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2021 (4) TMI 473 - ITAT MUMBAIRevision u/s 263 by CIT - Long term loss arising of transfer of preference shares on redemption at par due to indexation and further purchase on preference shares of the same company which tantamount to conversion - HELD THAT:- We find that assessee had filed all the supporting documents relating to redemption of preference shares of TML Holdings Pte Ltd., and further subscription of 2020000 cumulative preference shares of TML Holdings Singapore - We find that the ld. AO on going through all these relevant documents had (a) allowed carry forward of long term capital loss to be carried forward under normal provisions of the Act by duly appreciating the fact that the loss of redemption of preference shares had occurred during the year only because of indexation benefit which is a statutory deduction available to the assessee; (b) setting off business loss with the foreign dividend income u/s.71 of the Act while computing income under normal provisions of the Act. This order was sought to be revised by the ld. PCIT u/s.263 on the ground that the ld. AO had not made any enquiries regarding the aforesaid two issues in the original assessment proceedings. Assessee before the ld. PCIT in reply to show-cause notice u/s.263 of the Act had duly brought all these facts before him by pointing out that the ld.AO had made adequate enquiries with regard to the subject mentioned dispute issues during the course of assessment proceedings and on due appreciation of those submissions, the ld. AO had framed the assessment without disturbing claim thereon. It was specifically pointed out before the ld. PCIT that the order passed by the ld. AO was not in violation of any order, direction or instruction issued by CBDT u/s.119 of the Act. Rather it was specifically pointed out that in respect of taxability of foreign dividend u/s.115BBD of the Act, the order was passed by the AO in conformity with the decision of the Hon’ble Jurisdictional High Court in the case of British Insulated Calendar Ltd. [1993 (1) TMI 43 - BOMBAY HIGH COURT] There is absolutely no basis for arriving at this conclusion by the ld. PCIT. What could be expected from the side of the assessee is only furnishing of necessary and requisite details before the ld. AO in response to queries raised by him. Once that onus is discharged by the assessee, the assessee cannot be expected to step into the shoes and minds of the Assessing Officer by providing him assistance in the manner in which the impugned issues are to be addressed by the ld. AO in the assessment order and reach relevant conclusions thereon. This is apparently the job of the ld. AO. Hence, the assessee can in no way be faulted for the same. Even otherwise, we find that the ld. AO had duly appreciated all these facts and materials with evidence available on record and had accepted to the contentions of the assessee by making proper examination and enquiries thereon. Hence, it is not a case of lack of enquiry on the part of the ld. AO which would enable the ld. PCIT to invoke revisionary jurisdiction u/s.263 of the Act. We hold accordingly that Explanation 2 to Section 263 which has been heavily relied upon by the ld. PCIT for invoking revisionary jurisdiction u/s.263 of the Act, is bad in law in the facts and circumstances of the instant case. Once adequate enquiries were made by the ld. AO and the assessment has been framed accordingly, merely because no mention about those impugned issues has been recorded in the assessment order by the ld. AO, the said assessment order cannot be termed as erroneous even if it is found to be prejudicial to the interest of the revenue. The order of the ld. AO could not be termed as erroneous at all. Reliance in this regard is placed on the decision of the Hon’ble Supreme Court in the case of Malabar Industrial Company Ltd., vs. CIT [2000 (2) TMI 10 - SUPREME COURT] As assessee had duly responded before the ld. PCIT also by way of making detailed submissions on merits on the first issue regarding the loss of redemption of preference shares due to indexation benefit by specifically stating that the said loss of redemption of preference shares is distinguished from fresh purchase of preference shares during the year and the same does not amount to “conversion”. Order passed by the ld. AO and the opinion framed thereon by him was one of the possible views taken by him while framing the assessment based on the laws prevailing at that relevant point in time. The law is very well settled that, once a possible view has been taken by the ld. AO while framing the assessment, the same cannot be subjected to revision u/s.263 of the Act merely because the ld., PCIT is of a different view on the impugned subject. From the elaborate factual submissions made by the assessee on merits which are reproduced hereinabove, we are in complete agreement with the contentions of the assessee that the ld. PCIT ought not to have even resorted to take a divergent view than that taken by the ld. AO in the facts and circumstances of the instant case. In any case, we hold that revision jurisdictional u/s.263 of the Act is not permissible when a possible view has been taken by the ld. AO (though this is a case where no two views are possible) while framing the assessment and further revision u/s.263 could not be made merely because the ld. PCIT is trying to substitute his view in the view already taken by the ld. AO. Taxability of dividend received from specified foreign companies u/s.115BBD - We find that assessee had even submitted that by setting off the foreign dividend income with the business loss of the year u/s.71 of the Act, the assessee had actually set off the income taxable @15% with the loss which would have a tax effect of 30%. This has only caused prejudice to the interest of the assessee and it is not prejudicial to the interest of the revenue. Even this aspect has not been considered and appreciated by the ld. PCIT. We hold that in view of the aforesaid detailed observations that assessee had also made out a case before the ld. PCIT even on merits and accordingly, the ld. PCIT ought not to have given directions to the ld. AO to disallow the claim of carry forward of long term capital loss and for taxing the foreign dividend income. Hence, the assessee succeeds on this aspect on merits also. Also find from the final pages of the assessment order that ultimately the income has been determined only u/s.115JB of the Act. Even after giving effect to the order of the ld. PCIT u/s.263 of the Act, there would be no taxable income under normal provisions of the Act and even then, the income would ultimately get determined only u/s.115JB of the Act. Hence, there would be no prejudice that could be caused to the interest of the Revenue in this regard. While this is so, we are unable to persuade ourselves to accept to the contentions of the ld. PCIT that the order of the ld. AO is erroneous and prejudicial to the interest of the revenue. Reliance in this regard has been rightly placed by the ld. AR on case of Luxmi Co. Ltd. [2017 (2) TMI 1439 - ITAT KOLKATA] which is directly on the point in dispute before us. For the sake of brevity, the relevant operative portion of the said order is not reproduced hereunder. Even on this ground, we hold that the revision order passed by the ld. PCIT is unsustainable in the eyes of law. - Decided in favour of assessee.
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