TMI Blog2015 (4) TMI 324X X X X Extracts X X X X X X X X Extracts X X X X ..... ot in nature of speculative loss but same was allowed as business loss. Thus, matter was decided in favour of assessee. In such situation, order passed by Assessing Officer cannot be said to be erroneous so as to be prejudicial to the interest of revenue. In response to query raised by Bench whether currency loss of ₹ 6.04 Crores consists of all the losses or any profit earned in this currency swap agreements. The Learned Authorized Representative drew our attention to pages 29 and 30 of the compilation where ledger account of currency swap was compiled. He also pointed out that in certain currency swap transactions, profit is also earned and hence, sum of ₹ 6.04 Crores is net figure of loss. Thus case on merit also tilt in favour of assessee. There is no dispute to the proposition that Assessing Officer’s order can be revised in case of assessee made no inquiry in the assessment order. But in case before us enquiry has been done. So it can not be said that Assessing Officer has passed order without any enquiry or application of mind. So, the cases relied by learned Departmental Representative does not help the Revenue. In view of above discussion, CIT was not justif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee was asked to explain as to why appropriate order u/s. 263(1) of the Act should not be passed. In response to same, Learned Authorized Representative for the assessee made submissions and having heard the same, CIT observed that assessee is a Public Limited Company engaged in export/import and domestic trading of various commodities. The return of income was filed on 30.09.2008 and 28.05.2009 declaring total income of ₹ 44.30 crores. Same was revised on 28.04.2009 whereby total income was enhanced to ₹ 117.58 crores. Assessment order u/s. 143(3) r.w.s. 144C was passed on 24.02.2012 whereby total income was assessed at ₹ 136.99 crores after making several additions/disallowances. The major additions includes Transfer Pricing addition (Rs.10.91 crores), Prior period expenses (Rs.45.09 lacs), Bad Debts (Rs.1.64 crores), Disallowance u/s. 14A (Rs.3.97 crores) and Deduction u/s.80IA (Rs.1.23 crores). 2.1 Subsequently, on examination of case records, CIT observed that assessee had claimed currency swap loss of ₹ 6.04 crores under the head Financial expenses in the profit and loss account. Since, this loss was related to hedging of Rupee loan with Dollar l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted the claims of assessee and failed to make any enquiry which was called in the circumstances of the case. At the same time CIT observed that analysing the claim of assessee in detail, elaboration has been done in assessment order but the chain of events should show that there was application of mind. Assessing Officer did not apply his mind while allowing he claim. Assessing Officer is not supposed to take a view without making proper enquiries and without proper examination of the claim made by the assessee. It is his duty to ascertain the truth of facts stated in return when circumstances of case are such as to provoke an inquiry. It is incumbent on the Assessing Officer to make further inquiry to further investigate the facts stated in the return. The word erroneous in Section 263 includes failure to make such inquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct. CIT observed that revisional power conferred on the Commissioner u/s.263 is of wide amplitude. Any order passed by Assessing Officer without inquiry and investigation is e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of Section 263. Accordingly, same should be set aside. On other hand, learned Departmental Representative made detailed factual and legal submissions to support the facts that order of CIT passed u/s. 263 is valid one, which will be dealt in detail in this order. Accordingly, learned Departmental Representative submitted that order of CIT should be upheLearned In sum and substance, Learned Departmental Representative supported the order of CIT passed u/s. 263 on facts and law. 4. After going through rival submissions and material on record, we find that order of Assessing Officer has been reversed under the provision of Section 263 of the Act. For the sake of convenience we reproduce Section 263, which reads as under: The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Income Tax Officer is erroneous in so far as it is prejudicial to the interest of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng, give a detailed note. b) Give the copy of agreement the enterprise entered with the authorities referred in s. 80IA(4)(b) c) Give infrastructure facility developed and investment made details over the years, which is the initial year of claim and give year wise deduction claimed and status in assessments? d) Please demonstrate that the undertaking satisfies all other conditions of section 80IA e) Please produce the audited accounts of the undertaking and the P L and Balance sheet with enclosures and give working of the deduction. f) What are the transactions of the said undertaking with the sister concerns/associate concerns and give details of quantity and value of these transactions. 