TMI Blog2015 (5) TMI 865X X X X Extracts X X X X X X X X Extracts X X X X ..... loss of ₹ 5739 crores had been credited to the P & L a/c. From the above entries it is clear that the assessee had claimed the loss in the P & L A/c. However, the said amount was suo-motu added in the computation of income because it was not an allowable loss. This fact was examined by the AO who framed the draft assessment order for the approval of the DRP. The AO prepared a draft assessment order u/s 144C(1) of the Act and the said draft assessment order inter alia covered the issue relating to the taxability of transfer of PI undertaking to BIL at Nil consideration. The AO referred to the notes to the accounts and computation of total income, then specifically asked the assessee about the justification of the claim of capital loss amounting to ₹ 5739 crores which is evident from page nos. 73 to 78 of the draft assessment order dated 16.11.2011, copy of which is placed at page nos. 125 to 130 of the assessee’s compilation. From the above noted facts, it therefore, appears that the issue on the basis of which assessment order was considered by the ld. CIT as erroneous and prejudicial to the interest of the Revenue was examined by the AO in detail and it was dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustified in holding the assessment order dated 30.10.2012 as erroneous and prejudicial to the interest of the Revenue. Action of the ld. CIT was impermissible u/s 263 of the Act particularly when he directed the AO to re-examine the issue and proposed to tax ₹ 2479 crores either under section 45 or section 28(iv) of the Act. As regard expenditure incurred by the assessee towards amount paid to BIL for usage of passive telecom infrastructure ld. CIT directed the AO to re-examine the allowability of expenditure claimed by the assessee but he had not stated as to how and in what manner the expenses claimed by the assessee were impermissible, therefore, the action of the ld. CIT was not justified. As in the former part of this order that the AO in the original assessment proceedings had accepted the claim of the assessee after proper examination and verification of the claim and the ld. CIT had not given any finding as to how and in what manner the order of the AO on this issue was erroneous and prejudicial to the interest of the Revenue. He simply directed the AO to make further verification and examination for allowing the claim which the AO had already done, therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DRP qua the specific issue of determination and allowability of 'capital loss' suffered by the assessee pursuant to the scheme of arrangement sanctioned by the High Court and thus the CIT had no jurisdiction under section 263 of the Act to revise such order. 3.3 That on the facts and circumstances of the case and in law, the CIT failed to appreciate that the specific issue of determination and allowability of 'capital loss' suffered by the assessee pursuant to the scheme of arrangement sanctioned by the High Court was also before the Appellate Tribunal and thus the CIT had no jurisdiction under section 263 of the Act to revise such order. 4. That on the facts and circumstances of the case and in law, the CIT erred in alleging that the order of assessing officer was erroneous and prejudicial to the interest of the revenue in as much as he had not examined as to whether the transaction of transfer of passive telecom infrastructure by the appellant to its 100% subsidiary for Nil consideration, resulted in capital gains/business income to the appellant and whether the said transaction was a colorable device to evade tax. 4.1 That on the facts and circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not nil but ₹ 8,218 crores. 7.2 That the CIT failed to appreciate that in the absence of receipt of any consideration on transfer of the passive telecom infrastructure, the issue of applicability of capital gains tax under section 45 did not arise in view of the specific exclusion provided in section 47(iii) of the Act. 7.3 That the CIT failed to appreciate that in absence of receipt of any consideration for transfer of the telecom infrastructure, the question of attributing any notional sum as consideration and bringing the transaction to capital gains tax did not arise and such an action had absolutely no basis in law. 7.4 That the CIT failed to appreciate that the transfer of the telecom infrastructure for Nil consideration only resulted in loss of ₹ 5,739 crores to the appellant, which had been rightly held by the assessing officer and the DRP as 'capital loss' in the order passed under section 143(3)/144C of the Act. 7.5 That the CIT failed to appreciate that accounting entries are not determinative of the taxability of any claim of income or deductibility of expenditure under the provisions of the Act. 7.6 That the CIT failed to appreciate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds it is gathered that the only grievance of the assessee relates to the action of the ld. CIT u/s 263 of the Act in setting aside the assessment order framed by the AO u/s 143(3) r.w.s. 144C of the Act. 4. Facts of the case in brief are that the assessee filed ereturn of income on 30.09.2008 declaring an income of ₹ 16,085,805,679/- which was processed u/s 143(1) of the Act on 31.03.2010. Subsequently the assessee filed its revised return on 22.04.2011 declaring an income of ₹ 19,980,629,260/- under normal computation and the same was processed u/s 143(1) of the Act on 09.11.2010 resulting a refund of ₹ 12,90,886,170/-. Subsequently, the case was selected for scrutiny. 5. The assessee was engaged in the business of providing telecommunication services, like mobile, fixed lined, long distance and data services across the country. The assessee and M/s Bharti Infratel Ltd. (BIL in short) filed Scheme of Arrangement (SOA) before the Hon ble Delhi High Court for transfer of passive infrastructure undertaking (PI undertaking), all assets and liabilities were transferred from assessee to BIL (a wholly owned subsidiary of the assessee). All the plant and machinery, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the issue of disallowance made by the AO. In the meantime, the ld. CIT exercised his revisionary power u/s 263 of the Act and issued a show cause notice to the assessee on 25.11.2013 asking it to submit the objection if any against the proposed revision. The contents of the aforesaid show cause notice issued to the assessee are reproduced verbatim as under: On perusal of the Assessment Records and other records available with undersigned, before coming to the exact issues involved, the brief facts and relevant portion from the Scheme of Arrangement entered into by the Assessee; Shareholder s agreement; Auditor s report for F.Y. 07-08, 08-09 in the case of Bharti Airtel Ltd. (BAL) and its subsidiary company M/s Bharti Infratel Ltd. (BIL), and Indefeasible Right to Use Agreement (IRU) are being discussed/noted/reproduced below: Scheme of Arrangement (SOA) (dated nil) The main facts related to the issues under consideration are noted below.