TMI Blog2010 (12) TMI 295X X X X Extracts X X X X X X X X Extracts X X X X ..... BER J, Rajan Vora for the Appellant. Smt. Vasundhara Sinha for the Respondent. ORDER Per Chandra Poojari, Accountant Member : This appeal preferred by the assessee is directed against the order of passed u/s 263 of the IT Act dated 23.3.2009. 2. Brief facts of the case are that the assessee is a limited company incorporated on March 15, 1974 and engaged in the business of manufacturing and trading of cement. The assessee has filed its return of income on Oct. 31, 2004 and the assessment was completed u/s 143(3) vide order dated December 8, 2006. The CIT had issued a notice u/s 263 of the Act dated July 11, 2008 stating that the order of the Assessing Officer is erroneous in so far as it is prejudicial to the interest of the revenue on the contention that the assessment u/s 143(3) has been completed omitting to assess profit u/s 115JB resulting in short computation of tax to the extent of Rs. 7,33,55,613. The assessee had filed written submissions dated August 20, 2008 explaining that the gain arising on transfer of assets to wholly owned subsidiary being exempt u/s 47( iv ) is not taxable u/s 115JB of the Act based on various judicial precedents. 2.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available with the Assessing Officer and the Assessing Officer has applied his mind in determining the income of the assessee. It was contended that the assessee has relied the various decisions of Tribunal while calculating the book profits and arrived at the conclusion in absence of the jurisdictional HC decision which cannot be the reason for revision u/s 263. 2.6 The learned counsel for the assessee placed reliance on the following decisions to support his contention : ( i ) Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR 83 (SC). ( ii ) Mrs. Khatiza S. Oomerbhoy v. ITO (2006) 100 ITD 173 (Mum.). ( iii ) Mrs. Girdharilal B. Rohra v. CIT (2004) 86 TTJ 177 (Mum.). 2.7 Further, he submitted that there was no judicial precedent against the assessee on the issue of taxability of capital gains exempt u/s 47( iv ) of the Act while computing book profits u/s 115JB of the Act. In fact, all the judicial precedents cited during the course of submission were in favour of the assessee. 2.8 According to him, in the absence of any negative judicial precedents in relation of aforementioned issued against the assessee proceedings initiated u/s 263 of the Act are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve in the case of Malabar Industries Co. Ltd. v. CIT (243 ITR 83) (SC). In this case it was held that: "Every loss of revenue as a consequence of an order of the Assessing Officer, cannot be treated as prejudicial to the interests of the Revenue. For example, when the ITO adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the ITO has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the ITO is unsustainable in law." 1. In the case of Mrs. Khatiza S. Oomerbhoy v. ITO (Mum.) (100 ITD 173) wherein it was held that: ( i ) the commissioner must record satisfaction that the order of the Assessing Officer is erroneous and prejudicial to the interests of the revenue. Both the conditions must be fulfilled. ( ii ) An incorrect assumption of facts or an incorrect application of law will suffice for the requirement of order being erroneous. ( iii ) Section 263 cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer and it is only when an or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual and arbitrary manner and if there is no material on record to satisfy prima facie that the aforesaid two conditions are present then the provision of S.263 cannot be invoked. While passing the order u/s 263 it is expected that the CIT should be prima facie satisfied about the erroneous nature of the assessment which has caused prejudice to the Revenue. Beyond stating that no further enquiries are made, there should be some material which must be pointed out to show how lack of an enquiry has caused prejudice to the Revenue. This has not been done by the CIT in the present case." 6. From the aforesaid discussions, it is apparent that prejudicial to the interest of revenue appearing section 263 is conjunction with the expression 'erroneous' and that every loss of revenue as a consequence of an order of the Assessing Officer cannot prejudice to the interest of Revenue. In case, where the Assessing Officer adopts one of the courses permissible in law where two views are plausible the CIT cannot exercise his power u/s 263 to defer with the Assessing Officer even if there has been a loss of revenue. On the other hand, when the Assessing Officer takes a view it is patently unsusta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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