3. You have made investments of ₹ 1494.77 crores and earned ₹ 1431639 as dividend, further ₹ 177,27,82,245 is earned as share of profit from Adani Exports which is exempt from tax. However no expenditure relevant to the income has been disallowed by you. Please explain as to why Rule 8D should not be applied to disallow the expenditure under section 14A. 4. The company during the year has received DFCE licenses worth ₹ 211.61 crores for import of mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount covered by section are unpaid Bonus unpaid ₹ 382978 Interest on buyers credit Rs.349685 Interest on LC Rs.209599 Please explain as to why these amounts should not be disallowed and added to income under section 43B of the Act. 14.What is Target Plus Scheme'. Please give details of achievements made by the company under the scheme and year wise benefit due to the company under the Scheme. Please furnish ledger accounts of the same since 2004. 15.It is seen that you have charged ₹ 1.96 crores to P L account in respect of derivative contracts. Please give the nature of expenditure along with the relevant account. Also show cause as to why the amount should not be disallowed and added to income. 16.It is seen that company owns office premises by virtue of investment in shares. Shares are distinct assets and depreciation is not provided on these assets by the IT Act. Please give the depreciation claimed on these shares in the accounts and explain as to why the depreciation should not be disallowed and added to income. 17 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .Please give details of shareholdings of directors having more than 10% voting rights and give their ledger account for the year. 25.Please give details of term loans and working capital loans (7166.36 cr) taken like bank (branch, loan account number, address) nature of loan, copy of the loan sanction letter and the details of the securities offered to the bank for availing the loan/credit. Also give copies of statements of assets filed to these banks as on 31.03.2009 in respect of these loans. Please give date of payment of interest for verification of compliance to s. 43B provisions. 26.During the year there are substantial additions to fixed assets. Please produce the vouchers to substantiate the acquisition of assets and also give Notes supporting the use of the same during the year with evidence. Please state whether any additional depreciation has been claimed for the year, If so give details. Please state whether any 'land lease or access rights' are obtained by you and give details of lease rent written off for the year. 27.Please state whether all over heads and tax, duty cess etc. included in Turnover and Inventories (Rs.914.89 cr) in compliance to pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rterly return in hard copy) Learned Authorized Representative before us drew specific attention to the page no.2 of said compilation, wherein Assessing Officer vide query no.12 made certain enquiry touching issue at hand, which reads as under: 12. What is Currency Swap. You have charged ₹ 6.04 crores of Currency Swap losses to P L account. Please explain as to why the amount should not be disallowed and added to income. 4.4 Above referred show cause notice and queries raised by Assessing Officer, was replied by assessee vide its letter dated 29.11.2011 along with its Annexure 1, which has been compiled at page nos. 21 to 35 of paper book filed before us again certified to be filed before concern Assessing Officer and reads as under: In connection with the above assessment proceedings, we are pleased to submit the remaining details point-wise as per notice u/s 142(1) of the IT Act in addition to our earlier submission dated 1st October, 2011 herein under: (12) Your good self has sought explanation regarding currency loss of ₹ 6.04 Crores. In this regard we submit that the assesses company is a Five Star Export House and exports various types of commo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owable expense u/s 37 of the IT Act as is held in various judicial pronouncements. The assessee company places reliance on the landmark decision in this context of the Hon'ble Supreme Court in the case of Sutlej Cotton Mills Ltd Vs C1T reported in 116 ITR 1 (SC).The relevant part of head note of the said decision reads as under: Whether where profit or loss arises to an assessee on account of appreciation or depreciation in value of foreign currency held by him, on conversion into another currency, such profit or loss would ordinarily be trading profit or loss if foreign currency is held by assessee on revenue account or as a trading asset or as part of circulating capital embarked in business - Held, yes - Whether, however, if foreign currency is held as a capital asset or as fixed capital, such profit or loss would be of capital nature - Held, yes (15) Your good self has sought an explanation regarding allowability of Loss of ₹ 1.96 Crores on derivatives contracts. We are submitting herewith the break up of the said loss of ₹ 1.96 Crores and copies of the relevant ledger accounts. (Annexure-2) On perusal of the same, your good self would find that the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the year under consideration. Since, the loss of ₹ 1.23 Crores is incurred on derivative contracts to hedge against the fluctuation in the price of agro products which is traded by the assessee company, the said hedging loss being realized trading expenditure is allowable u/s 37 of the IT Act in view of various judicial pronouncements. (17) The assessee company has incurred ₹ 2,36,124 towards club expenses. The ledger account along