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2015 (10) TMI 2246 - ITAT MUMBAI

2015 (10) TMI 2246 - ITAT MUMBAI - TMI - Revision u/s 263 - assessee company is not eligible for deduction u/s 35D - Held that:- CIT(A) has proceeded on wrong assumption of facts. The CIT has held that the preliminary expenditure claimed by the assessee were incurred during the financial year 2008-09 whereas the business has commenced from 10.07.2007 relevant to assessment year 2008-09, therefore, the claim of the expense as 'prior period expense' and allowable u/s 35D carries no weightage. This .....

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mpugned financial year, WIP is shown at ₹ 1,47,77,27,412/- which means that the entire purchase of land was done during the year which also means that the business has been commenced during the year under consideration and the expenditures claim as prior period expenditure are allowable u/s 35D of the Act. - Decided in favour of assessee.

Taxability of interest income - Held that:- Assessing Officer has taken a view which may be different from the view of the Ld. Commissioner an .....

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with which the Ld. Commissioner does not agree, it cannot be treated as an order which is erroneous or prejudicial to the interest of the revenue unless the view taken by the ITO is unsustainable in law.

Thus the assessment order is neither erroneous nor prejudicial to the interest of the revenue. We, therefore, set aside the impugned order passed by Ld. Commissioner u/s 263 and restore that of the Assessing Officer passed u/s 143(3) of the Act. - Decided in favour of assessee. - ITA .....

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of the revenue. 2. The briefly stated, the facts of the case are that the assessee is in the business of construction and development of real estate. The return for the year was filed on 29.09.2009 declaring loss of ₹ 20,64,158/-. The return was selected for scrutiny assessment and accordingly statutory notices were issued and served upon the assessee. After discussion and verification of the details filed by the assessee, the Assessing Officer completed the assessment accepting the return .....

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n AY 2009-10 which has been allowed by the A.O. The assessee company is not eligible for deduction of ₹ 14,87,380/- u/s 35D of the Income Tax Act, since no expansion of any undertaking has taken place or a new unit set up during F.Y. 2008-09. The TDS certificates submitted issued by Axis Bank Ltd and Oriental Bank of Commerce shows an amount of ₹ 28,21,622/- as interest received. Against this, an amount of ₹ 27,89,795/- only has been accounted for. Relying on the decision of th .....

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r sources'. Hence, it appears that the Assessing Officer failed to consider/examine these issues during the course of assessment proceedings. Consequently, there is escapement of income to the tune of ₹ 43,09,002/- resulting in short levy of tax amounting to ₹ 13,29,481/- In view of the above, the assessment order passed by the ITO.3(3)(3), Mumbai dated 30.11.2011 appears to be erroneous and prejudicial to the interest of Revenue and it is evident that the Assessing Officer has c .....

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ee to the Assessing Officer in the assessment proceedings. It was pointed out that a complete submission regarding claim of expenses u/s 35D was provided to the Assessing Officer vide submission dated 21.10.2011. It was further pointed out that the details of the WIP including the interest income component was also provided to the Assessing Officer during the course of the assessment proceedings itself. The assessee strongly contended that all these aspects have been duly considered by the Asses .....

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e meaning of section 263 of the Act and accordingly directed the Assessing Officer to make a fresh assessment after a detailed verification of submission given by the assessee in the return in the statement filed. Aggrieved by this, the assessee is before us. The Counsel for the assessee reiterated what has been submitted before the CIT. Per contra, the DR strongly supported the findings of the CIT. 5. We have heard the rival submissions and carefully perused the order of the CIT. Undisputedly, .....

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aim of the expense as 'prior period expense' and allowable u/s 35D of the Act carries no weightage. This entire finding of the CIT is based on the wrong assumption of fact that the assessee's business has commenced from 10.07.2007. The correct fact is that the assessee company was incorporated on 10.07.2007. The business has been commenced only during the year under consideration. Our view is also fortified by the fact that in the Balance sheet under the head "current assets, lo .....

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nterest income is concerned, the CIT has heavily relied upon the judgment of Hon'ble Bombay High Court in the case of Thane Electricity Supply (206 ITR 727). The observation of the CIT is that the judgment of the Hon'ble Madras High Court is not applicable in the State of Maharashtra. Without going deep into these observations, these observations of CIT itself shows that two views are possible and the Assessing Officer has followed one possible view, therefore, invoking the jurisdiction .....

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conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous ; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent - if the order of the Income-tax Officer is erroneous but is not prejudicial to the Revenue - recourse cannot be had to section 263(1) of the Act. The provision cannot e invoked to correct each and every type of mistake or error committed by the Assessing Officer, it is only when an order is erroneous that the section .....

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inted out elsewhere, the Assessing Officer has followed a particular view which is different from the view of the Ld. Commissioner. It would be pertinent to refer to the observations of the Tribunal Pune Bench in the case of Aurangabad Holiday Resorts P Ltd., reported in 305 ITR (AT) 294 wherein the Tribunal had the occasion to consider the binding nature of the decision of one of the High Courts on another High Court. The Tribunal made the following observation at para 10 :- "In this light .....

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h in the case of Godavaridevi Saraf's case [1978] 113 ITR 589 (Bom). Therefore, it cannot be open to a subordinate Tribunal like us to disregard any of the judgments of the Hon'ble Bombay High Court, whether in the case of Thana Electricity Supply Ltd. [1994] 206 ITR 727 or in the case of Godavaridevi Saraf's case [1978] 113 ITR 589. It is indeed our duty to loyally extent utmost respect and reverence to the hon'ble High Court, and to read these two judgments by the Division Benc .....

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h Court, whereas in Godavaridevi Saraf's case [1978] 113 ITR 589 (Bom), their Lordships dealt with the issue whether or not a non jurisdictional High Court is to be followed by a bench of the Income-tax Appellate Tribunal. To that extent, and irrespective of some casual observations on the applicability of the non-jurisdictional High Court judgments on the subordinate courts and the Tribunals, these two decisions deal in two different areas. As we have noticed earlier also, in Thana Electric .....

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] 113 ITR 589 stands overruled by their Lordship's judgment in the case of Thana Electricity Supply Ltd.'s case [1994] 206 ITR 727 (Bom). The only way in which we can harmoniously interpret these judgments is that these decisions deal with two different issues and ratio decidendi of these decisions must be construed accordingly". By reading the observations of the Tribunal in the light of the facts of the case in hand, in our considered opinion, the Assessing Officer has taken a vie .....

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