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M/s Volvo India Pvt. Ltd. Versus Commissioner of Income-Tax (LTU)

2016 (1) TMI 1032 - ITAT BANGALORE

Revision u/s 263 - claim of allowance under the provisions of sec. 40(a)(ia) was not examined by the AO during the course of assessment proceedings - Held that:- The assessee could not demonstrate before us that the issue was examined by the AO during the course of assessment proceedings. It is settled principle of law that non-enquiry by the AO on an issue confers jurisdiction on the CIT to revise the assessment. The Hon’ble jurisdictional High Court, in the case of CIT vs. Infosys Technologies .....

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'ble jurisdictional High Court in the case of Infosys Technologies Ltd.(supra), we hold that the ld.CIT(LTU) was justified in assuming jurisdiction u/s 263 of the Act and directing for de novo assessment. - Decided against assessee - ITA No. 687/Bang/2015 - Dated:- 20-1-2016 - Asha Vijaraghavan, JM And Inturi Rama Rao, AM For the Appellant : Shri P Dinesh, Advo For the Respondent : Shri Binod Kumar Singh, CIT (DR) ORDER Per Inturi Rama Rao, AM This appeal by the assessee-company is directed agai .....

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ainable. 2. On the facts there being no error much less an error prejudicial to the interest of the revenue, the learned Commissioner of Income-tax ought to have refrained from invoking the provisions of sec.263 of the Act. 3. Without prejudice, the learned Commissioner erroneously disallowed the expenditure of ₹ 2,36,07,661/- as deduction without considering the fact that the AO had considered the explanation of the appellant and had passed a speaking order U/s 143(3) r.w.sec 144C of the .....

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7-08 6. On the facts and in the circumstances of the case, the learned Commissioner failed to consider the case of Pfizer wherein the Tribunal has settled the principles that the disallowance of expenses is not required u/sec. 40(a)(ia) if the identity of the parties are not known, which is very much similar with the present case. 7. For these and other grounds that may be urged at the time of hearing of the appeal the appellant prays that the appeal may be allowed. 3. Brief facts of the case ar .....

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₹ 347,04,06,832/- after making several disallowances. Being aggrieved by the disallowance, an appeal was filed and pending disposal. As the matter stood thus, the ld.CIT (LTU) had issued notice u/s 263 dated 4/2/2015 calling upon the assessee-company to show cause as to why the assessment order cannot be revised, as the AO had failed to disallow a sum of ₹ 2,36,07,661/- as no tax deduction was made. In response to show cause notice, assessee-company submitted vide letter dated 11/3/2 .....

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g the explanation of the assessee-company observed that TDS on an amount of ₹ 2,36,07,661/- was not made in any of the years but it is claimed as deduction in the year under consideration and therefore, held that the amount cannot be claimed as a deduction under the provisions of sec.40(a)(ia) of the Act. The ld.CIT(LTU) held that this claim of the assessee was not examined by the AO during the course of assessment proceedings. Therefore, he set aside the assessment order to examine this i .....

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5 SOT 277. 4.2 On the other hand, learned CIT(DR) supported the order of the ld.CIT(LTU) passed u/s 263 of the Act. 4.3 We have heard rival submissions and perused the material on record. The only issue that arises for our consideration in the present appeal is whether the ld.CIT(LTU) was justified in assuming jurisdiction under the provisions of sec.263 of the Act. The only ground on which the ld.CIT(LTU)exercised the power of revision u/s 263 was that the claim of allowance of ₹ 2,36,07, .....

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wing the judgment of the Hon ble Supreme Court in the case of Malabar Industrial Co. vs. CIT (243 ITR 83), held that where deduction was allowed by the AO without indicating the basis, that could be considered as an order both erroneous and prejudicial to interests of revenue vide paras.27 & 28 which read as under: 27. The assessing authority performs a quasi-judicial function and the reasons for his conclusions and findings should be forthcoming in the assessment order. Though it is urged o .....

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