TMI Blog2013 (10) TMI 428X X X X Extracts X X X X X X X X Extracts X X X X ..... rest of the Revenue - Decided against the Revenue. - ITA 1404/2009 & ITA 1691/2010 - - - Dated:- 10-9-2013 - Sanjiv Khanna, And Sanjeev Sachdeva, JJ. For the Appellants : Mr T N Chopra, Shivendra Kumar Singh, Advs. For the Respondents : Mr M S Syali, Sr Adv., Ms Husnal Syali, Mr Mayank Nagi, Anuhbhav Rastogi, Advs. JUDGEMENT:- PER : Sanjiv Khanna (Oral) By order dated 23.11.2011, two substantial questions of law were admitted for hearing in this appeal, which pertains to Assessment Year 2002-03. (1) "Whether the Income Tax Appellate Tribunal was right in setting aside the order dated 29th March, 2007 passed by the Commissioner of Income Tax under Section 263 of the Income Tax Act, 1961? (2) Whether the assessing officer during the course of the original assessment proceedings had examined and considered that the assessee New Delhi Television Ltd. was owner of the copyright or the software in form of television programme which were sent/transmitted to Hong Kong?" 2. Return for the said year was made subject matter of scrutiny assessment under Section 143(3) of the Income Tax Act, 1961 ('Act' for Short) vide assessment order dated 31.01.2005. Returne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was contended that allowability /justification of claim u/s 80HHF was specifically examined by the AO who duly consider the detailed replies, oral submission and the documents filed during the assessment proceedings. As regards, items exported it was stated that NDTV has produced and exported television software related to news and current affairs to STAR TV as per agreement between assessee company and STAR TV. Hong Kong through INTEL SAT Satellite from its facility at New Delhi. Satellite space and up linking facility have been contracted from VSNL on NDTV. Transmission from NDTV studio to STAR TV Hong Kong was made on point to point basis without any physical or electronic interference. It was claimed that before the assessing officer assessee furnished large number of document like export invoices to STAR TV, copy of bank certificate of export and realization, copy of foreign inward remittance issued by the bank. During the course of proceedings u/s 263 assessee company further furnished the documents like copy of bill raised by VSNL, copy of certificate from VSNL stating that satellite space segment was leased to NDTV for up-linking news signal from India to be down linked a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in case of export of limited rights were not examined. In the Case of M/s Gee Vee Enterprises 99 ITR 375, the jurisdictional High Court has categorically held that failure of the Assessing Officer to conduct the required enquiry and accepting the statement of the assessee without due verification renders the order erroneous in as much as prejudicial to the interest of revenue. In a more recent judgment rendered by the Allahabad High Court in the case of Jagdish Kumar Gulati vs. CIT 269 ITR 71, the Hon'ble Court considering various judicial pronouncement passed earlier viz. Diuggal Co. 220 ITR 456 (Delhi) K.A. Ramawami Chettiar 220 ITR 657 (Mad.) etc. held that absence of proper enquiry in a matter renders an order erroneous as well as prejudicial to the interest of the revenue. In view of above, assessment order is held to be erroneous as so far as prejudicial to the interest of revenue." 6. Aggrieved, the respondent preferred an appeal and succeeded before the Tribunal. Commissioner's order dated 29.03.2007 in exercise of power under section 263 of the Act has been set aside. Revenue has impugned and challenged the findings recorded in the order passed by Tribunal dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 345 ITR 446 (Del) and CIT vs. Nagesh Knitwears Pvt. Ltd. (2012) 345 ITR 145 (Del). 8. Learned counsel for the respondent has contested and stated that the judgments relied upon by the Revenue support and affirm the ratio and reasoning in the impuged order. Decision of the Delhi High Court in the case of Ashok Logani (supra) was clearly distinguishable and was a peculiar case which has been decided on its facts. He relied upon paragraph 10 of the judgment in the case of Ashok Logani (supra). 9. The scope and ambit of Section 263 has been examined and elucidated in several decisions. Section 263 enables the Commissioner to exercise the power of revision for correcting orders passed by the Assessing Officer when the two cumulative conditions are satisfied. Firstly, the order should be erroneous and secondly, the order should also be prejudicial to the interest of the Revenue. An order is erroneous, when it is unsustainable, wrong or an incorrect decision deviating from law and the expression prejudicial to the interest of the Revenue is of wide import and is not confined to mere loss of tax. 10. In Gee Vee Enterprises (supra) failure on the part of the Assessing Officer to con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to; three replies submitted by the respondent to the queries raised during the course of the original assessment proceedings to justify deduction under Section 80HHF. The respondent had submitted evidence in support of export/transmission of software to Hong Kong, consideration received in foreign exchange and within the time limit prescribed. Details filed included export invoices, bank certificate of export and realization and forward inward remittance certificate issued by the Bank etc. We would like to reproduce reply dated 20.01.2005, which has been quoted in the impugned order of the tribunal and the same reads:- C. Reply dated 20th January 2005 1) Initially an Agreement was executed on 29/02/1997 ("First Agreement") between NDTV and NTVI (a STAR TV's group company). It may be noted that this was more than one year prior to the commencement of the financial year under consideration and the launch of the actual channel on 01/04/1998. 2) On March 21, 1998 proximate to the channel launch, there was a new Agreement ("Second Agreement") signed between NDTV, STAR TV of Hong Kong and NTVL, Subsequently, an Agreement dated November finality of "Second Agreeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tronic inference being possible. c) STAR TV pays NDTV directly in foreign exchange through normal banking channels. d) All requirements of sc. 80HHF are fully satisfied. 