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2020 (3) TMI 782 - ITAT MUMBAIRevision u/s 263 - Addition in respect of interest on arbitration awards granted to the appellant - HELD THAT:- Assessee during the course of regular proceedings with respect to taxability of interest on arbitration awards were not called for by AO in notice u/s 142(1) and the submissions were purely suo-moto voluntary submissions which would clearly demonstrate that Ld. AO did not apply his mind to this aspect while framing the assessment. We find that assessee has duly certified the paper-book containing the said submission that the aforesaid submissions vide letter No. PG/26138 as well as supporting documents were duly submitted to Ld.AO during the course of regular hearing. The factum of making said submission during the course of regular assessment proceedings was reiterated by the assessee in para-5 of its submissions dated 25/03/2019 to Ld. Pr.CIT while opposing the revision proceedings u/s 263. CIT-DR has not disputed the fact that the said documents were not, at all, available before Ld.AO during the course of regular assessment proceedings. The argument advanced is that the said documents were not called for by Ld. AO and the same were not considered by Ld.AO while framing the assessment. It is difficult to accept the fact that the said documents were not appreciated / considered by Ld. AO since a specific disallowance has been made, being conscious of the fact that certain arbitration income was not offered to taxation by the assessee. The assessment orders for earlier years were specifically called for vide notice u/s 142(1) and the same were also furnished by the assessee. Upon perusal of the same, Ld.AO specifically took note of the fact that similar disallowance was made in earlier years and therefore, he chose to make similar disallowance during the year under consideration. The computation of income filed by the assessee clearly demonstrated that arbitration awards received during the year were offered to tax whereas interest on arbitration award was reduced while computing the taxable income. The revenue recognition policy being followed by the assessee to recognize the interest income was fully disclosed in Notes to the account. In the light of all these facts, it could safely be concluded that the position taken by assessee to recognize the interest income was accepted by Ld.AO who was well conscious of the fact that certain arbitration income was not offered to tax. Hence, it could not be said that there was non-application of mind by Ld. AO on the sated issue. This being the case, a logical assumption would arise that Ld.AO has duly applied his mind to the issue of interest on arbitration award and chose not to make any addition thereof. Therefore, it could not be said that there was non-application of mind and no view was taken by Ld. AO on the stated matter. Subject matter of proposed revision was already deliberated upon by Ld. AO and a possible was taken in the matter. That view could not be said to be contrary to law, perverse or unsustainable in law, in any manner and the same would be a possible view keeping in mind the rule of consistency. Assessment order could not be termed as erroneous or prejudicial to the interest of the revenue u/s 263 as held by Pr. CIT. The action of AO, in our opinion, was in consonance with the position accepted by the revenue in earlier years and therefore, it could not be said that the order was not in accordance with law. In such a case, the action of Ld. Pr.CIT in invoking jurisdiction u/s 263 could not be sustained in the eyes of law. Therefore, we quash the same in terms of settled legal position as enumerated by us in opening paragraphs. Keeping in view the fact that in the present appeal we are merely concerned with determining the validity of revisional jurisdiction u/s 263, the argument that whether the action of the assessee in recognizing the interest income, in such a manner, was in consonance with the provisions of The Arbitration and Conciliation Act, 1996 or not, is left open. The other arguments also, on merits, not delved into and left open. - Decided in favour of assessee.
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