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TMI Blog2015 (5) TMI 865X X X X Extracts X X X X X X X X Extracts X X X X ..... hout jurisdiction, bad in law and voidab- initio. 2. That on the facts and circumstances of the case and in law, the proceedings under section 263 of the Act having been initiated on the basis of incorrect facts, the impugned order passed pursuant thereto is without jurisdiction, illegal and bad in law. 3. That on the facts and circumstances of the case and in law, the CIT failed to appreciate that-the order passed under section 144C(13), in pursuance of the directions of the DRP not being an order passed by the assessing officer, the same cannot be revised under section 263 of the Act. 3.1 That on the facts and circumstances of the case and in law, the CIT erred in exercising jurisdiction under section 263 of the Act without appreciating that the original assessment order under section 143(3)/144C of the Act having been passed with the approval/sanction of the DRP, comprising of a collegium of three CITs, such an assessment was not amenable to revision under section 263 of the Act. 3.2. That on the facts and circumstances of-the case and in law, the CIT failed to appreciate that the order of the assessing officer stood merged with the order/directions of the DRP qua the specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estment in subsidiary was revalued upwards in the books of' the appellant, gave rise to any taxable income in the hands of the appellant. 6. That on the facts and circumstances of the case and in law, the impugned order is bad in law as the CIT was himself not certain as to the tax implications of the transaction of transfer of passive telecom infrastructure, as would be clear on perusal of para 20 of the impugned order alongwith the first show cause notice issued by the CIT on 25.11.2013 and the second show cause notice issued on 29.03.2014. Without prejudice: 7. The CIT erred in holding that the 'notional' difference between the book value and the fair market value of the 'passive telecom infrastructure' transferred by the appellant to Bharti Infratel Ltd. (BIL), constituted consideration for transfer of such infrastructure and was exigible to capital gains under section 45 of the Act. 7.1 That the CIT erred in observing that since the value of investment in subsidiary company had gone up only because of transfer of assets by the appellant to the subsidiary at fair market value, the consideration for transfer of assets was not nil but Rs. 8,218 crores. 7.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egular course of business. 10. That the CIT erred on facts and in law in setting aside the assessment order passed by the assessing officer under section 143(3)/144 of the Act as regards allowability of the expenditure incurred by the appellant towards amount paid to BIL, for usage of the passive telecom infrastructure, alleging that the assessing officer has failed to examine if such amount was payable in terms of the scheme and was allowable deduction. 10.1 That the CIT failed to appreciate there was no embargo in the terms of the Scheme, prohibiting the appellant from making payment to BIL for usage of the transferred telecom infrastructure and there was no scope for disallowance of such expenditure under the Act. 10.2 That the CIT failed to appreciate that there was no prejudice caused to the Revenue in the aforesaid transaction in as much as the amount allowed as deduction in the hands of the appellant was ultimately taxed in the hands of BIL at the same rate. The appellant craves leave to add to, alter, amend or vary the aforesaid grounds of appeal before or at the time of hearing." 3. From the above grounds it is gathered that the only grievance of the assessee relates t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee filed objection before the Dispute Resolution Panel (DRP) on 15.12.2011 and the DRP vide directions dated 30.08.2012 held that the disallowance of Rs. 5739 crores by the AO being capital loss on transfer of PI undertaking by the assessee to BIL at Nil consideration was perfectly in order. At the same time, the AO was directed to verify the claim of the assessee for not reducing the equivalent sum from the computation of income on account of amount transferred from the reserves. The DRP passed an order u/s 144C(5) of the Act on 30.08.2012 which was implemented by the AO as per the directions given in the said order and the assessment was framed at an income of Rs. 7819,34,10,410/- vide assessment order dated 30.10.2012. The AO held that the assessee transferred PI undertaking to BIL at Nil consideration resulting in a capital loss of Rs. 5739 crores which was not allowable under normal computation provisions. The AO added back the loss of Rs. 5739 crores to the income offered by the assessee. Being aggrieved the assessee filed the appeal before the ITAT 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to the transferor company or its share holders. .....3.1.1 viii) As per the SOA, the scheme was subject to nonexclusive right of the transferor company to use the telecom infrastructure for the purposes of its business without any obligation to pay for the same or on payment of such charges as maybe reasonable and acceptable to the transferor company and the transferee company. ........C(5) ix) The transferee company was to credit an amount equal to fair value of telecom infrastructure as general reserve which shall constitute free reserves available for all purposes as the transferee company at its own discretion considers proper. .......3.2.2 x) The transferor company shall revalue in particular the investment in the transferee company at its fair value and the difference between the book value of investments and fair value of investments will be accounted as reserves for business restructuring, available to meet the increased depreciation, cost, expenses and losses, including on account of impairment of or write 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 restructur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above assets in Indus and after the merger to own the above assets. The Annual Report of Bharti lnfratel Limited for F.Y. 2007-08 and F.Y. 2008-09. The main facts related to the issues under consideration are noted below:- i. Investments of 1.35 billion USD from leading International Investors were received in BIL during the financial year 2007-08. ii. The Annual report of F. Y.2007-08 shows that during the financial year itself, after the transfer of Passive Infrastructure on 31.1.2008 to BIL from BAL, 4050 equity shares of RS.l0 each has been called by BIL through private placement from foreign entities. 