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TMI Blog2009 (9) TMI 691X X X X Extracts X X X X X X X X Extracts X X X X ..... cts of the case are that the CIT on perusal of assessment order and other details available on record seen that the assessee had claimed deduction under section 80 HHC of the Act to the extent of Rs. 8,18,638 against export of manufactured 'plastic processing machines'. The assessee had shown total export turnover of Rs. 1,31,87,610 and against this the assessee had debited Rs. 61,31,529 on account of purchases. On examination of details of purchases, the CIT found that the assessee made total purchases of Rs. 67,06,250 and was in receipt of S.T. refund of Rs. 5,74,720. The CIT noticed that the assessee was in receipt of sales tax refund of Rs. 5,74,720, which was included in the profit should have been excluded from the profit component fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icy of the State Government. Therefore, the assessee is not liable for sales tax on the purchases and accounted the purchases net of sales tax liabilities. The assessee has also issued the requisite forms and the suppliers who have not charged the sales tax in some of the cases. But in the purchases from traders, sales tax is built in the cost of material which has been claimed as refund and reduced from the cost of purchases at the end of the year. The learned AR further submitted that sales tax set off/refund receivable by the assessee from the State Government does not fit in any of the categories equivalent to brokerage, commission, interest, rent charges or any other receipt of that nature, therefore, the assessee while computing deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing afresh assessment. Explanation.-For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,- (a)an order passed on or before or after the 1st day of June, 1 988 by the Assessing Officer shall include- (i)an order of assessment made by the Assistant Commissioner or Deputy Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the Supreme Court. Explanation.-In computing the period of limitation for the purposes of subjection (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded." [Emphasis supplied] 6.1 From the perusal of sub-section (1) of section 263, it is clear that the power of suo motu revision can be exercised by the Commissioner only if, on examination of the records of any proceedings under this Act, he considers that any order passed therein by the Income-tax Officer is "erroneous in so far as it is prejudicial to the interests of the Revenue". It is not an arbitrar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent" means "one rendered according to course and practice of court, but contrary to law, upon mistaken view of law, or upon erroneous application of legal principles. 6.2 An order cannot be termed as erroneous unless it is not in accordance with law. If an Income-tax Officer acting in accordance with law makes an assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the Assessing Officer should made thorough enquiry and order should have been written more elaborately. This section does not visualise a case of substitution of the judgment of the Commissioner for that of the Income-tax Officer, who passed the order, unless the decision is held to be erroneous. Cases may be visualised where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax was refunded. It is a settled principle of law as has been held by the Apex Court in the case of CIT v. Laxmi Machine Works [2007] 290 ITR 667 ftn1Chandrakant L. Nandwana v. Asstt. CIT.htm that sales tax is not a part of total turnover for the purpose of calculation of deduction under section 80HHC of the Act as it has no element of profit. In other words, sales tax is neither part of the total turnover nor part of the profit. The assessee was to get reimbursed/refund from sales tax department in respect of purchases on which the assessee paid the sales tax. In case of such reimbursement there is no element of any profit. In the light of these basic principles of accounting as well as the provisions under Income-tax Act regarding deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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