with vouchers and invoices are submitted herewith. (Armexure-3) On perusal of the same, it is clear that the said expenses are incurred for the residential accommodation and food beverages for the vendors and employees of the company. Your good self would appreciate that the said expenses are necessary to effectively run the business of the company and the expense incurred is miniscule as compared to the revenue of the assessee being listed company. Since the club expense has been incurred for the residential accommodation and food beverages of vendors and employees, the same is actually and wholly incurred for the business of the assessee company and the same is allowable u/s 37 of the IT Act. Moreover, the said club expense incurred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said details, it is evident that the major addition is in the block of vehicles, computers, furniture fixtures etc which is put to use as soon as they are acquired as is evident on perusal of the details submitted herewith. Further, the assessee company submits that it is having an in house internal audit department and external auditors who do statutory audit as well as tax audit and therefore, the date of put to use have been verified by all of them. Further, we confirm that the assesses company has not claimed additional depreciation on the plant machinery. In so far as details of lease rent is concerned, we submit that ₹ 1.56 Crores (Net) is charged off to profit loss account as lease rent in respect of leasing arrangements entered into by the assessee company. The copy of the ledger account of lease rent is submitted herewith. (Annexure-8) Moreover, we submit that there is no lease of land arrangement entered into by the assessee company. (27) Your good self has sought an explanation regarding compliance with the provisions of Section 145A of the IT Act in respect of inventories. In this regard, we submit that the assessee company is engaged in the bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansaction. (Annexure-10) On perusal of above transactions coupled with party wise comparables provided by us, it is evident that the assessee has entered into transactions with its related parties at prevalent market price. (38) The details of loss in respect of cash flow hedges in respect of derivative contracts as referred to in Note no A(t) are already submitted vide point 23 herein above and hence, the same is not submitted again. (39) On perusal of details of brought forward loss as shown in Annexure XV of the Tax Audit Report and claimed in return of income, it is evident that the said brought forward losses are short term and long term capital losses of A.Y.2002-03, 2003-04,2004-05 and 2005-06 which are allowed as such in the assessment orders of the said years. Further, in respect of long term capital loss of A.Y.2006-07 and 2007-08 are concerned, we are submitting that the said loses have been allowed to us. We are submitting herewith the copies of assessment order of A.Y.2006-07 and 2007-08 for your good selves ready reference. (Annexure-11) 4.5 It shows that detailed enquiry has been done by Assessing Officer including issue of currency swap loss of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that Assessing Officer while framing assessment order is supposed to call all record of the assessee and having perusing the same order is passed then assessment order could not be revised in exercise of revisional power u/s.263. Even in case before us, we find that notice dated 23.08.2011 issued by the Assessing Officer u/s. 142(1), wherein Assessing Officer has almost raised 40 issues and on each of the issue, assessee has replied the same in detail to concerned Assessing Officer as discussed above. Having considered the same, Assessing Officer reached to certain conclusion. In such situation, it cannot be alleged that Assessing Officer has not applied his mind on the issue at hand, before reaching to certain conclusion. It was explained before Assessing Officer that assessee company borrowed money for the purpose of its business i.e. global trading of various commodities. As per terms entered into with banks for foreign currency working capital loan, banks sanctioned foreign currency with a condition that assessee company would enter into a currency swap arrangement for the said foreign currency Loan. Accordingly, assessee company had entered into currency swap transaction in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f capital nature - Held, yes 4.7 As stated above, complete details and break-up of aforesaid Currency Swap Loss alongwith a sample contract with Barclays Capital formed part of Annexure-I to the aforesaid letter dated 29th November, 2011. The Assessing Officer considered all the relevant issues during course of assessment proceedings and various replies and explanations filed on behalf of assessee-company and having duly considered vis-a-vis the documentary evidences and the audited accounts. Thereafter the assessment order was passed wherein total income was determined by Assessing Officer at ₹ 136,99,26,00/- as against returned income (as per revised return) of ₹ 117,58,16,576/-. Assessing Officer made several additions and disallowances. He after proper application of mind accepted the assessee's claim regarding currency swap loss of ₹ 6,04,00,000/- and no disallowance on this issue was made. It is correct that there is no discussion on this issue in assessment order but all the accompanying facts and circumstances establish beyond any doubt that this issue was specifically and thoroughly examined by Assessing Officer and he arrived at legally correct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stocks and shares through price fluctuations; or (c) a contract entered into by a member of a forward market or a stock exchange in the course of any transaction in the nature of jobbing or arbitrage to guard against loss which may arise in the ordinary course of his business as such member; o] (d) an eligible transaction in respect of trading in derivatives referred to in clause 35[(ac)] of section 236 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) carried out in a recognised stock exchange;] shall not be deemed to be a speculative transaction. Explanation.