- i) The SOA dated nil has been entered into between BAL (transferor) BIL (transferee), approved by the Hon'ble Delhi High Court vide order dated 26.11.2001. ii) BIL has been incorporated as a whoIIy owned subsidiary of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... down of assets which may be suffered by the transferor company, pursuant to this scheme or otherwise in course of its business or in carrying out such restructuring of operations of the transferor company or any of its subsidiaries, as the transferor company consider necessary or appropriate. Such reserve for business restructuring shall be withdrawn and will be credited to profit and loss accounts prepared for the quarter in which the scheme becomes effective. Such reserves for business restructuring shall be arising out of this scheme and shall not be considered as reserves created by the transferor company. .........3.3.1 xi) The transferor company shall reduce from its account the book value of the demerged telecom infrastructure undertaking and shall be debited by the transferor company to its P L a/c prepared for the quarter in which the scheme becomes effective. ...........3.3.2 xii) On demerger on 31.01.2008 of the telecom infrastructure undertaking of the transferor company, the assets stand transferred to and vested in the transferee company at nil value, free from any charges and encumbrances, subject however to the rights retained by the transferor company and acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transferor company on 31.1.2008. Besides this 32,03,550 fully and compulsory convertible noncumulative unsecured and interest free debentures of ₹ 10,000/- each has also been issued, out of which 30,25,575 debentures have been issued in the March, 2008 itself. iii. During F.Y.2008-09, BIL bas issued bonus shares in the ratio of 1:9999, increasing the share holding of M/s BAL to 50,00,00,00,000 shares from share premium received in the last financial year. Annual Report on Bharti Airtel Limited. The main facts related to the issues under consideration are noted below:- i. As per the annual report of 2007-08, the assessee has entered into a joint venture agreement with VEL and Idea Cellular Limited to form an independent tower company by the name of Indus Tower Limited to provide passive infrastructure services in 16 circles of India. ii. BAL and Vodafone will hold shares approximately 42% each in Indus Tower and balance 16 percent will be held by the Idea. iii. Pursuant to the joint venture agreement Bharti Infratel Limited has subscribed 50,000 equity shares of ₹ 10 each in Indus Tower Limited on17.12.2007 for an aggregate value of ₹ 500000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sets, Capital Work in Progress (Including Capital Advances) 2,502,324 Current Assets 2,423,048 Current Liabilities (10,608,193) Deferred Tax Liability -1,558,143 Amount Transferred to General Reserve 82,359,656 The Indefeasible Right to Use Agreement (19.12.2008) Entered into by Bharti lnfratel Limited Indus Towers Limited. Effective Date 1.1.2009 The main fact related to the Issue under consideration is noted below:- (i) Indus wishes to use the Passive Infrastructure located at the Sites owned or acquired or possessed by the Operator, to the extent permitted by applicable laws in India, to provide access to such Passive Infrastructure to various telecommunications operators in India on a non- discriminatory basis. (ii) The Operator is willing to provide to Indus an indefeasible right to use the Passive Infrastructure to the extent permitted by applicable laws in India and subject to the terms 'and conditions of this Agreement. (iii) This Agreement sets forth the mutually agreed terms and conditions under which the IRU Grantor Party grants and Indus accepts, with effect from the Effective Date, an indefeasible right to use in respect of the Passi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, it was clear that the assessee had not disclosed the full and true intention in the SOA approved by the Hon ble High Court. He pointed out that in the SOA, it was mentioned that the passive infrastructure of the assessee is being transferred to wholly owned subsidiary and as there is no movement of assets of the company outside the group, neither any shares are to be issued, nor any consideration is to be paid to the Shareholders for transfer of the assets. He further pointed out that within less than 15 days of approval of SOA by the Hon ble High Court and even before the transfer of assets by the assessee to Bharti Infratel Ltd., a Shareholder Agreement dated 08.12.2007 was entered into which clearly disclosed the intention of the transferor company that a joint venture company in the name of Indus Infratel Ltd. was to be created in which the passive infrastructure of the transferor company has to ultimately reach through the intermediaries i.e. Bharti Infratel Ltd. and Bharti Infratel Ventures Ltd. The ld. CIT pointed out that as per the Shareholders agreement, the passive infrastructure transferred by the assessee company, before the effective date and after the effective da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hange of other assets, the acquisition cost of the investment should be determined by reference to the fair value of the asset given up. The ld. CIT further observed that the cost of investment in BIL had been revised from ₹ 5,00,000/- before the transfer of assets by the assessee company to the transferee company to ₹ 82,181,703,000/- on transfer, after adding the fair market value of passive infrastructure transferred to BIL in the Financial Year ending on 31.03.2008. Thus, the consideration for transfer of assets to BIL had been received by the assessee directly and credited by it to the investments in the name of BIL in the balance sheet without properly routing it through P L a/c. The ld. CIT further pointed out that if the cross entries were to be ignored, the final effect in the balance sheet as on 31.03.2008 of the assessee was that the value of investment had increased to the tune of ₹ 8218 crores and the value of its passive infrastructure assets had decreased by ₹ 5739 crores and the difference thereof amounting to ₹ 2479 crores was shown during the assessment year 2008-09 and ₹ 126,831,000/- in the assessment year 2009- 10. In this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Non-exclusive right of use of its transferred assets to BIL, without any obligation to pay or on payment of such charges as may be reasonable and acceptable to both transferor and transferee company, as per the SOA approved by the Hon ble High Court. 8. The ld. CIT asked the assessee to submit objection, if any. In response, the assessee submitted that the legal objection raised to the initiation of proceedings u/s 263 of the Act, need to the disposed off before dealing with the merits of the issues raised in the show cause notice. A reference was made to the following case laws: M/s GKN Driveshafts (India) Ltd. Vs ITO Others 259 ITR 19 (SC) Janaki Exports International Vs UOI 278 ITR 296 (Del) (HC) 9. The ld. CIT after considering the submissions of the assessee observed that the decisions cited by the assessee were not applicable for the proceedings u/s 263 of the Act and there is no requirement for the Commissioner before initiating the proceedings u/s 263 of the Act to be satisfied which is the requirement for the proceedings under sections 147 and 158BD of the Act. A reference was made to the following case laws: Renusagar Power Company Ltd. Vs CIT 234 ITR 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o ₹ 5,739 crores made by the assessing officer in the draft assessment order dated 16.11.2011, resulting in double addition and all facts pertinent to the said issue, which included the scheme of arrangement, the audited accounts and the computation of income etc., were disclosed/filed before the DRP. After considering the facts and above documents in their entirety, the DRP agreed with the finding of the assessing officer that the assessee-company had incurred 'capital loss' of ₹ 5,739 crores, pursuant to the Scheme of Arrangement, which was not allowable deduction for the purpose of computation of business income of the assessee- company in the assessment year under consideration. Further, on the issue of reduction of the proportionate amount withdrawn from the business restructuring reserve which was agitated by the assessee, the DRP directed the assessing officer to verify the claim of the assessee