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TMI Blog2011 (11) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... 07. 3. While the assessee has raised as many as eleven grounds of appeal, the main grievances pressed before us pertain to CIT(A)'s initiating the revision proceedings- (i) in respect of set off of loss from eligible profits of business for the purpose of computing deduction under section 80 HHF of the Act , and thus denying deduction under section 80HHF amounting to Rs 9,51,70,949 ; (ii) in respect of deductibility of expenses incurred in foreign currency from export turnover and total turnover, for the purpose of computing deduction under section 80 HHF of the Act; and (iii) in respect of allowability of bad debts as a deduction. 3. To adjudicate on this appeal, only a few material facts need to be taken note of. The assessee is mainly engaged in the business of producing and procuring television programs and films/ film rights for supplying the same to Star Group Limited and other overseas media companies. The assessee also carries on channel subscription business and acts as marketing agents for, and renders services to, Star Group Limited and other overseas media companies. Its assessment under section 143(3) of the Income Tax Act , 1961 was finalized by the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the AO is both erroneous and prejudicial to the interest of the revenue on the issue of brought forward loss/ set off of loss before al lowing the deduction under section 80 HHC". Learned Commissioner further noted that in IPCA's case "Supreme Court has held that deduction under section 80 HHC is to be allowed after set off of brought forward loss of earlier years", and also referred to Hon'ble MP High Court 's decision in the case of Vippy Solvex Products Ltd Vs CIT (273 ITR 107). With these observations, learned Commissioner rejected submissions of the assessee on this issue. 4. The next point which learned Commissioner picked up for revision proceedings, and which is being challenged before us now, was raised by the Commissioner during the course of the revision proceedings. Vide letter dated 24th September, 2007, learned Commissioner issued the show cause notice requiring the assessee to show cause as to why the assessment not be subjected to revision under section 263 on this point as well, and stated as follows: In addition to the points covered by this office letter of even no. dated 18.7.2006, the assessment order is considered erroneous insofar as it is prejudicial to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing adjustments as provided in Explanations c and j referred to above. Deduction under section 80 HHF will be worked out accordingly after al lowing the opportunity to the assessee. 6. The third issue on which the assessment order was subjected to revision and which is challenged in this appeal is in respect of bad debts. The short reason for which the assessment was subjected to revision proceedings in respect of the Assessing Officer having allowed the bad debts was that "the assessee's claim of bad debt of Rs 13.82 crores was allowed without making any enquiry into the circumstances leading to the write off " and that "the bad debt in respect of foreign exchange to be received was allowed without proper inquiries". However, learned representatives fairly agree that in view of Hon'ble Supreme Court in the case of TRF Ltd Vs CIT (323 ITR 397), it is no longer necessary for the assessee to establish that the debt has actually become unrecoverable and as long as the assessee has actually written off the debt in the books of accounts, and upon fulfillment of other necessary preconditions - which are not subject matter of dispute before us anyway, the assessee is entitled to deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal. It is submitted that the Assessing Officer cannot be said to be in error in taking the same view as was taken by a coordinate bench of this Tribunal, and the view taken by the coordinate bench of this Tribunal was that even post IPCA decision by Supreme Court , Shirke Equipment decision of Hon'ble Bombay High Court held good in law. Learned counsel then fairly accepts that Shrike Equipment decision by Hon'ble Bombay High Court has since been disapproved by Hon'ble Supreme Court on 17th May 2007, but then this event took place much after the assessment order was framed. He, however, hastens to add that what is to be seen for the purpose of exercise of powers under section 263 is the law as it stood at the point of time when assessment was framed. In support of this legal plea, learned counsel relies upon the judgment of Hon'ble Supreme Court in the case of CIT Vs G M Stainless Steel Pvt Ltd (263 ITR 255) wherein it is held that.- ".... .Given the fact that the decision of the jurisdictional High Court was operative at the material time, the AO could not be said to have erred in law" and that "...The fact that this Court had subsequent ly reversed the decision of the High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are to be considered for the purpose of granting deduction. On the strength of these arguments, learned counsel urges to quash the impugned order on this point. Learned Departmental Representative, on the other hand, submits that IPCA decision was admittedly avai lable to the Assessing Officer, and as a plain reading of the IPCA decision would show, post the stand so taken by Hon'ble Supreme Court, Shrike Equipment decision by Hon'ble Bombay High Court did not hold good law. It is also submitted than that all that Shirke Supreme Court decision does is to hold that in view of IPCA decision by Hon'ble Supreme Court, Shrike Equipment decision by Hon'ble Bombay High Court is no longer good law. In such a situation, according to the learned Departmental Representative, it could not be said that Bombay High Court's judgment in Shirke's case continued to be good law post IPCA decision. Learned counsel then submitted that the present revision order was not a frivolous revision order as evident from the fact that the assessee himself has conceded on some of the points. Once it is found that the revision order is sustainable in law at least on some grounds, we should not quash the same