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2015 (12) TMI 1377 - ITAT MUMBAI

2015 (12) TMI 1377 - ITAT MUMBAI - TMI - Revision u/s 263 - Held that:- In order to invoke the provision of section 263 of the Act, the order passed by the AO has to be erroneous and prejudicial to the interest of the revenue. Whereas in the present case the order is not erroneous nor prejudicial. The AO had called for details from the assessee in respect of Manglad Flash Flood claim and after considering the reply filed by the assessee allowed and accepted the treatment given to disputed claim .....

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d not be interfered with only because another view is possible. Similarly in the case of CIT Vs. Max India Limited 2007 (11) TMI 12 - Supreme Court of India & Malbar Industries Co. Ltd. Vs. CIT (2000 (2) TMI 10 - SUPREME Court ) the Supreme Court has laid down the principle that when the Assessing Officer taken one of the two views permissible in law and which the Commissioner does not agree with and which results in a loss of revenue, it cannot be treated as erroneous order prejudicial to the i .....

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hri Joginder Singh, JM And Shri Rajesh Kumar, AM For the Appellant : Shri H.P.Mahajani For the Respondent : Shri N.P. Singh ORDER Per Rajesh Kumar, A. M: This appeal by the assessee is directed against the order dated 05-03-2015 of Commissioner of Income Tax-29, Mumbai (Hereinafter called as the CIT) for assessment year 2010-11. The assessee has raised following grounds of appeal: 1. On the facts and in the circumstances of the case and in law, the learned CIT erred in initiating proceedings u/s .....

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is offered to tax in AY 2011-12. 4. On the facts and in the circumstances of the case and in law, the learned CIT has erred in nothing that the disputed amount should have been provided in the books of accounts which in fact it was as noted by the Learned CIT himself at Para 3 of his order 2. The common issue raised in all the grounds of appeal is against proceedings u/s263 of the IT Act on the ground that AO had not obtained any details regarding the exclusion of Manglad Flash Flood Claim amou .....

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h Flood Claim amounting to ₹ 13,45,47,750/- and directed the Assessing Officer to re-frame the assessment afresh after making complete inquiries on the genuineness of the said claims made by the assessee. 3. The ld. AR submitted that the ld. Assessing Officer raised specific query qua the claim of Manglad Flash Flood during the assessment proceedings which was replied by the assessee vide letter dated 12.09.2012 filed on page no. 11 of the paper book, wherein it had been mentioned in parag .....

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id money was created in favour of the assessee and therefore, the assessee had rightly excluded the said amount from the current year s income. The ld. Counsel further submitted that this was clearly mentioned in the statement of total income filed along with the return of income and also mentioned by way of notes to accounts(note no 4) to the annual accounts of the assessee copies of which were now filed at page no.01 and page no.09 of the paper book respectively. The ld. Counsel vide letter da .....

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reduced by the counterclaim by client for recovery of advances given by them towards Minimum Wages - ₹ 2,98,90,277/- and thus net claim worked out to ₹ 10,46,57,473/-. The ld. Counsel strongly placed reliance on the judgements of Supreme Court in the case of E.D. Sasson & Co. (26 ITR 27), Shoorji Vallabhdas & Co (46 ITR 144) and CIT Vs. Hindustan Housing & Land Development Trust Ltd. (161 ITR 524). The ld. Counsel further submitted that in order to invoke Section 263 the .....

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officer and he was provided copy of the case filed in the Delhi High Court by M/s. SJVN Ltd disputing the said claim. 4. The ld. Counsel further submitted that the said claim was offered for taxation in the immediately succeeding year i.e. AY 2011-12 when the claim attained finality, the assessee entered into an agreement with the client which gave the unfettered right to receive the income from his client qua the claim and therefore, there was no loss of revenue to the Income Tax Department as .....

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the AO nowhere discussed in the assessment order, the issue of said claim. 5. We have heard the rival submissions and perused the material on record. We find that the CIT invoked the provisions of u/s 263 of the Act to set aside the assessment order dated 15/02/2013 and directing the AO to frame the assessment afresh on the ground that the AO failed to obtain details in respect of claim of Manglad Flash Flood of Rs. ₹ 13,45,47,750/-. In the computation of total income the assessee had exc .....

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ring the current year. However, the Manglad Flash Flood and Minimum Wages awards have been further disputed with SJVN before the High Court of Delhi. 6. The brief history of the claim is that an unprecedented flash flood occurred on 11.08.1997 at Manglad Khad the project site was flooded with large amount of water along with debris, silt, boulders, wood, trees etc, resulting into complete/partial destruction of machinery and equipment with loss of human life which led to additional cost being in .....

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ducted the payment made to assessee for the work done. Whereas, on the other hand, the assessee maintained that no interest was chargeable on the adhoc advance made. The matter was taken to the Dispute Revenue Board, wherein it was decided that the rate of interest charged by the client was excessive and it should be @ 10%, being the rate of interest specified in the contract document. The client M/s. SJVN Ltd. did not accept the decision of DRB referred the matter to Arbitration. Arbitrators al .....

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AO formed an opinion on the submissions of assesee made by letter dated 12/09/12 by accepting the stand of the assessee. In order to invoke the provision of section 263 of the Act, the order passed by the AO has to be erroneous and prejudicial to the interest of the revenue. Whereas in the present case the order is not erroneous nor prejudicial. The AO had called for details from the assessee in respect of Manglad Flash Flood claim and after considering the reply filed by the assessee allowed an .....

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o accrue or arise when a debt comes into existence in favour of the assessee but the assessee must have also acquired the right to receive the payment. The real test of income is whether or not the assessee has an unfettered right to receive the same. However, in the present case M/s. SJVN Ltd. filed a case in the Delhi High Court against the arbitral award which shows that the assesse does not have an unfettered right to receive the claim. In the case of Shoorji Vallabhdas &Co (46 ITR 144) .....

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