-For the purposes of this clause, the expressions- (i) eligible transaction means any transaction,- (A) carried out electronically on screen-based systems through a stock broker or sub-broker or such other intermediary registered under section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) in accordance with the provisions of the Securities Contracts (Regulation) Act. 1956 (42 of 1956) or the Securities and Exchange Board of India Act, 1992 (15 of 1992) or the Depositories Act, 1996 (22 of 1996) and the rules, regulations or bye-laws made or directions issued under thos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntroversial issue, we have to understand as to what exactly derivative means and what is exact meaning of transaction in respect of trading in derivative insofar as income-tax is concerned. After clearly understanding the actual legal meaning of the derivative trading vis-a-vis the speculative transaction, we cannot resist ourselves to arrive at the same conclusion on which the Learned CIT(A) has actually arrived. A derivative is a financial instrument, the price of which has a strong correlation with an underlying commodity, currency, economic variable or financial instrument. The different types of derivatives are future contracts, forward, swaps and options . They are traded on derivatives markets or over the counter (OTC). The market traded derivatives are standard but the OTC trades can be customized with regard to maturity, quantity, or pricing structure for a particular client. The disclosure of derivatives in financial statements is required by Financial Reporting Standard-13 . A speculative transaction as per section 43(5) means a transaction in which the contract for the purchase or sale of any commodity, including stocks and shares, is periodically or ultimately sett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee was a cotton exporter. The assessee was an export house. Therefore, foreign exchange contracts were booked only as incidental to the assessee's regular course of business. The Tribunal has recorded a categorical finding to this effect in its order. The Assessing Officer has not considered these facts. Under section 43(5) of the Income-tax Act, speculative transaction has been defined to mean a transaction in which a contract for the purchase or sale of commodity is settled otherwise than by the actual delivery or transfer of such commodity. However, as stated above, the assessee was not a dealer in foreign exchange. The assessee was an exporter of cotton. In order to hedge against losses, the assessee had booked foreign exchange in the forward market with the bank. However, the export contracts entered into by the assessee for export of cotton in some cases failed. In the circumstances, the assessee was entitled to claim deduction in respect of ₹ 13.50 lakhs as a business loss. This matter is squarely covered by the judgment of the Calcutta High Court, with which we agree in the case of C1T v. Soorajmull Nagurmull (1981) 129 ITR169. Before the Calcutta High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, with a view to reverse the completed assessment order on alleged ground that such assessment was erroneous and prejudicial to the interest of revenue. To sum up, we find that assessment order was passed after thorough scrutiny and after due application of mind on relevant issues on the point. Claim of currency swap loss of ₹ 6,04,00,000/- was specifically inquired into during the course of the assessment proceedings and Assessing Officer raised all relevant queries on this issue. Assessee filed detailed replies on this issue accompanied by all documentary evidences in support of its claim. Assessing Officer after due application of mind concluded that the currency swap loss was allowable having regard to the provisions of section 43(5) of the Act. 4.14 Even if it is assumed that two different possible views could have been taken on this issue, the fact remains that the Assessing Officer has adopted a legally tenable and possible view after taking into considering the facts and circumstances as discussed above. Such view adopted by Assessing Officer cannot be said to be a legally unsustainable view. 4.15 It is established legal position that every loss of revenue c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ried out any investigation either while adding certain amounts in the total income or while accepting the assessee's explanations on the various points. The Tribunal set aside the order of the Commissioner of Income-tax. On a reference: Held, that the finding of fact by the Tribunal was that the assessee had produced