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TMI Blog2014 (1) TMI 1324X X X X Extracts X X X X X X X X Extracts X X X X ..... brief. The assessment in the hands of the assessee was completed u/s. 143(3) of the Act on 15-12-2011 for the year under consideration. The Ld. CIT, on examination of the record, found that the assessment order is erroneous and prejudicial to the interests of Revenue for the following reasons: "2. It is observed from the records that while completing the assessment for the A.Y. 2009-10, an amount of Rs. 76,38,143/- was allowed as deduction u/s. 80P after disallowing interest income of Rs. 6,50,000/- earned from investment made with Treasury. The Assessing Officer has treated the assessee as a Primary Agricultural Credit Society (PACS). However, it is observed from the records that the Agricultural loans constitute less than 0.5% of the to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer is seen to have not conducted any enquiry about the above items which are claimed as expenditure. The "reserve created" or "provision made" are not allowable as per the provisions of the Income Tax Act, unless they are specifically provided under the Act. Moreover deductibility towards bad debts etc. are governed by various provisions of the Income Tax Act. The Assessing Officer has failed to conduct any enquiry what so ever about the nature of the claim and also about its allowability. Similarly certain items credited in the Profit & Loss Account are to be excluded while arriving at net profit for the year for taxation purposes. The Assessing Officer has also not verified the correctness of the depreciation claimed in the Profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 6. We have heard the rival contentions and perused the record. Admittedly, the assessment order is cryptic and it did not contain any discussion about the interest expenditure relating to the loan taken by the partners. It is well settled proposition of law that the assessment order would be rendered erroneous and prejudicial to the interests of the revenue, if there is lack of enquiry on the part of the assessing officer on any of the issues having tax impact. For this proposition, a gainful reference may be made to the decision of Hon'ble Supreme Court in the case of Malabar Industrial Co. Vs. CIT (243 ITR 83). We feel it pertinent to refer to the decision rendered by the Hon'ble Bombay High Court in the case of Grasim Industries Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the Revenue", the Supreme Court held, it is of wide import and is not confined to a loss of tax. What is prejudicial to the interest of the Revenue is explained in the judgment of the Supreme Court (head note) : "The phrase 'prejudicial to the interests of the Revenue' has to be read in conjunction with an erroneous order passed by the Assessing Officer. 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 an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on order passed by Ld CIT u/s 263 of the Act for the reasons stated above. The said order of the Delhi High court has been approved by the Hon'ble Supreme Court in the case of Toyoto Motor Corporation (306 ITR 52) with the observation that the assessing officer should pass a reasoned order. These decisions clearly bring out that the assessment order should be passed with or contain proper reasons on various issues. 8. The impugned issue pointed out by Ld CIT would have implication on the tax computation if it is decided against the assessee, in which case the impugned assessment order passed by the assessing officer would become prejudicial to the interests of the revenue. 9. In view of the foregoing discussions, in our view, the Ld CIT w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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