3825 equity shares were issued in March, 2008 itself at a share premium of Rs. 2017,04,62,000/- and the balance of 225 shares were issued in April, 2008 in the next financial year at a share premium of Rs. 118, 64,98,000/- . The share premium per equity share works out to Rs. 52, 73,324/- taken by BIL within less than two months, after the transfer of passive infrastructure by the transferor company on 31.1.2008. Besides this 32,03,550 fully and compulsory convertible noncumulative unsecured and interest free debentures of Rs. 10,000/- each has also been issued, out of wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Business Restructuring Reserve (BRR) and decrease in net liabilities of the Company by Rs. 126, 831,000 for the year ended on March 31,2009. ix. In the financial year ending on 31 March 2009, the assessee company was having 500,000,000 equity shares, and the total value of the investments as on 31.3.2009 has been shown same i.e. Rs. 82,181,703,000/- as on 31.03.2008. Bonus shares totalling to 499,950,000 were allotted to the assessee company by BIL during the financial year ending on 31.03.2009. x. The relevant portion how the reserve has been created is reproduced below: "The assets and liabilities have been recorded at following fair values [based on independent fair valuation report for fixed assets and capital work in progress and management estimate for others} and the amount of the General Reserve is computed as below:" Particulars Amount Fair Value of Assets and Liabilities 89,600,620 Fixed Assets, 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) Ente ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons 391 to 394 of the Companies Act (a 'Demerger'), shall not require the prior written consent of Indus. - 4.3 (vii) During the Term, the IRU Grantor Party shall not transfer, assign, sell, alienate or otherwise dispose of or create any third party interests in the Sites or the Passive Infrastructure located at the Sites without the prior written approval of Indus, provided however, that a Demerger shall not require the prior written approval of Indus. - 4.5 (viii) This Agreement shall expire upon the completion of the Term. No Party shall be entitled to terminate and/or revoke this Agreement at any time during the Term, except as set out in Clause 6.1.2. - 6.1" 7. The ld. CIT observed that from the Shareholders Agreement dated 08.12.2007, Annual Report of M/s Bharti Infratel Ltd. for the Financial Years 2007-08 and 2008-09, Annual Report of the assessee and the agreement, 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 as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts did not involve any movement of assets or liabilities to any company outside the group. The ld. CIT was of the view that the assessee company has totally misrepresented before the Hon'ble High Court and that the schedule 6 of the balance sheet for the Financial Year 2007-08 revealed that the assessee had increased the value of its investment in M/s Bharti Infratel Ltd. (BIL) from Rs. 500,000/- to Rs. 82,181,703,000/- which had been explained by way of Note 2(b) of schedule 21 of the balance sheet, to be due to transfer of passive infrastructure assets at fair market value to BIL. The ld. CIT observed that the value investment of subsidiary company had gone up only and only for the reason of transfer of assets by the assessee company to its subsidiary company at fair market value and as per the Accounting Standard-13, Para No. 29, if an investment is acquired in exchange 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 Rs. 5,00,000/- before the transfer of assets by the assessee company to the transferee company t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee to the transferee company. The ld. CIT observed that the assessment order dated 30.11.2012 for the assessment year 2008-09 passed by the AO prima facie appears to be 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 31.01.2008 to its subsidiary company, which no longer remained a wholly owned subsidiary of the assessee company as on 31.03.2008. (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 having a 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 submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessing officer. (d) Notice is issued on mere change of opinion. (e) Notice is issued on factually incorrect premise." 12. The assessee also submitted to the ld. CIT as under: "6(i) In the assessment proceedings, the assessing officer after examining the scheme and the accounting entries passed in this regard by the assessee, disallowed loss of Rs. 5,739 cores debited to the Profit& Loss Account pursuant to transfer of the Telecom Infrastructure, holding the same to be capital loss in the draft assessment order passed under section 144C(1) of the Act. In pursuance of the new scheme of assessment, the assessee filed its objections before the DRP under section 144C (2) of the Act which, inter-alia, included objections against the erroneous add back of 'capital loss' amounting to Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a high powered body consisting of three Commissioners, is erroneous and prejudicial 'to the interest of the Revenue. For this argument the assessee has drawn support from the following case laws: - Hari Iron Trading Co. V, CIT: 263 ITR 437 (P&H) - CIT V. Hastings Properties: 253 ITR 124 (Cal.) - FestoElgi (P) Limited V. CIT: 246 ITR 705 (Mad.) A reference to the recent decision rendered by the Madras High Court in the case of R. Srinivasan vs. ACIT: ITA No. 354 of 2006, was also made wherein the High Court held that where order under section 158BC of the Act was passed by the assessing officer, with the statutory approval of the CIT under section 158BG of the Act, it was not open to another CIT to assume jurisdiction under section 263 of the Act to revise such an assessment 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 hear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (DRP). In the aforesaid show cause notice dated 25.11.2013, the conclusion drawn by the assessing officer is sought to be substituted with a totally different view inasmuch as the transaction of transfer of passive telecom infrastructure is alleged to have resulted in 'capital gains' to the assessee in the assessment year under consideration. The aforesaid action, tantamount to mere 'change of opinion'. Section 263 of the Act does not visualize a case of substitution of opinion of Commissioner for that of the assessing officer, if the view of the assessing officer is a plausible view. Once the assessing officer has accepted the fact that the assessee received 'nil' consideration on transfer of the passive telecom infrastructure, which consequently resulted in capital loss of Rs. 5,739 crores, the attempt to now consider the revalued amount of such assets at Rs. 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 Rs. 2479 crores had to be compulsorily withdrawn from reserve and credited to the profit and loss ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said action of the assessee may not be disapproved while computing the book profit u/s 115JB of the Act, in view of the decision of the Hon'ble Apex Court in the case of Indo Rama Synthetics (2011) 196 Taxman 539 and after receiving the reply from the assessee that its action of reducing the amount of Rs. 5739 was not in line with the decision of the Hon'ble Apex Court, the AO simply added back the said amount in the computation of book profit for the purpose of section 115JB of the Act. Accordingly, the ld. CIT was of the view that the transaction of transfer of asset and taxability thereof was not at all raised by the AO in her draft assessment order as far as the computation of book profit for the purposes of section 115JB of the Act was 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 Rs. 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 Rs. 5739 crores as per provisions of the I.T Act which revealed that even for normal computation, the AO had not examined th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e DRP, therefore, the principle of merger applies only to the issues which were raised and asked by the DRP. The ld. CIT held that the decisions cited by the assessee were not applicable on the facts of the case. He also did not accept this contention of the assessee that the show cause notice was issued under wrong presumption of the fact and so it was not valid show cause notice and therefore, the proceedings should have been dropped. The ld. CIT also discussed the submissions of the assessee at para 15 of the impugned order which are reproduced verbatim as under: "15(i) Twin conditions of section 263 namely order being erroneous and prejudicial to the interest of revenue are not satisfied. The assessment order dated 30.10.2012 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. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company in Bharti Infratel Ltd. pursuant to the scheme remained intact i.e. in other words, prior to the transfer of telecom infrastructure the assessee-company held 50,000 shares of Rs. 10 each in Bharti Infratel Ltd., which remained unchanged even on transfer of the telecom infrastructure and no additional shares were, it is submitted, received by the assessee in pursuance of the scheme of arrangement Further, the analogy drawn by your Honour in the above notice by placing reliance on the provisions contained in Para 29 of AS-13 is also misplaced, in as much as there was virtually no fresh investment received by the assessee-company on transfer of the assets. Para 29 of AS-13 provides for the determination 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he right to use the telecom infrastructure, without payment of charges. The parties were, in fact to decide whether any payment was to be made for use of the aforesaid infrastructure. There was no embargo, in the terms of the scheme, prohibiting the assessee from making payment to M/s Bharti Infratel Limited, for usage of the transferred telecom infrastructure. As per the terms of the scheme, the usage of the transferred telecom infrastructure by the assessee-company was allowable on payment of reasonable charges. The payment made by the assessee-company to Bharti Infratel Limited in the assessment year under consideration, for the usage of the telecom infrastructure was as per market rates, 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as erroneous so as to warrant exercise of revisionary jurisdiction under section 263, on the alleged ground that the assessing officer has not examined the issue whether any income arose under section 28(iv) of the Act in the aforesaid transaction of transfer of Telecom Infrastructure Undertaking." 