relevant material and offered explanations in pursuance of the notices issued under section 142(1) as well as section 143(2) of the Act and after considering the material and explanations, the Income-tax Officer had come to a definite conclusion. Since the material was there on record and the said material was considered by the Income-tax Officer and a particular view was taken, the mere fact that different view can be taken should not be the basis for an action under section 263. The order of revision was u justified. It shows that even if two possible views are possible on merits, and Assessing Officer has adopted one view after appreciation of facts, his order cannot be said to be erroneous so as to be prejudicial to the interests of Revenue to invoke provision of Section 263. We also find that Hon ble Supreme Court in case of Malabar Industrial Company L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the submission of learned 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 assessing 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was increased from ₹ 1.33 Crs. to ₹ 2.66 Crs. and the shares were issued at a premium of ₹ 67.09 Crs. Later on, Sanghavi Foods Pvt. Ltd. invested ₹ 52.42 Crs. in M/s. Deepak Foods and out of the said amount ₹ 21.52 Crs. was withdrawn by the assessee which is subject matter of tax as dealt by the concerned CIT above. 6.3 The CIT has stated that the amount of goodwill has been decided on an arbitrary basis without recognizing the principles of natural justice. He has referred to the profit earned by M/s. Deepak Foods and has stated that it was impossible to determine the goodwill at such a huge figure. According to him, the entire transaction has been routed under the garb of goodwill and therefore, he has stated that the amount received of ₹ 21.52 Crs. should be taxed on a protective basis under the head income from other sources. As stated above, the CIT has given the following directions. a. Firstly, he has stated that the goodwill should be computed as per the super profit method and the amount received by the assessee in excess of the goodwill amount should be taxed as long term capital gain. b. Alternately, he has stated that the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Commissioner of Income-tax (Appeals). 3. Before the Commissioner of Income-tax (Appeals), assessee relied on a subsequent decision of our coordinate Bench in the case of Mr Riyaz A Shaikh v. ITO vide ITA No 352/PN/06 dated 29.10.2010, wherein the Tribunal held that amounts received by the partner on his retirement are exempt from capital gains tax. The Commissioner of Income-tax (Appeals) has since deleted the impugned addition and against this decision, the Revenue is in appeal before us. 4. The learned departmental Representative supported the order of the Assessing Officer. According to the learned Departmental Representative, the additional consideration received by the assessee was on account of relinquishment of his pre existing rights in the partnership firm, and therefore, the same was in the nature of capital gain liable to tax as per the provisions of sections 45 read with section 2 (47) ft) (ii) of the Act. 5. On the other hand, the learned Counsel for the respondent- assessee defended the order of the Commissioner of Income-tax (Appeals) and filed a copy of the order of our co-ordinate Bench in the case of Mr Riyaz A Shaikh (supra) in support of the stand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i (supra) has also noted the omission of section 47(ii) of the Act and insertion of section 45(4) of the Act with effect from 1.4.1988. Considering the entirety of the legal position, it has been affirmed by the Hon'ble High Court that amounts received by the partner on his retirement, are exempt from capital gains tax. In this view of the matter, we find it appropriate to allow the claim of the assessee and accordingly the order of the CIT(A) is set aside. The AO is directed to delete the impugned addition. Thus, in Ground Nos 2 3, assessee succeeds as above. Therefore, we do not find any error in the order of the Commissioner of Income-tax (Appeals) and accordingly, affirm his order. The revenue fails on this Ground of appeal. Nothing contrary was brought to our knowledge on behalf of revenue with regard to above legal preposition. The assessee further clarified that the decision of ITAT, Pune in the case of Riyaz Shaikh has been confirmed by Hon'ble Jurisdictional of Bombay High Court, inter alia held that the amount received at the time of retirement is exempt from tax. The relevant operative para of the said order is as under: 2. We find that by the impug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ictional Bombay High Court and ITAT, Pune as discussed above, the order of Assessing Officer cannot be said to be erroneous as to be prejudicial to the interest of revenue to invoke the provisions of section 263 of Act. 6.7 Regarding the contention of CIT that the entire transaction was an arranged transaction. According to him, the amount received by the assessee as goodwill was not correct since the goodwill of M/s. Deepak Foods was much less. The copy of the balance sheet of Deepak Foods for F.Y. 2007-08 has been placed on pages 123 to 129 of the Paper Book filed by assessee reveals that the total revenue was ₹ 9.19 Crs. and the net profit was ₹ 85.49 lakhs. The concerned CIT in his order has considered the turnover and profit of