TMI Blog2010 (12) TMI 708X X X X Extracts X X X X X X X X Extracts X X X X ..... ified either in the show cause notice or ultimately in the order. Similarly depreciation on computer and computer peripherals is admissible @ 60% - Appeal is allowed - ITA No. 2331/Del/10 - - - Dated:- 16-12-2010 - G.E. Veerabhadrappa, Rajpal Yadav, JJ. Tapas Ram Mishra, Adv., for the Appellant A.D. Mehrotra, CIT/DR for the Respondent ORDER Rajpal Yadav: The assessee is in appeal before us against the order of Ld. Commissioner dated 26th February, 2010 passed u/s 263 of the Income Tax Act in asstt. year 2005-06. The grounds of appeal taken by the assessee are not in consonance with rule 8 of ITAT Rules. They are descriptive and argumentative in nature. In brief the grievance of assessee is that Ld. CIT has er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed an opinion that assessment order is erroneous, in so far as, it is prejudicial to the interest of the revenue. He issued a show cause notice u/s 263 of the Income Tax Act, inviting the explanation of the assessee as to why asstt. order be not held as erroneous in so far as, it is prejudicial to the interest of revenue and why it should not be set aside? The copy of the notice is available at page 14 and 15 of the paper book. In the show cause notice Ld. Commissioner has assigned two reasons for forming the opinion that action u/s 263 is required. The first reason is that assessee had dividend income of Rs.28,20,145/- which is exempt from tax. According to the Ld. Commissioner the AO has not made any disallowance as per section 14A of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the Tribunal in its written submission. It also pointed out that Rule 8D has been brought on the statute book w.e.f. 24th March, 2008. It is not applicable in this asstt. Year. Therefore on an average no disallowance can be made. With regard to the depreciation on computers softwares etc. it contended that such depreciation is admissible @ 60%. Apart from explaining the issues on merit the assessee submitted that action u/s 263 can be taken only on fulfilment of twin condition i.e order of the AO should be erroneous as well as prejudicial to the interest of revenue. If any one of the condition is missing then action u/s 263 cannot be taken. The assessee submitted to the Ld. Commissioner that it is entitled for 100% deduction u/s 10A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied upon the order of Ld. CIT. He submitted that order of the AO is totally silent on all these issues. Therefore in view of the Hon'ble Delhi High Court's decision in the case of Gee Vee Enterprises vs. ACIT 99 ITR 375, order of the AO deserves to be set aside. He placed on record a synopsis of arguments on the different case laws, drafted by the CIT DR. In this synopsis Ld. DR mainly made a reference to the decision of Hon'ble Supreme Court in the case of CIT vs. Ralson Industries Ltd. 288 ITR 322, Toyta Motor Corporation vs. CIT 306 ITR 52 as well as the decision of Hon'ble Delhi High Court in this case reported in 306 ITR 49. He also made reference to the decision of Hon'ble Delhi High Court in the case of CIT vs. Ashish Rajpal 320 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us order, unless the view taken by the AO is unsustainable under law. (vi) If while making the assessment, the AO examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determine the income, the CIT, while exercising his power under s. 263 is not permitted tos substitute his estimate of income in place of the income estimated by the AO. (vii) The AO exercises quasi-judicial power vested in his and if he exercises such power in accordance with law and arrive at a conclusion, such conclusion cannot be termed to be erroneous simply because the CIT does not feel satisfied with the conclusion. (viii) The CIT, before exercising his jurisdiction under s. 263 must have material on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus on the basis of average investment the disallowance cannot be made at 0.05%. The disallowance is to be made on actual expenses which Ld. Commissioner has not specified either in the show cause notice or ultimately in the order. Similarly depreciation on computer and computer peripherals is admissible @ 60%. The AO has accepted this stand of the assessee. Leaving apart all these issues, it has been demonstrated by the assessee that it is entitled for 100% deduction u/s 10A. For the sake of arguments, it is assumed that these disallowances would be made then there will not be any tax effect. It suggest that there is no prejudice to the revenue. There is no loss of tax. In such situation an assessee should not be subjected to second roun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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