16. However, the ld. CIT after considering the submissions of the assessee was of the view that the AO had not applied his mind and simply took the loss as debited in the P & L a/c for disallowance purposes in the computation of income which was added back by the assessee also in its computation of income. As regards to the twin conditions required for passing the order u/s 263 of the 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 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the value of its passive infrastructure assets has decreased by Rs. 5739 crores. The difference thereof amounting to Rs. 2479crores, during the AY.2008-09 has been credited to Business Restructuring Reserve. This increase in value of investment has been explained in the balance sheet by way of Note 2(b) of schedule 21 of the balance sheet, to be due to the transfer of passive infrastructure assets at fair market value to BIL. In other words, the value of investment in the subsidiary company has gone up only and only for the reason of transfer of assets by the assessee company to its subsidiary company at fair market value. Therefore, it appears that consideration for transfer of asset is not nil but Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve at the exact nature of the transaction and real consideration. He further observed that since the AO had not made any enquiry to pierce the corporate veil, he also failed to examine the taxability of transfer of asset at a fair market value and failed to examine as to how provisions of section 45 of the Act will be applicable on the asset transferred to BIL and that the AO also failed to examine how and whether effect of provisions of section 50 of the Act will be required to be given or whether the effect of this transaction of transfer at fair market value will be reflected by change in 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 Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ues relating to the tax implication of transactions pertaining to transfer of PI undertaking to BIL, the revaluation of investments in BIL, the creation of Reserves for Business Restructuring, the amount transferred from such Reserve to P & L a/c were all considered by the DRP and that the assessment order u/s 143(3) r.w.s. 144C(13) was passed by the AO after taking into consideration the directions of the DRP. It was further stated that the AO as well as the DRP held in clear terms that the transfer of the telecom infrastructure by the assessee to BIL resulted in a capital loss of Rs. 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 Rs. 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not a tax deductible item. Similarly, the amount transferred from reserves of Rs. 5739 crores was also not a taxable item. (v) These were purely factual issues which were adequately dealt by the DRP." 22. It was contended that the ld. CIT while excercising the powers conferred u/s 263 of the Act clearly exceeded his jurisdiction in directing the AO to verify the matters already covered in totality by the ITAT, Delhi vide order dated 11.03.2014 in the assessee's case in ITA No. 5816/Del/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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11 (Del.) Union of India Vs Azadi Bachao Andolan (2003) 263 ITR 0706 (SC) Banyan and Berry Vs CIT (1996) 222 ITR 831 (Guj.) 25. It was further stated that the transactions pertaining to transfer of PI undertaking to BIL, the revaluation of investments in BIL, the creation of Reserves for Business Restructuring, the amount transferred from such Reserve to P & L a/c were all considered by the Dispute Resolution Panel (DRP) and the assessment order u/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 Rs. 5739 crores and the AO held that the capital loss of Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... frastructure assets had decreased by Rs. 5739 crores, the difference thereof amounting to Rs. 2479 crores arising on transfer of those assets standing to the credit of Business Restructuring Reserve was allegedly in the nature of capital gains accruing to the assessee which should have been offered to tax u/s 45 of the Act and alternatively, such amount was allegedly taxable u/s 28(iv) of the Act. The ld. Counsel 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 Rs. 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 Rs. 2479 crores representing the resultant increase in the Balance Sheet of the company due to trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P & L a/c from Business Restructuring Reserve of Rs. 5739 crores to recoup such loss was merely in the nature of contra adjustment in the P & L a/c and was also not a taxable item and that the Hon'ble Supreme Court in the case of Indo Rama Synthetics (supra) gave a categorical finding that creation of revaluation reserve was merely an adjustment entry 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 Rs. 2479 crores standing to the credit of Business Restructuring Reserve (being the difference between the original revaluation reserve of Rs. 8218 crores and amount transferred there from of Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for the purpose of computing book profits u/s 115JB of the Act and for the purpose of computation of income under normal provisions. Therefore, the action of the ld. CIT was erroneous and unsustainable in law and hence deserves to be quashed. 31. It was further stated that the power of suo-motu revision under sub-section (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mber 26, 2007 and filed with the Registrar of Companies, Delhi & Haryana on January 31, 2008 i.e. the effective date of the scheme. Pursuant to the terms of the Scheme; the Company has transferred the telecom Infrastructure worth Rs. 57,396,005,089 to BIL. The depreciation on assets transferred to 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 = Rs. 8,683,809,952/- Depreciation on above assets for 306 days (i.e. upto Jan 31st) = Rs. 7,260,234,550/- The aforesaid depreciation of Rs. 7,260,234,550/- The balance depreciation for 60 days amounting to Rs. 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income. (vi) Out of the total reserves for business restructuring created in pursuance of the SOA, an amount of Rs. 5739 crores being equal to the loss incurred on transfer of PI undertaking was credited to the P & L A/c pursuant 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 Rs. 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 Rs. 8218 crores and further went on to observe that the said reserve stood at Rs. 