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2016 (6) TMI 23 - ITAT DELHI

2016 (6) TMI 23 - ITAT DELHI - [2016] 49 ITR (Trib) 8 - Revision u/s 263 - Eligibility for deduction u/s 80IA - Held that:- The Ld. AR has drawn our attention to various pages in the paper book which support the assessee’s claims that the A.O., during the assessment proceedings u/s 143(3) of the Act, had made extensive enquiries about the assessee’s claim of deduction u/s 80IA. A copy of the reply furnished by the assessee to the A.O in this regard is found to be placed in pages 46 to 51 of the .....

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before us, the AO has conducted an enquiry. He has given a consideration to the claim of the assessee also as is evident from the disallowance made by him on account of other income. However, he has not launched a lengthy discussion on the issue of deduction but that does not lead to an inference that there has been a lack of enquiry on his part on the issue. It is clear that an order cannot be termed as erroneous unless it is not in accordance with law. If an AO, acting in accordance with law, .....

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263 of the Act was patently illegal and liable to be quashed. - Decided in favour of assessee. - ITA No. 2560/Del/2014 - Dated:- 30-5-2016 - Shri G. D. Agrawal, Vice President And Shri Sudhanshu Srivastava, Judicial Member For the Appellant : Shri Ved Jain, Adv. Shri Ashish Kumar, Adv. For the Respondent : Shri Pankaj Vidharthi, CIT DR ORDER Per Sudhanshu Srivastava, Judicial Member This appeal has been preferred by the assessee against order dated 29/3/2014 by the Ld. Commissioner of Income tax .....

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t was an infrastructure company carrying on bio-medical waste treatment, which fell under solid waste management system. In the original assessment order u/s 143(3) dated 26/12/2011, the claim u/s 80IA was reduced from ₹ 1,72,76,560/- to ₹ 1,66,73,315/- and a sum of ₹ 6,03,245/- was disallowed as deduction on the ground that other income was not eligible for deduction u/s 80IA of the Act. 3. The Ld. CIT, Hisar issued a shows cause notice to the assessee u/s 263(1) of the Act on .....

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x, Hisar is devoid of jurisdiction as no error prejudicial to the interest of Revenue has been established and so must be quashed. 2. Additionally, the order u/s 263 of the Act proposing a redoing of the assessment merely on the basis of difference in opinion and holding that the Assessing Officer has failed to apply his mind on relevant provision of law is untenable on facts and law and unsustainable as such and must be quashed. 4. The Ld. AR submitted that during the course of assessment proce .....

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by Ld. CIT (copy at pages 54-56 of the Paper Book), whereby the Ld. CIT raised the issue regarding the deduction u/s 80IA of ₹ 1,72,75,560/- claimed by the assessee in respect of treatment of bio-medical waste, and stated that the same required further inquiry. In response to the said notice, the assessee submitted a detailed reply along with various documentary evidences to justify its claim of deduction u/s 80IA of the Act. The said reply is at Pages 57 - 66of the Paper Book. The various .....

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oremost allegation of the Ld. CIT is that the assessment order passed by the AO without determination of total income and tax payable is illegal. He submitted that in this regard, the following facts cannot be ignored: (i) Copy of Audit Report submitted by the assessee in Form 10CCB (enclosed at PB 29 - 35). (ii) A proper reply regarding the justification of claiming the deduction u/s 80IA has been given by the assessee to the AO, which is enclosed at PB 48 - 50. (iii) The AO in his order dated .....

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o in his order in Para 3.3.1. 6. The Ld. AR further submitted that in view of the above facts, it is clearly evident that the order passed by the AO was in no way prejudicial to the interest of the revenue as the tax payable had been calculated in a separate Annexure. It was submitted that merely because the AO has not elaborately discussed the claim of assessee, the same cannot be a ground for invoking the provisions of section 263. The Ld. AR submitted that despite considering the reply of the .....

