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TMI Blog2012 (8) TMI 583X X X X Extracts X X X X X X X X Extracts X X X X ..... by the learned Assessing Office u/s.143(3) for the said A.Y. 2006-07 allowing deduction u/s.10A of the Income Tax Act to the appellant without curtailment was erroneous and prejudicial to the interest of the revenue. On the facts and in the circumstances of the case and in laws the learned CIT erred in holding that the deduction claimed u/s.10A of the Income Tax Act should have been curtailed even though the appellant was prevented and disabled from receiving export sale proceeds without there being any fault on his part and there was no remedy available under the circumstances to the appellant. It is prayed that the order of the CIT be annulled and the order of the Assessing Officer be restored." 3. Facts of the case, in brief, are that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 98/- as against the allowed deduction of Rs. 3,57,70,951/-. Since excess deduction u/s.10A has been allowed to the extent of Rs. 93,88,653/- by the AO, therefore, he held that the order is erroneous and prejudicial to the interest of the revenue. 4. The learned CIT accordingly issued notice u/s.263 to the assessee to explain as to why the order passed by the AO should not be held as erroneous and prejudicial to the interest of the revenue and therefore the same should not be set aside u/s.263 of the I.T. Act. Rejecting the various explanations given by the assessee the learned CIT held that the order passed by the AO is erroneous as well as prejudicial to the interest of the revenue. He accordingly set aside the order and directed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee from its customer. 22 23 6. He submitted that based on the various details furnished by the assessee from time to time, the AO accepted the claim of deduction u/s.10A. Referring to the decision of the Mumbai Bench of the Tribunal in the case of Morgan Stanley Advantage Services Pvt. Ltd. Vs. ITO reported in 30 SOT 1 the learned counsel for the assessee drew the attention of the Bench to Para 9 of the order which reads as under : "9. From the above letter, it is evident that the RBI has extended the time for remittance of foreign exchange under FEMA. So however, there is no formal approval for the purposes of s.10A in the light of the aforementioned Note. In our considered view, the RBI, in response to the request of the assessee to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings, therefore, the order is not erroneous. He submitted that for assuming jurisdiction u/s.263 the twin conditions, i.e. (i) the order must be erroneous and (ii) the order must be prejudicial to the interest of the revenue must be fulfilled. Unless both the conditions are satisfied the learned CIT cannot assume jurisdiction u/s.263. He accordingly submitted that the order passed u/s.263 by the learned CIT should be set-aside and the order of the AO be restored. 8. The learned D.R. on the other hand heavily relied on the order of the CIT and submitted that since the AO has failed to make detailed enquiry while allowing deduction u/s.10A, therefore, the learned CIT was justified in assuming jurisdiction u/s.263 of the I.T. Act. 9. We hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Photocopy of the order of United States Bankruptcy Court New York staying and restraining recovery of amount of export invoices from Dana Corporation USA and its affiliates. 10 17 5 Statement showing post facto receipt of entire export proceeds by the assessee from its customer. 22 23 10. Under these circumstances it has to be seen as to whether the order passed by the AO is erroneous and prejudicial to the interest of the revenue so as to empower the CIT(A) to assume jurisdiction u/s.263 of the I.T. Act. We find the Mumbai Bench of the Tribunal in the case of Morgan Stanley Advantage Services Pvt. Ltd. (Supra) has decided the case in favour of the assessee in which the assessee had applied for extension of time for remittance of f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s.263. Since in the instant case the AO has allowed deduction u/s.10A on the basis of the report of the Auditors as well as the various documents furnished before him, therefore the same in our opinion is a possible view and cannot be termed as erroneous although the same may be prejudicial to the interest of the revenue. Since both the conditions as mentioned above are not satisfied, therefore, under the facts and circumstances of the case the learned CIT in our opinion is not justified in assuming jurisdiction u/s.263 of the I.T. Act. We, therefore, set aside the order of the CIT and allow the grounds raised by the assessee. 13. In the result, the appeal filed by the assessee is allowed. Pronounced in the Open court on 18th June 2012. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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