passing the order under s. 263, the CIT has to examine not only the assessment order but also the entire facts on the record. Further, when a regular assessment is made it has to be presumed that it has been passed upon proper application of mind when he has made proper enquiry before passing assessment order. The ITO is not only the adjudicator but also an investigator. In the facts of the present case, the AO has not applied his mind to the provisions of s. 80-IA(5). No additional facts were necessary before the AO to come to the conclusion that deduction under s. 80-IA is wrongly computed. The AO not examined the facts before him. The order passed by the AO is very cryptic. There is no discussion or methodology of computation of deduction under s. 80-IA. It cannot be said that the AO is aware of any of the Tribunal orders on the issues involved. The order of the AO is erroneous for want of proper enquiry. He has not recorded reasons for accepting the return of the assessee as submitted by it on the impugned issue. The AO without making any enquiry accepted the claim of the assessee without recording any reasons at all. The assessment order is silent about the issue raised by the CIT - In this case, the failure of the AO to make an enquiry with regard to the claim of the assessee and to record such a reason, why he is taking particular view, makes the assessment order erroneous and prejudicial to the interest of the Revenue. As such, there is no merit in the arguments of the assessee’s counsel against observation made by CIT in his order under s. 263. Appeal dismissed.
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