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT in as much as the same transaction of transfer of PI undertaking resulting in a capital loss was alleged to have resulted in capital gains of Rs. 2479 crores to the assessee 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 cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vested in him in accordance with law and after examination of records of the assessee arrived at a conclusion that the impugned transfer resulted in a capital loss of Rs. 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue of the consideration only in specified circumstances on satisfaction of specified conditions. It was stated that for 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 al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT 82 ITR 363 (SC) CIT Vs India Discount Co. Ltd. 75 ITR 191 (SC) Pullangode Rubber 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sanctioned. It was pointed out that out of the 23 circles of which passive 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 Rs. 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 de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s income for the assessment year 2008-09 as per the provisions 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 Rs. 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 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ligation to pay for the same on 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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. 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 prej ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 Rs. 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 having a Non exclusive righ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ft 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 Rs. 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 Rs. 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 erroneous and prejudicial to the interest of the Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 54. The fundamental principles which emerge from the several ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laborate 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 order was considered by the ld. CIT as erroneous and prejudicial to the interest of the Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erve and credited to P & L A/c amounting to Rs. 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 Rs. 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 was lowered by Rs. 5379 crores for the year under consideration." 59. In the present case, the DRP after examining the submissions of the assessee d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn of income, the assessee has first added Rs. 5739,60,05,089 as "Loss on transfer of telecom infrastructure to Bharti Infratel Limited" and then reduced Rs. 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 to square up this loss. Whichever way one looks at these entries, the inescapable conclusion is that the addition made by the Assessing Officer is wholly erroneous and devoid of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed before them in a comprehensive and effective manner. While we delete the impugned addition of Rs. 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 Rs. 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 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 directed by the DRP that the addition was not to be made after proper ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edit to the profit and loss account." 61. In the present case also the assessee passed the adjustment entries for a sum of Rs. 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. Rs. 8218 crores To Business Restructuring Reserve (BRR) Rs. 8218 crores The assessee also transferred an amount equal to loss on transfer from Business Restructuring Reserve to the P & L A/c by passing a following entry: Business Restructuring Reserves A/c...Dr. Rs. 5739 crores To Net Assets (transfer) Rs. 5739 crores 63. However, the ld. CIT was of the view that the resultant figure of Rs. 2479 croes (Rs. 8218 crores - Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 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 the Income-tax Officer could not be held to be "erroneous" simply because in his order he did not make an elaborate discussion in that regard. Moreover, in the instant case, the Commissioner himself, even after initiating proceedings for revision and hearing the assessee, could not say that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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-Commissioner could not possibly say that the matter had been decided without application of mind by the Assessing Officer." In the present case also the AO examined the issue relating to capital loss on transfer of PI undertaking by the assessee to BIL for Nil consideration. The said issue was also considere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Hon'ble Jurisdictional High Court in the case of CIT Vs Hero Auto Ltd. 343 ITR 342 has held as under: "That there was no discussion in the order of the Commissioner as to how and in what manner the enquiry was lacking and what was the fault and default committed by the Assessing Officer. The Assessing Officer had exam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 by adequate reasons for doing so. Provisions of section 263 of the Act, when read as a composite whole, make it incumbent upon the Commissioner before exercising revisional powers to: (i) call for and examine the record, and (ii) give the assessee an opportunity of being heard and thereafter to make or cause to be made such enq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Similarly, in the case of CIT Vs DLF Power Ltd. (2012) 345 ITR 446, relied by the ld. CIT DR the Hon'ble Delhi High Court held as under: "If the Assessing Officer keeps a letter on record and does not carry out necessary investigations which are per se required to verify the correctness of the averments, there is an error in the sense th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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