in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the CIT, therefore, was based on no material either legal or f actual which would have given him the jurisdiction to take action under s. 263 of the IT Act..........". It is also specifically provided in the statute itself that the expression 'records' , for the purpose of Section 263, is deemed to include "all records under any proceedings under this Act available at the time of examination by the Commissioner". It is, therefore, futile to suggest that legal decisions available at the point of time when Commissioner is examining the matter for exercise of powers under section 163 can be ignored. As regards learned counsel 's reliance on this Tribunal 's order in the case of Gajendra Kumar T Agarwal Vs Income Tax Officer (11 ITR Trib 640), that once again was a situation in which there was no material difference in the legal position between the points of time when assessment was finalized and the revision order was passed. As a matter of fact , the issue was decided, on merits, in favour of the assessee, and then it was held that , notwithstanding the decision on merits in favour of the assessee, it could not have been a fit case for revision proceedings for the reason that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w taken by the Assessing Officer, even though it may be a possible view of the matter at the point of time when the assessment order was passed, cannot be said to be a view which Commissioner cannot disturb in the revision proceedings. 10. As regards learned counsel 's rather plea that the Assessing Officer was bound to follow Hon'ble Jurisdictional High Court judgment as long as the said judgment is not specifically overruled, we find no merits in this plea either. Learned counsel did not elaborate upon his arguments and we do not , therefore, have the benefit of his analysis of legal position. As we understand, an Assessing Officer is part of revenue machinery, even though his job involves exercise of certain quasi -judicial powers, and decisions of the appellate forums, in general, do not prevent him from raising demands on those issues, unless these decisions are accepted by the revenue. No doubt, the Assessing Officer should follow the judicial decisions as long as he can do so without sacrificing the legitimate interests of the revenue, but we cannot visualize a situation in which his not raising demands on those issues will not affect the interests of revenue. In case the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the revenue. Merely because another demand raised on the same issue has not been approved by a judicial body, as long as the decision of that judicial body is in challenge before the higher judicial authority, does not prevent the Assessing Officer from raising demands on those issues in the cases of other taxpayers, even though, as we have seen earlier, he may not be in a position to enforce recovery of tax demands in such cases. We, therefore, see no merits in this plea of the assessee either. 11. In view of the reasons set out above, we uphold the action of the Commissioner in invoking his revision powers in respect of in respect of set off of loss from eligible prof its of business for the purpose of computing deduction under section 80 HHF of the Act . 12. As regards the second issue, i .e. in respect of deductibility of expenses incurred in foreign currency from export turnover and total turnover, for the purpose of computing deduction under section 80 HHF of the Act , we find that it has been a categorical stand of the assesse before the CIT that no income has been earned by providing technical services such as dubbing, post production, technical consultancy services e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tric Supply (140 ITR 490). For this short reason, therefore, the revision proceedings are not legal ly sustainable on this issue , i .e. the notice is issued on the ground of inadmissibility of deduction, and the revision is done on the ground that the matter needs to examined even as there are no findings about shortcomings in the proceedings before the Assessing Officer. In any case, the CIT has not given any findings against the assessee at all and yet he has proceeded to direct the Assessing Officer to examine the issue again. Unless the CIT points out any defect in the stand of the Assessing Officer, i t cannot be open to him to exercise the revision powers. Such defects cannot be assumed or inferred. As held by Hon'ble Bombay High Court in the case of CIT Vs Gabriel India Ltd (203 ITR 108), unless Commissioner points out specific defects in the order of the Assessing Officer, he cannot simply proceed to direct the Assessing Officer to reexamine the matter. No such defects have been pointed out in the impugned order. In this view of the matter, we see merits in the plea of the assessee on this issue and hold that revision of order, on this issue, was not justified. 13. We, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecline to interfere in the matter. 20. In the result , ITA No. 3201/Mum/10 is dismissed. 21. We now take up ITA No. 3315/Mum/2010. 22. Learned representatives fairly agree that the first four grounds of appeal, which deal with different facets of bad debts disallowance of Rs 13.82 crores, are now covered in favour of the assessee by Hon'ble Supreme Court 's decision in the case of TRF Ltd (supra). In our order on assessee's challenge to revision proceedings on this issue, we have already upheld assessee's contentions on the issue of validity of revision proceedings and thus quashed the revision order to that extent. The quantum additions in respect of the said issue cannot, therefore, survive. The CIT(A) was, even on merits, justified in deleting the impugned addition. 23. Ground Nos. 1 to 4 are thus dismissed. 24. In the fourth ground of appeal, the Assessing Officer is aggrieved that the CIT(A) erred in deleting the addition of Rs 8,87,400 . 25. The subject addition was made by the Assessing Officer on the ground that there was nothing on record to suggest that the said income was already taxed in an earlier assessment year. In the proceedings before the CIT(A), however, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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