M/s. Deepak Foods for the earlier years and has held that the goodwill should be computed as per the super profit method. According to the CIT, the goodwill as per the super profit method would be worked out at a much lower figure. In this regard, we find that the CIT has not appreciated the fact that Lesma Ltd. had acquired ₹ 1.33 Crs. share capital in M/s. Sanghavi Foods Pvt. Ltd. at a premium of ₹ 67.09 Crs and the Sanghavi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partite agreement between such legal heirs, landlord and purchaser for handing over peaceful possession to the purchaser being capital receipt could not be brought to tax as income from other sources. The similar view has been expressed in the case of CIT Vs. Smt. T.P. Sidhwa (1982) 133 ITR 840 (Bom), wherein it was held that the income from house property earned by one who was not owner was held not assessable under the head income from other sources. The mere fact that rent received in the absence of ownership could not be brought to charge u/s.9 would not enable the revenue to bring it under the residuary head i.e. income from other sources. 6.9 Regarding the allegation of CIT that the assessee has resorted to tax planning. As per the above discussion, the retirement of partner does not amount to a transfer for the purposes of capital gains. The court has held that if transactions are arranged as per law, simply because they lead to tax reduction, it does not mean that these transactions are to be rejected as tax planning measures. The Hon ble Supreme Court in the case of Walfort Shares and Securities [326 ITR 1] has held that in case, the assessee company purchased the sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer and materials which were collected by the Commissioner in revisional proceedings, the Commissioner had taken a different view. However, in the revisional proceedings under section 263. it was not open for the Commissioner to take such a different view. There was nothing on record to suggest that the view taken by the Assessing Officer was unsustainable in law. Hon ble Delhi High Court in case of CIT vs. DLF Ltd., 350 ITR 555 (Del.). held that It is not mere prejudicial to the Revenue or a mere erroneous view which can be revised, under section 263 of Income-tax Act. There should be added element of unsustainability in the order of Assessing Officer, which clothes the Commissioner with jurisdiction to issue notice, and proceed to make appropriate orders under provision of Section 263. Hon ble Supreme Court in case of CIT vs. Greenworld Corporation, 314 ITR 81 (SC) observed that scope of provisions of section 263 of the Act is no longer res integra. The power to exercise suo motu power of revision in terms of section 263(1) is in the nature of supervisory jurisdiction and same can be exercised only if the circumstances specified therein, viz., (1) the order is e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, the issues which are accepted do not find mention in the assessment order and only such points are taken note of on which the assessee's explanations are rejected and additions/disallowances are made. In such a situation, we are of the view that provisions of s. 263 cannot be resorted to and for which we draw support by the decision of H'ble Bombay*High Court in the case of Gabriel India Ltd (supra). We also draw support from the decision of H'ble Delhi High Court in the case of CIT vs. Honda Sial Power 333 ITR 547 (Del), where it has been held that when a regular assessment is made u/s 143(3) a presumption can be raised that the order has been passed upon on application of mind. Before us, Revenue has not brought any material on record to demonstrate that the view taken by the AO was an impermissible view and was contrary to law or was upon erroneous application of legal principles necessitating the exercising of Revisionary powers u/s 263. Further, the cases laws relied upon by the Revenue are distinguishable on facts and therefore cannot be applied to the facts of the present case. In the view of the aforesaid facts, we are of the view that in the present case fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ahar Bhattacharjee 24 Taxmann.com 215 (Gau.), wherein assessment order passed on wrong assumption of facts, on incorrect application of law, without due application of mind are not beyond the scope of Section 263. In case before us there is no wrong assumption by Assessing Officer and case has been decided in its facts and circumstances. 4.21 Learned Departmental Representative also relied on following case to support the order of CIT(A). i. CIT v. Usha International Ltd. 348ITR 485 [Del.] ii. Bharat Overseas Bank Ltd. vs. CIT 152 TTJ 546 (Chennai) iii. Malabar Industries Ltd. vs. CIT 243 ITR 23 (SC). iv. Asman Invesmtent Ltd. v DCIT ITA No. 1262/A/2011, ITAT Ahmedabad 4. There is no dispute to the proposition that Assessing Officer s order can be revised in case of assessee made no inquiry in the assessment order. But in case before us enquiry has been done. So it can not be said that Assessing Officer has passed order without any enquiry or application of mind. So, the cases relied by learned Departmental Representative does not help the Revenue. In view of above discussion, CIT was not justified in setting aside the order of Assessing Officer by invoking provis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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