6) All aspects of these agreements and manner of export/transmission have been discussed in earlier year's viz. A.Y. 1999-00, 2000-01 and 2001-02 and deduction under 80HHF allowed to the assessee. It is retreated that all facts and circumstances remain exactly the same as in earlier years. The deduction under Section 80HHF may kindly be allowed for A.Y. 2002-03 as claimed. 12. It is not disputed that the reply was furnished to the Assessing Officer. The assessment order records that the case was discussed. In paragraph 4 of the impugned order dated 29.03.2007, the Commissioner, has referred to this contention of the assessee. He has not controverted or denied the said contention in paragraphs 5 and 6 of the order passed by him. In paragraph 5, Commissioner has observed that evidences were furnished before the Assessing Officer as well as before him to show/establish news items were actually exported through VSNL to STAR TV, Hong Kong but these did not clearly establish actual export of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel for the Revenue was that while passing the assessment order, the Assessing Officer did not consider this aspect specifically whether the expenditure in question was revenue or capital expenditure. This argument predicates on the assessment order, which apparently does not give any reasons while allowing the entire expenditure as revenue expenditure. However, that by itself would not be indicative of the fact that the Assessing Officer had not applied his mind on the issue. There are judgments galore laying down the principle that the Assessing Officer in the assessment order is not required to give detailed reason in respect of each and every item of deduction, etc. Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. Learned counsel for the assessee is right in his submission that one has to keep in mind the distinction between 'lack of inquiry' and 'inadequate inquiry'. If there was any inquiry, even inadequate that would not by itself give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has a different opinion in the matter. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimate himself. The Commissioner, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would have estimated; the income at a figure higher than the one determined by the Income-tax Officer. That would not vest the Commissioner with power to re-examine the accounts and determine the income himself at a higher figure. It is because the Income-tax Officer has exercised the quasi-judicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be formed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. .. There must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed..." 14. In the present case, the claim of the assessee was allowed by the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing jurisdiction under section 263 of the Act and in the absence of the finding that the order is erroneous and prejudicial to the interests of the Revenue, exercise of jurisdiction under the said section is not sustainable. In most cases of alleged "inadequate investigation", it will be difficult to hold that the order of the Assessing Officer, who had conducted enquiries and had acted as an investigator, is erroneous, without the Commissioner of Income-tax conducting verification/inquiry. The order of the Assessing Officer may be or may not be wrong. The Commissioner of Income-tax cannot direct reconsideration on this ground but only when the order is erroneous. An order of remit cannot be passed by the Commissioner of Income-tax to ask the Assessing Officer to decide whether the order was erroneous. This is not permissible. An order is not erroneous, unless the Commissioner of Income-tax hold and records reasons why it is erroneous. An order will not become erroneous because on remit, the Assessing Officer may decide that the order is erroneous. Therefore, the Commissioner of Income-tax must after recording reasons hold that the order is erroneous. The jurisdictional preco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner in his order dated 29.03.2007 was uncertain and ambiguous, if not perceptibly reluctant and unable to meet the contention, facts and legal position put forth. He has accepted that evidences were furnished before the Assessing Officer with regard to the claim that news items were exported from VSNL to Star TV, Hong Kong but observed that this was not clearly established without elucidating. Conspicuously he did not record that evidences were incorrect or false, or why and for what reasons the assessment was erroneous in accepting export was made. Mere ipsi dixit is not sufficient to establish that the assessment was erroneous. Even with regard to the eligibility under Section 80HHF, no finding has been recorded except recording that decision of Mumbai Branch of the Tribunal in K.R. Films Pvt. Limited (supra) has not been accepted by the Revenue. Why and for what reason, Section 80HHF should be interpreted differently, is not stated or elucidated. The Section itself is not examined and interpreted. Without recording the said finding, the Commissioner could not have stated or averred that the claim allowed under Section 80HHF was erroneous. 18. In the present case, jurisdicti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence to the deduction under Section 80IA. It was recorded that this bifurcation and the nature of income was accepted by the Tribunal though the Commissioner of Income Tax had only given a tentative opinion that some elements of income may be eligible. Tribunal had given its own factual finding without there being verification or full and proper rebuttal. In these circumstances, it was observed that where an Assessing Officer does not carry out investigation which was per se required, there would be an error in the sense that the Assessing Officer has failed to carry out the requisite inquiry. This was again a case falling under the exception carved out and mentioned in the case of DG Housing Projects Ltd. (supra). 20. In view of the aforesaid discussion, question No.2 has to be answered against the Revenue and in favour of the respondent assessee and it has to be held that the Assessing Officer during the course of original assessment proceedings, had delved deep into the question of deduction under Section 80HHF and was satisfied that the deduction made were as per law. Question No.1 is also answered in favour of the respondent assessee and against the Revenue. 21. Tribunal w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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