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TMI Blog2015 (12) TMI 839X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions under Sections 80-IB and 80HHC of the Act. The Assessing Officer concluded as under: "In response to discussion during the assessment proceedings, the assessee has filed the copies of Balance Sheet & Profit & Loss Account for the period ending 31/03/1992 and it is found that this firm was not constituted after splitting up the old business. The assessee was specifically asked when this firm was entitled for deduction u/s 80 IB since its establishment, then why it did not claim deduction u/s 80 IB prior to this year. In response to this, the assessee has submitted that in earlier years, there was 100% deduction u/s 80HHC of I.T.Act, 1961 and no income was left liable for assessment and this, it did not claim u/s 80IB of I.T.Act, 1961 in earlier year. On going through all the documents submitted and produced, it is seen that assessee qualifies for deduction u/s 80IB as per proviso (I) of sub-section (3) of section 80IB of I.T.Act, 1961. In view of above discussion, the deduction u/s 80IB of I.T.Act, 1961 is therefore allowed and A.Y. 1992-93 is the initial assessment year. In view of above observations, total income is computed as under: Net Profit as Per Profit and Los ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngly, held that the approach of the Assessing Officer was incorrect and consequently, the deductions given was prejudicial to the interest of the revenue. The Commissioner of Income Tax, accordingly, cancelled the assessment order and directed the Assessing Officer to make a fresh assessment de-novo after providing a reasonable opportunity of hearing to the assessee. 5. The assessee, being aggrieved, filed an appeal before the Tribunal, which was allowed and the order of the Commissioner of Income Tax passed under Section 263 of the Act was set aside. The Tribunal held that the Commissioner of Income Tax was not justified in revising the order of the Assessing officer under Section 263 of the Act. The Department, being aggrieved by the said order, has filed the present appeal under Section 260-A of the Act proposing that the following substantial question of law arises for consideration; "(1) Whether on the facts and in the circumstances of the case, the Tribunal is justified in holding that the deduction u/s 80-HHC and 80-IB on the same figure of profit without reducing deduction allowed u/s 80-HHC ? (2) Whether on the facts and in the circumstances of the case, the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luding this Court as well as by the Supreme Court and, it is not necessary to dwell in detail all those decisions. It is sufficient for this Court to consider one judgment given by the Supreme Court in Malabar Industrial Co. Ltd. Vs. Commissioner of Income Tax, (2000) 243 ITR 83 (SC), wherein the Supreme Court explained the provision of Section 263 of the Act as under: "To consider the first contention, it will be apt to quote Section 263(1) which is relevant for our purpose. 263. Revision of orders prejudicial to revenue - (1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous insofar as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. Explanation... A bare reading of this provision makes it clear that the prerequisite to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Administration. In our view this interpretation is too narrow to merit acceptance. The scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the Revenue. If due to an erroneous order of the Income-tax Officer, the revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the revenue. The phrase prejudicial to the interests of the revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interests of the revenue, for example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the Income-tax Officer is unsustainable in law. It has been held by this Court that where a sum not earned by a person is assessed as income in his hands on his s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer was erroneous and prejudicial to the interest of the revenue. 11. On the other hand, Sri R.R.Agrawal, the learned Senior Counsel for the assessee submitted that the Assessing Officer considered all the provisions and, after detailed discussions, made the assessment order under Section 143(3) of the Act granting maximum deduction permissible as provided under Section 80-IA (9) of the Act. It was urged that mere fact that Sections 80 IA (9) and 80-IB (13) were not indicated in the assessment order does not make the assessment order erroneous or prejudicial to the interest of the revenue. 12. Having heard the learned counsel for the parties, we find from a reading of the assessment order that the Assessing Officer has discussed in detail the deductions sought to be claimed by the assessee under Sections 80HHC and 80-IB of the Act and, after considering the provisions, computed the income after granting deductions as per Section 80-IA(9) of the Act on the amount of profits and gains upto the extent of 100% of the amount of profits and gains. The assessment order indicates that deductions calculated was more than 100% of the profits and gains but the Assessing Officer restrict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts mind to these provisions or that the assessment order has been passed on incorrect application of law. From a perusal of the assessment order it is clear that the deduction has not exceeded beyond 100%, as contemplated under Section 80 IA(9) of the Act. Consequently, even if the Section 80 IA(9) has not been mentioned in the impugned order, nonetheless, the impact of this section has been given effect to in the assessment order. This view of ours is also supported by the decision of Delhi High Court in Commissioner of Income-Tax Vs. Honda Siel Power Products, (2011) 33 ITR 547 (Del). 16. The Assessing Officer granted deduction under Sections 80HHC and 80-IB of the Act by taking the same figure of profits. On the other hand, the Department's case is that the deduction under Section 80 HHC of the Act was required to be computed after reducing the amount of deduction under Section 80-IB of the Act from profits and gains. On this score, there are a divergence of views taken by different High Courts. In the case of Associated Capsules P Ltd. Vs. Dy. Commissioner of Income Tax and another, (2011) 332 ITR 42 (Bom) and Commissioner of Income Tax and another ..... X X X X Extracts X X X X X X X X Extracts X X X X
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