and take necessary action. The DRP while disposing off the objections raised by the assessee to the draft assessment order has, under the Act, plenary powers; the power of the DRP are, in other words, co-terminus with those of AO and traverse over the whole assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment on the ground that the same was erroneous and prejudicial to the interest of the Revenue. (iii) The power of revision available under section 263 of the Act is restricted only to orders which are passed by the 'assessing officer', Under the new scheme of assessment, a draft order is passed by the assessing officer against which the assessee may file objections before the DRP. The DRP, after hearing the objections of the assessee issues directions qua such objections raised by the assessee as well as on other issues which may come to its notice during the pending proceedings. Further, the directions issued by the DRP are, in view of the Section 144C(10) of the Act, binding on the assessing officer and the final order is passed by the assessing officer without further going into the merits of the case. On perusal of the above provisions, it may be noted that section 144C(13) provides that upon receipt of the directions, the assessing officer shall, in conformity with the directions, complete the assessment without providing any further opportunity of being heard to the assessee. Thus, it is clear that the assessing officer has no choice, but to pass an order strictly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esulted in capital loss of ₹ 5,739 crores, the attempt to now consider the revalued amount of such assets at ₹ 8,218 crores, amounts to change of opinion. (v) The primary observation made in the above show cause notice, that the difference in the book value and fair market value of the investments amounting to ₹ 2479 crores had to be compulsorily withdrawn from reserve and credited to the profit and loss account of the assessee-company in the quarter in which the scheme became effective is factually incorrect and denied. The terms of the scheme nowhere provided that the entire amount of 'business restructuring reserve' should be withdrawn and credited to the profit and loss account in the quarter in which the scheme becomes effective, but only stipulated that the reserve to the extent necessary to compensate the loss incurred by the assessee, pursuant to the scheme was to be withdrawn and credited to the profit and loss account. The present show cause notice primarily proceeds on the aforesaid wrong factual premise that the assesse company had failed to comply with the terms stipulated in the scheme. Thus, the very foundation of show cause notice allegi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerned. As regards to the computation of total income as per normal provisions, the ld. CIT observed that the AO had simply asked why the loss of ₹ 5739 crores debited in the P L a/c may not be disallowed and after considering the reply of the assessee held that the assessee offered for tax the entire amount of ₹ 5739 crores as per provisions of the I.T Act which revealed that even for normal computation, the AO had not examined the transaction perse, correctness of the consideration at Nil or as to whether this transaction had resulted into capital loss or gain. 14. As regards to the claim of the assessee that the DRP had, on detailed examination of the issue and on due application of mind affirmed the finding of the AO that the assessee had suffered capital loss pursuant to a scheme of arrangement, the ld. CIT held that it was not factually correct. He also pointed out that the DRP had given the finding only about non-allowability of the amount of ₹ 5739 crores which was on account of transfer of capital asset and in that context had observed that this loss debited in P L a/c was not an allowable item. According to him the issue as to whether the tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10.2012 for the assessment year 2008-09, is neither 'erroneous' nor 'prejudicial to the interest of the Revenue in relation to the two issues referred to in the above notice. The aforesaid, two conditions must be shown to simultaneously exist before the Commissioner may lawfully be vested with jurisdiction under Section 263 of the Act and for this reliance was placed on the landmark decision of the Supreme Court in the case of Malabar Industrial Co. Ltd. v. CIT ; 2431TR 83 (SC). In the instant case, the assessing officer, after examination/verification of terms of the scheme, the accounting treatment provided in the books of the assessee, the computation of income and due application of mind as regards the nature of income/ loss arising in relation to the aforesaid transaction of transfer of passive telecom infrastructure undertaking without consideration to Bharti Infratel Ltd., concluded that there was sale of the telecom infrastructure pursuant to the scheme of arrangement, which resulted in capital loss of ₹ 5,739 crores, which was proportionate to the amount withdrawn by the assessee from the business restructuring reserve and credited to the profit and loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mination of value of 'Investment', when the same is acquired in exchange for another asset. In the case of the assessee, it is an accepted fact that no additional shares were received from Bharti Infratel Ltd. on transfer of the telecom infrastructure and the share-holding of the assesseecompany in Bharti Infratel Ltd. remained unchanged. Thus, the question of receiving any 'investment' in exchange of transfer of assets does not arise. at all and there can, therefore, be no application of the aforesaid accounting standard. Even otherwise, it is respectfully submitted, that when the revaluation of investment of the assessee-company in Bharti Infratel Ltd. was in itself not in terms of AS- 13, as elaborated supra, the question of holding that consideration to the extent of such revalued amount of investment had been received by the assessee, does not arise at all. Further, mere accounting entries amounting to revaluation of an existing asset held by an assessee, cannot be said to constitute receipt of actual consideration. (iv) The assessment order passed by the assessing officer is not erroneous, much less prejudicial to the interest of Revenue warranting revision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been noted by your Honour, in Para 7 of the show cause notice itself. Once it is accepted that the usage charges paid by the assessee- company was as per the prevalent market rates and there was no embargo as such in making such payments under the scheme, there is no scope for disallowance of such expenditure under the Act. (vi) As regards, show cause notice dated 21.03.2014, the main submission of assessee, other than challenging the validity of 263 proceedings on jurisdiction issue, Is that the view that the notional difference between the book value and the fair market value of the 'passive telecom infrastructure undertaking' transferred by the assessee-company to Bharti Infratel Ltd., constitutes revenue receipt under section 28(iv) of the Act, is not valid and unsustainable in law. Section 28(iv) provides two preconditions to be satisfied: (a) There should be a non-monetary 'benefit or perquisite' accruing to the assessee; and (b) Such benefit or perquisite should arise from the business or the exercise of a profession. In the present case, both the aforesaid ingredients of section 28(iv) of the Act are not fulfilled. In the absence of receipt of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act, the ld. CIT referred to the following case laws: CIT(Central-II) Vs Goetz (India) Pvt. Ltd. (Del.) (HC) order dated 09.12.2013 CIT Vs Nagesh Knitwear Pvt. Ltd. 345 