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lhi - Trib.) The Ld. AR submitted that the Ld. CIT has alleged that the AO has not made proper enquiries however it is on record that the details of deduction claimed by the assessee along with the relevant justification of the said claim was submitted by the assessee before the AO. Further, the Audit Report in Form 10CCB was also submitted before the AO and it was only after verifying the claim of the assessee and considering the submissions of the assessee that the AO had restricted the claim .....

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f the said claim along with various documentary evidences was submitted by the assessee before the AO as well as before the Ld. CIT. It was submitted that the assessee also referred to the publication of World Bank Institute to justify that Bio-Medical waste is included in solid waste management. The said publication is at Pages 69 - 80 of the paer Book. The Ld. AR further submitted that the Ld. CIT has alleged that the assessee is paying rent for the plant and machinery which indicates that the .....

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se rentals to Director Health Services, Govt. of NCT of Delhi for the space provided for setting up of CBWTF at Delhi. The copies of invoices along with copy of cheques for the same were also submitted by the assessee before the AO and Ld. CIT. Though the rent was paid for the space, but the CBWTFs were owned by the assessee itself. The Ld. AR further submitted that the assessee had also submitted the following evidences before the AO as well the Ld. CIT, which will further ensure that the asses .....

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tion, reception, treatment, storage, transportation and Disposal of the Bio Medical Waste from Haryana State Pollution Control Board • Agreement with General Hospital & Trauma Center • Agreement with Director Health Services for the period of ten years • An agreement with UP Health System Development Project for having or setting CTF at or around Lucknow 8. The Ld. AR submitted that the Ld. CIT has completely disregarded the justification as well as the documentary evidences s .....

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ank publication. Further, this fact is also supported by the judgment of Hon ble ITAT Mumbai in the case of ITO v. E. A. Infrastructure Operations P. Ltd. [2011]. The Ld. AR further submitted that were two views are possible and Assessing Officer follows one of the possible view, the CIT cannot sit over the judgment of the AO. This was held by the Apex Court in the case of CIT vs Max India Ltd. [2007] 295 ITR 282 (SC). Similar view has been taken by Jurisdictional High Court in the case of CIT V .....

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on record that the claim of deduction u/s 80IA was made by the assessee through a revised return and not in the original return which casts a doubt on the bona fides of the claim. He also emphasized that the deduction u/s 80IA of the Act was allowable only on disposal of waste and not on collection of waste which the assessee company was engaged in. He submitted that the Ld. CIT (A) had rightly set aside the assessment order and that the impugned order should be upheld. 10. We have heard the riv .....

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e A.O has specifically allowed the claim of deduction u/s 80IA after reducing it by ₹ 6,03,245/- on account of other income not being eligible for the claim of deduction. Therefore, it will be wrong to infer that there has been no application of mind by the A.O while considering the claim of the assessee although he might not have expressed it in terms of a lengthy discussion on the issue. The Hon ble Delhi High Court in CIT vs. Sunbeam Auto Ltd 332 ITR 167 (Del) has opined in Para 17 of i .....

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was revenue or capital expenditure. This argument predicates on the assessment order, which apparently does not give any reasons while allowing the entire expenditure as revenue expenditure. However, that by itself would not be indicative of the fact that the Assessing Officer had not applied his mind on the issue. There are judgments galore laying down the principle that the Assessing Officer in the assessment order is not required to give detailed reason in respect of each and every item of d .....

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nt opinion in the matter. It is only in cases of lack of inquiry that such a course of action would be open. In Gabriel India Ltd. [1993] 203 ITR 108 (Bom), law on this aspect was discussed in the following manner (page 113): "... From a rending of sub-section (1) of section 263, it is clear that the power of suo motu revision can be exercised by the Commissioner only if, on examination of the records of any proceedings under this Act, he considers that any order passed therein by the Incom .....

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h it can be said that the Commissioner acting in a reasonable manner could have come to such a conclusion, the very initiation of proceedings by him will be illegal and without jurisdiction. The Commissioner cannot initiate proceedings with a view to starting fishing and roving enquiries in matters or orders which are already concluded. Such action will be against the wellaccepted policy of law that there must be a point of finality in all legal proceedings, that stale issues should not be react .....