ITR 135 (2012) (Del.) Malabar Industrial Co. Ltd. Vs CIT 243 ITR 83 (SC) Nabha Investments Pvt. Ltd. Vs Union of India 246 ITR 41(Del.) ITO Vs DG Housing Project Ltd. 343 ITR 329 (Del.) Gee Vee Enterprises Vs ACIT, Delhi-I, (1975) 99 ITR 375 (Del.) Rampyari Devi Saraogi Vs CIT (1968) 67 ITR 84 (SC) Tara Devi Aggarwal (Smt) Vs CIT (1973) 88 ITR 323 (SC) CIT Vs Jaykumar B. Patil (1999) 236 ITR 469 (SC) 17. The ld. CIT observed that the AO was duty bound to examine the facts of the case in totality not only of the assessee but of BIL, to arrive at the conclusion about correctness of the claim of stated consideration relating to transfer of passive asset of the assessee to BIL at Nil and then come to a conclusion as to whether the apparent transaction of transferring the passive infrastructure in the form of towers by the assessee to M/s Bharti Infratel Ltd. (BIL) at Nil consideration in pursuant to Scheme of Agreement (SOA), was to be accepted as such as correct or further enquiries wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arket value. Therefore, it appears that consideration for transfer of asset is not nil but ₹ 82,181,203,000/-. (b) It is claimed by assessee that the increase in investment in BIL is notional as it is on account of revaluation of asset of BIL and no fresh share were issued. This appears correct apparently but does not appear to be correct if examined in depth and balance sheet of subsequent year is perused. The fact is that during F.Y.2008-09, BIL has issued bonus shares in the ratio of 1:9999, increasing the share holding of assessee to 50,00,00,000 shares. Thus in the financial year ending on 31 March 2009, the assessee company was having 50,00,00,000 equity shares, and the total value of the investments as on 31.3.2009 has been shown same i.e. ₹ 82,181,703,000/- as on 31.03.2008. Thus the no. of shares has also gone up and this increase in shareholding is only on account of the transfer of passive infrastructure assets. (c) Further, assessee is claiming expenditure for the use of its transferred asset to BIL at market rate though it is claimed that asset has been transferred at nil value. In the Scheme of Arrangement it has been stated that the transferor compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowability of depreciation due to change in written down value as per section 43(6) of the Act, if it was claimed that the passive infrastructure assets so transferred were depreciable asset. 19. As regards to the objection of the assessee for the applicability of provisions of section 28(iv) of the Act to ₹ 2479 crores representing an amount by which, assessee s balance sheet had gone up. The ld. CIT observed that the said amount was not hypothetical but real if the transaction was to be examined in totality. The ld. CIT observed that the asset of the assessee in the form of investment in its subsidiary namely BIL had actually gone up by ₹ 2479 crores which was evident from the fact that in the subsequent year assessee had been allotted bonus shares of M/s BIL in the ratio of 1:9999 and thereby maintaining the total value of shareholding at ₹ 8218 crores whereas asset in form of passive infrastructure had gone down by ₹ 5739 crores thus giving net effect of actual increase of ₹ 2479 crores which was the real benefit arose to the assessee and not hypothetical. As regards to the argument of the assessee that since the transaction was purely a capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a capital loss of ₹ 5739 crores to the assessee company and since the said loss was capital in nature, the assessee company suo-motu added back the same while computing income under normal provisions of the Act. It was contented that the AO although correctly held that the said transfer resulted in a capital loss of ₹ 5739 which was not allowable under normal provisions of the Act, however, while computing business income, he added back the said loss once again to the income returned by the assessee after disallowing such loss, thus, resulting in double disallowance of the same amount which was later on rectified by the Hon ble ITAT vide order dated 11.03.2014 by categorically holding that it was a case of double addition by the AO. It was stated that the ITAT specifically held that the impugned transfer resulted in a capital loss of ₹ 5739 crores to the assessee which was not a tax deductible item and that the said entries were absolutely profit neutral. It was further stated that the findings of the AO and the DRP to the effect that the transfer of telecom infrastructure resulted in a capital loss of ₹ 5739 crores to the assessee company were held to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el/2012. It was also contended that the Tribunal is the final Fact Finding Authority and on questions of fact, its decision is final. Reliance was placed on the following case laws: Patnaik Co. Ltd. Vs CIT, (1986) 161 ITR 365 (SC) K. S. Subbiah Pillai Vs CIT (1999) 152 CTR (SC) 428 : (1999) 237 ITR 11 (SC) CIT Vs D.L.F United (2000) 243 ITR 855 (SC) CIT Vs Manna Ramji Co. (1972) 86 ITR 29 (SC) 23. It was further contended that in the present case the Tribunal being the final Fact Finding Authority had given an undisputed finding of fact on the issue relating to transfer of passive infrastructure. Therefore, the ld. CIT has no power to differ or to go behind such finding of fact given by the Tribunal or proposed to revise order of assessment on the issues already considered and adjudicated by the ITAT. It was emphasized that the Tribunal held in clear terms that the telecom infrastructure was transferred by the assessee to BIL for Nil consideration resulting in a capital loss of ₹ 5739 crores and that the revaluation of investments in BIL at its fair value of ₹ 8218 crores by the assessee was in order. It was also stated that the Tribunal had particula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 143(3) r.w.s 144C(13) was passed by the AO after taking into consideration the directions of the DRP. A reference was made to page no. 243 of the paper book and it was stated that the DRP vide their order dated 30.08.2012 in para 3.9.3 held in clear terms that the transfer of the telecom infrastructure by the assessee company to BIL resulted in a capital loss of ₹ 5739 crores and the AO held that the capital loss of ₹ 5739 crores was not allowable under normal provisions of the Act but he added the said loss once again to the income returned by the assessee after disallowing such loss, thus, resulting in double disallowance of the same amount. However, the ITAT vide order dated 11.03.2014 categorically held that it was a case of double addition by the AO and that the capital loss of ₹ 5739 crores to the assessee company which was not a tax deductible item and transferred from the reserves was not taxable. It was contended that the assessment order u/s 143(3) r.w.s 144C(13) stood merged with the order/directions of the DRP in respect of specific issue of the determination and allowability or otherwise of gain/loss on transfer of passive infrastructure to BIL, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l for the assessee summarized the allegations of the ld. CIT on the issue of transfer of PI undertaking as under: (i) The order of the AO was erroneous and prejudicial to the interest of the Revenue. (ii) The AO failed to examine the issue of taxability of capital gains allegedly accruing on the impugned transfer of PI undertaking. (iii) The consideration for transfer of impugned undertaking was not nil and the revaluation of investments to fair value of ₹ 8218 crores corresponding to the fair value of assets transferred was to be taken as consideration for transfer. (iv) The impugned transfer resulted in capital gains chargeable u/s 45 of the Act. (v) The amount of ₹ 2479 crores representing the resultant increase in the Balance Sheet of the company due to transfer of PI undertaking (i.e. difference between fair value of assets transferred and their book value) was the capital gains accruing to the assessee u/s 45. (vi) Alternatively, the said amount of ₹ 2479 crores represented business income u/s 28(iv) of the Act. 28. It was submitted that the issue of transfer of PI undertaking to BIL was fully covered by the order of the ITAT, Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to balance both sides of the balance sheet having no impact whatsoever on the profits of the assessee company. It, thus, follows that the balance amount of ₹ 2479 crores standing to the credit of Business Restructuring Reserve (being the difference between the original revaluation reserve of ₹ 8218 crores and amount transferred there from of ₹ 5739 crores to the P L a/c) was also merely a notional credit standing in the books of the assessee to balance both the sides of the balance sheet having no impact whatsoever on the P L a/c of the assessee. It was contended that both the aspects relating to (i) the transfer of passive infrastructure assets and (ii) book adjustments relating to creation of revaluation reserve, utilization thereof, and balance remaining in such reserve have reached finality in view of the direct findings of the Hon ble Supreme Court and the ITAT. Therefore, the order of the ld. CIT u/s 263 of the Act crashes at the very threshold on account of being contrary to the express judgments of the Hon ble Apex Court in the case of Indo Rama Synthetics (supra) and the ITAT in the assessee s own case. It was emphasized that the direct applicability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on (1) of section 263 of the Act is in nature of supervisory jurisdiction and the same can be exercised only if the circumstances specified therein exist. It was further stated that two circumstances must exist to enable the Commissioner to exercise the power of revision under this sub-section viz., (i) the order is erroneous (ii) by virtue of the order being erroneous, prejudice has been caused to the interest of the Revenue. However, the said power is not an arbitrary or uncharted power, it can be exercised only on fulfillment of the requirements laid down in the said section. A reference was made to the judgment of the Hon ble Supreme Court in the case of Malabar Industries Co. Ltd. Vs CIT 243 ITR 83 (SC). It was contended that the consideration of the ld. CIT as to whether an order is erroneous in so far as it is prejudicial to the interest of the Revenue must be based on materials on the record of the proceedings called for by him. But in the present case the assessment order passed by the AO was not erroneous much less prejudicial to the interest of the Revenue. It was stated that the ld. CIT has claimed that the AO had not examined the issue of taxability of transfer of PI u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BIL have been computed in accordance with the fifth proviso to section 32 of the Income tax Act, since assets have been used by both the legal entities during the year. Hence the depreciation on such assets for the assessment year 2008-09 has been apportioned between the two Companies in the ratio of number of days for which the assets were used by respective Companies, computed as follows: Total depreciation on assets transferred to BIL for F/Y = ₹ 8,683,809,952/- Depreciation on above assets for 306 days (i.e. upto Jan 31st) = ₹ 7,260,234,550/- The aforesaid depreciation of ₹ 7,260,234,550/- The balance depreciation for 60 days amounting to ₹ 1,423,575,402/- has been claimed by BIL in its return of income. (7) Pursuant to the SOA, the loss on transfer of such undertaking does not require any adjustment for computing book profits u/s 115JB. 33. It was also stated that in the Director s Report which formed the part of the financial statements for the year ending 31.03.2008, the discloser was made for mergers, acquisitions Scheme of Arrangement (SOA) and in the Corporate Governance Report forming part of the audited financial statements, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant to the terms of the SOA. 36. It was stated that the conclusions arrived at by the AO in the draft assessment order were also affirmed by the DRP vide directions dated 30.08.2012 and the ITAT, Delhi Bench vide order dated 11.03.2014 particularly took note of the SOA and all the aforesaid records of the assessee and upheld that the assessee had incurred a capital loss of ₹ 5739 crores on the transfer of the PI undertaking to BIL at Nil consideration pursuant to the SOA approved by the Hon ble Delhi High Court and that the assessee company had revalued its investments in BIL and recorded the same at its fair value of ₹ 8218 crores and further went on to observe that the said reserve stood at ₹ 2479 crores in the balance sheet of the assessee company as on 31.03.2008 and there was no impact of it in the profit and loss or taxable income of the assessee. Therefore, it was proved beyond doubt that the AO after examining all the records of the assessee company including the SOA and after due application of mind, held that the transfer of Telecom Infrastructure undertaking to BIL at Nil consideration resulted in capital loss of ₹ 5739 crores and that the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the ld. CIT. It was stated that the ld. CIT acted on mere suspicion doubting the intentions/motive of the assessee behind transactions carried out pursuant to the SOA approved by the Hon ble Delhi High Court, he failed to point out any error in the order passed by the AO u/s 143(3) r.w.s. 144C(13) of the Act and the ld. CIT failed to prove that such order was prejudicial to the interest of the Revenue. It was further stated that the ld. CIT passed a confusing order directing the AO to conduct further enquiry and re-examine the matter to determine whether the impugned transaction resulted in capital gains u/s 45 or whether the same was assessable as profit and gains from business or profession u/s 28 of the Act. He also directed the AO to examine the impact of the impugned transaction under various other sections of the Act. Therefore, it was clear that the ld. CIT himself failed to arrive at a definite conclusion and form an opinion regarding the tax implication of the impugned transactions. It was contended that the matter which has already been concluded under the law cannot be reexamined. The reliance was placed on the following case laws: CIT Vs International Travel House ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a capital loss of ₹ 5739 crores to the appellant company. The said view was also upheld by the Hon ble DRP and subsequently by the Hon ble ITAT. Such a conclusion could not be considered as erroneous merely because the CIT was not satisfied with the conclusion arrived at by the AO. The Ld. CIT sought to revise the assessment on the basis of reappraisal of the same set of documents submitted at the time of assessment proceedings by taking a completely different view in respect of the very same transaction. (vi) Thus, CIT was not permitted under the law to direct fresh assessment on the impugned issue merely because he entertained a different view on the given facts and drew a different inference contrary to that of the AO from the facts and circumstances of the case. (vii) The AO and DRP, in course of framing of assessment, had access to all records of assessee and after perusing such record, the DRP issued its direction and the AO framed assessment pursuant to such directions. Such an assessment could not be reopened in exercise of revisionary powers u/s 263 for making fresh inquiries. The error envisaged by s. 263 is not one which depends on possibility or guesswork ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imposing charge on the capital gain legislature has indicated detailed provisions in order to compute profits or gains under the head capital gains. However, if, for some reason computation u/s 48 of the Act is not possible, then the charge u/s 45 of the Act fails because it cannot be effectuated. The reliance was placed on the following case laws: CIT Vs B. C. Srinivasa Shetty (1981) 128 ITR 294 ACIT Vs Glad Investments (P) Ltd. 102 ITD 227 CIT Vs Mohanbhai Pamabhai 91 ITR 393 42. It was submitted that in the instant case, since no consideration was payable by BIL to the assessee company for transfer of PI undertaking, no capital gains arose on such transfer and it has also been consistently ruled by the Hon ble Supreme Court that the fair value of transferred undertaking cannot be presumed to be the full value of consideration for the purpose of section 48 of the Act and consequently in the instant case, the difference between the fair value and book value of the transferred assets cannot be held to be capital gains exigible to tax u/s 45 of the Act as alleged by the ld. CIT. Accordingly, it was submitted that the view taken by the ld. CIT was contrary to the judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber Produce Co. Ltd. Vs State of Kerala Anr. (1973) 91 ITR 18 (SC) Sutlej Cotton Ltd. Vs CIT 116 ITR 1 (SC) 44. It was further stated that the ld. CIT alleged that the assessee had not disclosed the full and true intention in the SOA approved by the Hon ble Delhi High Court for the following reasons: (i) Till the time of taking approval of SOA by the Hon ble High Court, the transferor company kept the status of its subsidiary as 100% subsidiary, but soon after the approval after the transfer of assets on 31.01.2008, in the same financial year itself, through private placements, shares and compulsory convertible debentures were issued to foreign investors by BIL at huge premium in March 2008. (ii) The transferor company in its SOA had allegedly incorrectly submitted that no shares were to be issued because in the next financial year itself bonus shares totaling to 49,99,50,000 had been issued to the transferor company by the transferee company. (iii) The passive infrastructure transferred by the transferor company were to be managed and operated by Indus Infratel Ltd., a joint venture company, and not even for a single day to be handled by BIL as per the Shareholde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sive telecom infrastructure was transferred by the assessee company to BIL under the SOA, only 12 circles were managed by M/s Indus Infratel Ltd. and the balance 11 circles continued to be managed by M/s BIL. Thus, the allegation of the ld. CIT that the passive infrastructure was not handled/managed by BIL even for the single day was factually incorrect. It was further stated that the assessee incurred a capital loss of ₹ 5739 crores on account of the transfer of PI undertaking and suo-motu added back the same to the taxable income, therefore, no tax benefit was claimed by the assessee in pursuance to the said scheme in the form of exemption/deduction under the Act. The ld. Counsel for the assessee submitted that the issuance of bonus shares by BIL had no connection whatsoever with the transfer of PI undertaking which is also fortified by the fact that the fair value of assets transferred and the amount of bonus shares had no correlation. It was submitted that the bonus shares were not issued in pursuance of the scheme of reorganization, therefore, the issue of bonus shares was a separate and independent act dehors the transfer of PI undertaking. It was contended that in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of section 28(iv) of the Act or not. In this regard, the ld. Counsel for the assessee submitted that section 28(iv) of the Act postulates following preconditions to be satisfied: (a) There should be a non-monetary benefit or perquisite accruing to the assessee; and (b) Such benefit or perquisite should arise from the business or exercise of a profession. 46. It was submitted that the view of the ld. CIT was based on mere change of opinion as the very same transaction of transfer of PI undertaking which was held by the AO to be in the nature of capital transaction resulting into a capital loss to the assessee was being alleged to be in the nature of revenue receipt by the ld. CIT resulting in business income u/s 28 of the Act and such an action is not permissible u/s 263 of the Act. It was further submitted that the fact that the impugned balance of ₹ 2479 crores standing to the credit of the reserve for business restructuring account as at 31.03.2008 has no tax implication has been upheld by the ITAT, Delhi Bench vide order dated 11.03.2008, a reference was made to page no. 408 of the assessee s paper book for the aforesaid contention. It was submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n payment of such charges as may be reasonable and acceptable. It was further stated that the ld. CIT alleged that the AO had not examined this issue which rendered the assessment order erroneous and prejudicial to the interest of the Revenue. The ld. Counsel for the assessee stated that the ld. CIT failed utterly in proving that the order of the AO allowing such expenditure was erroneous and prejudicial to the interest of the Revenue and that the ld. CIT was required to prove that (i) either the impugned expenses claimed to have been paid by the assessee were in fact not paid or paid at a rate different from the claim made by the assessee (ii) or that the impugned expenses claimed as allowable were actually not allowable as deduction from the business income, however, the ld. CIT failed to prove any such error in the claim of the assessee and acted merely on suspicion and guesswork but failed to bring out any error either of fact or of law in the assessment order passed by the AO for allowing such expenditure. It was further stated that the AO could not be presumed to have not examined the matter merely because there is no separate discussion in the assessment order in this regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the ld. CIT at his whims, felt that the assessee had either not paid such charges or paid charges at a different rate and the same required further verification. Such an action of the ld. CIT was impermissible and could not be allowed u/s 263 of the Act as the ld. CIT was required to reach a definite finding that the assessment order allowing the charges as claimed by the assessee was erroneous and incorrect. It was contended that since during the course of framing the assessment, the AO had access to all records of assessee and after perusing such records, the AO framed the assessment, such assessment could not be reopened in exercise of revisionary power u/s 263 of the Act for making further enquiries because the error envisaged by section 263 of the Act is not one which depends on possibility or guesswork but it should be actually an error either of facts or of law. However, the ld. CIT in the instant case failed to reach a conclusive finding that the claim made by the assessee and accepted by the AO was erroneous or incorrect. It was also stated that the assessee company had not gained in any manner by making payment of infrastructure user charges to BIL and no prejudice was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount was not credited to the P L a/c of the quarter in which the assets had been transferred as per the SOA and as the AO had not examined this issue at all alongwith the issue relating to the share premium of ₹ 2136 crores, therefore, the ld. CIT was justified in considering the assessment order passed by the AO as erroneous as well as prejudicial to the interest of the