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nded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately. This section does not visualize a case of substitution of the judgment of the Commissioner for that of the Income-tax Officer, who passed the order unless the decision is held to be erroneous. Cases may be visualized where the Income-tax Officer while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case an .....

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use the Income-tax Officer has exercised the quasi-judicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be formed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion . . . There must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than wh .....

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the assessee. Such decision of the Incometax Officer cannot be held to be erroneous simply because in his order he did not make an elaborate discussion in that regard. 11. Similarly, the Hon ble Delhi High Court in ITO vs. DG Housing Projects Ltd. 343 ITR 329 (Del) opined as under: 16. Thus, in cases of wrong opinion or finding on merits, the CIT has to come to the conclusion and himself decide that the order is erroneous, by conducting necessary enquiry, if required and necessary, before the or .....

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n is conducted by the CIT and he is able to establish and show the error or mistake made by the Assessing Officer, making the order unsustainable in Law. In some cases possibly though rarely, the CIT can also show and establish that the facts on record or inferences drawn from facts on record per se justified and mandated further enquiry or investigation but the Assessing Officer had erroneously not undertaken the same. However, the said finding must be clear, unambiguous and not debatable. The .....

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to decide the aspect/question. 17. This distinction must be kept in mind by the CIT while exercising jurisdiction under Section 263 of the Act and in the absence of the finding that the order is erroneous and prejudicial to the interest of Revenue, exercise of jurisdiction under the said section is not sustainable. In most cases of alleged "inadequate investigation", it will be difficult to hold that the order of the Assessing Officer, who had conducted enquiries and had acted as an i .....

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emit, the Assessing Officer may decide that the order is erroneous. Therefore CIT must after recording reasons hold that the order is erroneous. The jurisdictional precondition stipulated is that the CIT must come to the conclusion that the order is erroneous and is unsustainable in law. We may notice that the material which the CIT can rely includes not only the record as it stands at the time when the order in question was passed by the Assessing Officer but also the record as it stands at the .....

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conjunction with an erroneous order passed by the Assessing Officer. Every loss of Revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interest of Revenue. Thus, when the Assessing Officer had adopted one of the courses permissible and available to him, and this has resulted in loss to Revenue; or two views were possible and the Assessing Officer has taken one view with which the CIT may not agree; the said orders cannot be treated as an erroneo .....

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ional pre-conditions stipulated in Section 263 of the Act are not satisfied. The Assessing Officer did conduct investigation and accepted the claim under Section 80HHF on being satisfied that the conditions stipulated in the said Section are satisfied. It is not the case of "no investigation". It is also not a case where per-se further investigation was required. Commissioner in his order, as noticed above, has been tentative and hesitant and did not decide whether the claim under Sect .....

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lowed. Once the said claim was considered and examined by the Assessing Officer, Commissioner cannot set aside the order without recording contrary finding. This will be contrary to Section 263 of the Act. In paragraph 6 of the order dated 29th March, 2007, the Commissioner uses the expressions 'erroneous and prejudicial to the interest of Revenue' but did not cite any reason or ground for the said conclusion. Use of the words without elucidation indicates, that the said observation are .....

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. (supra), a similar reasoning and ratio was given and reference was made to the decision of a Full Bench of Delhi High Court in CIT vs. Kelvinator of India (2012) 256 ITR 1 (Del.). In the said case, order of remand to the Commissioner of Income Tax for fresh decision was passed after noticing that the Tribunal had considered the question of bifurcation of interest income with reference to the deduction under Section 80IA. It was recorded that this bifurcation and the nature of income was accept .....

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a case falling under the exception carved out and mentioned in the case of DG Housing Projects Ltd. (supra). 20. In view of the aforesaid discussion, question No. 2 has to be answered against the Revenue and in favour of the respondent assessee and it has to be held that the Assessing Officer during the course of original assessment proceedings, had delved deep into the question of deduction under Section 80HHF and was satisfied that the deduction made were as per law. Question No. 1 is also an .....

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