Revenue. The ld. CIT DR also referred to paras 7 8 of the impugned order and submitted that the assessment order dated 30.11.2012 passed by the AO was erroneous and prejudicial to the interest of the Revenue on the following two issues: (a) The AO failed to examine the taxability of the difference between the cost of assets and fair market value of the assets, shown directly credited to the reserves by the assessee company in its balance sheet, of the assets transferred by it on 31.1.2008 to its subsidiary company, which no longer remained a wholly owned subsidiary of the assessee company as on 31.3.2008. (b) The AO failed to examine the allowability of the expenditure claimed by the assessee company for the usage of its transferred assets to its subsidiary company contrary to the assessee company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, examination and investigation to lift the corporate veil from the apparent to the real transaction, actual consideration and then examined the taxability of real transaction but the AO had not examined the transaction in totality. Therefore, the ld. CIT rightly held the assessment order passed by the AO as erroneous and prejudicial to the interest of the Revenue. It was further stated that the AO had not examined the issue relating to the taxability of the amount of ₹ 2479 crores and had also not examined the scheme of amalgamation in right prospective. It was contended that the AO has also not considered this vital fact that the said amount of ₹ 2479 crores was received in the course of trading, so, even if it was not taxable originally being of capital in nature it changes its character when it became the assessee s own money. It was further contended that if during the course of conduct of business by any transaction, the assessee became richer, the common sense demands that it should be taxable u/s 28(iv) of the Act but the AO has not conducted any inquiry whatsoever on this issue. Therefore, the order passed by the AO was rightly treated by the ld. CIT as errone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an order as the circumstances of the case may warrant. He may pass an order enhancing the assessment or he may modify the assessment. He is also empowered to cancel the assessment and direct the AO to frame a fresh assessment. He is empowered to take recourse to any of the three courses indicated in section 263 of the Act. But the ld. CIT does not have unfettered and unchequred discretion to revise an order, he is required to exercise revisional power within the bounds of the law and has to satisfy the need of fairness in administrative action and fair play with due respect to the principle of audi alteram partem as envisaged in the Constitution of India as well as in section 263 of the Act. In our opinion, an order can be treated as erroneous if it is passed in utter ignorance or in violation of any law; or passed without taking into consideration all the relevant facts or by taking into consideration the irrelevant facts. The word prejudice as contemplated under section 263 of the Act is the prejudice to the Income Tax administration as a whole. The revision has to be done for the purpose of setting right distortions and prejudices caused to the Revenue in the above context. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r cannot be held to be erroneous simply because in his order he does not make an elaborate discussion in that regard. 56. Reverting to the facts of the present case, it is noticed that the ld. CIT considered the assessment order dated 30.10.2012 passed by the AO as erroneous and prejudicial to the interest of the Revenue to the following extent: (i) The AO failed to examine the taxability of the difference between the cost of the assets and fair value of the assets transferred to BIL, shown directly credited to the Reserves for Business Restructuring by the assessee company in its balance sheet and that the AO failed to examine as to whether the said difference was to be assessed as capital gain u/s 45 of the Act or as a business income u/s 28(iv) of the Act. (ii) The AO failed to examine the allowability of the expenditure claimed by the assessee at market rate for the usage of its transferred assets to its subsidiary company i.e. BIL without any obligation to pay or on payment of such charges as may be reasonable and acceptable to both the assessee company and the transferee company. 57. As regards to the above said first issue on the basis of which the assessment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer of such undertaking did not require any adjustment for computing book profits u/s 115JA. (iii) The amount withdrawn from Reserve and credited to P L A/c amounting to ₹ 57,39,60,05,089/- had been reduced out of the book profits as such reserve was not created in terms of explanation (i) to section 115JB of the Act, because such reserves had arisen pursuant to the SOA. The scheme approved by the High Court mentioned that such reserve for Business restructuring shall be arising out of this Scheme and shall not be considered as reserve created by the Transferor Company para 3.3.1 at page 18 of the Scheme. (iv) However, taking note of the recent decision of the Hon ble Supreme Court in the case of Indo Rama Synthetics (2011) 196 Taxman 539 (SC), in the interest of avoiding litigation, the assessee requested the AO to follow the said decision and not reduce the impugned amount of Reserves of ₹ 57,39,60,05,089/- out of the book profits. (v) The loss on sale of telecom infrastructure to BIL was corresponding to the amount credited to business restructuring reserve. If this amount was not withdrawn from the said reserve, the profit of the assessee company w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both these entries, as depicted above, in the computation of income. The Assessing Officer has taken note of the fact that in the computation of income attached to the return of income, the assessee has first added ₹ 5739,60,05,089 as Loss on transfer of telecom infrastructure to Bharti Infratel Limited and then reduced ₹ 5739,60,05,089 as amount withdrawn from Reserve for Business Restructuring , but then, instead of taking note of the unambiguous fact that these two distinct entries representing two facets duly reflected in the profit and loss account, the Assessing Officer assumes that since debit and credit of the same amount, resulting in neutralizing each other, he is justified in adding the loss of transfer of telecom infrastructure to the profit as per profit and loss account. Neither there was an effective debit to the profit and loss account, since the loss was squared up by transfer from reserve rather than by debit to profit and loss account, nor was it open to the Assessing Officer to take into account loss on transfer of assets, though reflected in the inner column, without taking into account another inner column item reflecting transfer from reserves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce, will lose all their relevance, if, irrespective of their heavy work load and demanding schedules, these forums do not rise to the occasion and do not deal with the objections raised before them in a comprehensive and effective manner. While we delete the impugned addition of ₹ 5739,60,05,089, we also place on record our dissatisfaction with the way and manner in which this issue has been handled at the assessment stage. Let us not forget that the majesty of law is as much damaged by not rendering justice to the conduct which cannot be faulted as much it is damaged by a wrongdoer going unpunished; not giving relief in deserving cases is as much of a disservice to the cause of justice and the cause of nation as much a disservice it is, to these causes, by granting undue reliefs. The time has come that a strong institutional check is put in place for dealing with such eventualities and de-incentivizing this kind of a conduct. With these observations, the impugned addition of ₹ 5739,60,05,089 is deleted. The assessee gets the relief accordingly. 60. From the above noted facts, it therefore, appears that the issue on the basis of which assessment order was considere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit and loss account, that entry cannot be said to be a credit to the profit and loss account and, therefore, though the amount had been literally credited to the profit and loss account, in substance there was no credit to the profit and loss account. 61. In the present case also the assessee passed the adjustment entries for a sum of ₹ 5739 crores in its books of account which had no effect on the profit/income of the assessee, therefore, the ld. CIT was not justified in holding that the AO had not examined the issue relating to the loss on account of transfer of passive telecom infrastructure to the subsidiary company. Therefore, it cannot be said that the assessment order dated 30.10.2012 was erroneous and prejudicial to the interest of the Revenue. 62. As regards to the adjustment entry for revaluation of investment in subsidiary company i.e. BIL is concerned. It is noticed that the assessee passed the following entry: Investment in Subsidiary A/c ..Dr. ₹ 8218 crores To Business Restructuring Reserve (BRR) ₹ 8218 crores The assessee also transferred an amount equal to loss on transfer from Business Restructuring Reserve to the P L A/c by pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT on the one hand, stated that the transfer of telecom passive infrastructure undertaking at Nil consideration resulted in a capital gain of ₹ 2479 crores, on the other hand, the same transaction was alternatively alleged to have resulted in a business income of ₹ 2479 crores u/s 28(iv) of the Act. Moreover, the ld. CIT directed the AO to re-examine and verify the issue, however, he himself failed to arrive at a definite conclusion. Therefore, we are of the view that the ld. CIT without arriving at a definite conclusion was not justified in holding the assessment order dated 30.10.2012 as erroneous and prejudicial to the interest of the Revenue. 64. On a similar issue the Hon ble Bombay High Court in the case of CIT Vs Gabriel India Ltd. (1993) 203 ITR 108 held as under: That the Income-tax Officer in this case had made enquiries in regard to the nature of the expenditure incurred by the assessee. The assessee had given a detailed explanation in that regard by a letter in writing. All these were part of the record of the case. Evidently, the claim was allowed by the Income-tax Officer on being satisfied with the explanation of the assessee. This decision of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in detail in the show cause and in the books of account. The Assessing Officer had already examined this aspect but the Commissioner had directed a re inquiry for merely a change of opinion which was impermissible under section 263 of the Act. He was required to arrive at a definite conclusion but he had not done so. There was no reason to interfere with the order of the Tribunal. 66. Similarly the Hon ble Delhi High Court in the case of Hari Iron Trading Co. Vs CIT (2003) 263 ITR 437 (supra) held as under: In the absence of any suggestion by the Commissioner as to how the inquiry was not proper, the action taken by him under section 263 could not be sustained. The letter by the Assessing Officer to the Commissioner supported the contention of the assessee that the case was being monitored by the Commissioner from time to time and the assessment order had been passed after a draft order along with the survey file had been forwarded to the Commissioner for his approval. Both the appellate authorities had failed to take the trouble of even referring to the assessment record. Once the assessment order had been passed with the approval of the Commissioner, the successor-Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowing the claim of the charges paid by the assessee at market rates would not be held as erroneous merely because the ld. CIT at his whims felt that the assessee had either not paid such charges or paid charges at a different rate and the same required further verification. In this regard, it is relevant to point out the observation of the ld. CIT at para 21 of the impugned order which reads as under: 21. The assessment order is therefore set aside to that extent with a direction to AO to verify the taxability of transaction under reference namely transfer of passive asset by the assessee to BIL in totality in light of observation given above as well as issues raised in show cause notice and also examine the allowability of the expenditure claimed by the assessee company for the usage of its transferred assets to its subsidiary company. From the above observations it is clear that the ld. CIT directed the AO to re-examine the allowability of expenditure claimed by the assessee but he had not stated as to how and in what manner the expenses claimed by the assessee were impermissible, therefore, the action of the ld. CIT was not justified. 68. On a similar issue, the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incomplete interpretation a lesser tax than what was just has been imposed. 70. On a similar issue, the Hon ble Delhi High Court in the case of CIT Vs Vikas Polymers (2012) 341 ITR 537 held as under: It is pre-requisite that the Commissioner must give reasons to justify the exercise of suo motu revisional powers by him to reopen a concluded assessment. A bare reiteration by him that the order of the Incometax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, will not suffice. The exercise of the power being quasi-judicial in nature, the reasons must be such as to show that the enhancement or modification of the assessment or cancellation of the assessment or directions issued for a fresh assessment were called for, and must irresistibly lead to the conclusion that the order of the Income-tax Officer was not only erroneous but was prejudicial to the interests of the Revenue. Thus, while the Income-tax Officer is not called upon to write an elaborate judgment giving detailed reasons in respect of each any every disallowance, deduction etc., it is incumbent upon the Commissioner not to exercise his suo motu revisional powers unless supported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to section 115JA was not applicable as a reserve was not created during the relevant period and that the AO had not applied section 14A of the Act and made no deduction under the said section. Therefore, the Hon ble High Court held that the order of revision was valid. However, in the present case, there is no such facts. In the case of CIT Vs Ashok Logani reported at (2012) 347 ITR 22 (Delhi) which was relied by the ld. CIT DR, the facts involved were that the AO had gone into the issue and accepted the claim of the assessee or not, was not discernible from the assessment order, it was held that there should have been at least a brief discussion regarding a satisfaction on the explanation offered by the assessee. Thus, it was a reasonably fit case for exercising revisionary jurisdiction u/s 263 of the Act. However, in the present case, the facts are different because the AO not only raised the specific query about the capital loss and the expenses etc. but also considered the explanation offered by the assessee and applied his mind, then framed the assessment. Therefore, the facts of the case referred by the ld. CIT DR are not applicable to the facts of the present case. Simila ..... X X X X Extracts X X X X X X X X Extracts X X X X
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