TMI Blog2016 (6) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... de 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, makes a certain assessment, the same cannot be branded 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 AO. Therefore, it cannot be held that in the instant case the AO’s order was erroneous and prejudicial to the interest of the revenue within the terms of section 263 of the Act. The impugned action of the Ld. CIT u/s 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 Vidharth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 48 50 of the paper book). The Ld. AR further submitted that the AO, after examining the assessee s explanation, reduced the claim of deduction to ₹ 1,66,73,315/- and held that the other income amounting to ₹ 6,03,245/- was not eligible for the said deduction. Thereafter, a notice was issued 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 details submitted along with the reply are at pages 67 132 of the Paper Book. The Ld. AR submitted that the Ld. CIT, however, set aside the order of the AO and restored the matter back to the file of the AO for making a fresh assessment. The Ld. CIT has held that the AO has not conducted necessary and proper enquiries and has not applied the relevant provisions of law, and thus, the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee 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 of the deduction to ₹ 1,66,73,315/-. He submitted that it is clear from the above that the Ld. CIT has passed the order u/s 263 merely because of a different opinion in the said matter, which is not valid as per law. 7. As regards the merits of the case, the assessee company being in the business of developing, operating and maintaining the infrastructure facility of bio-medical waste (which falls under the solid waste), is eligible for deduction u/s 80IA(4) of the Act. The justification of 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 plan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to mention here that the solid waste management includes the biomedical waste management, as has been provided in the World Bank 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 Vs Kelvinator India Ltd. [2011] 332 ITR 231 (Del). The Ld. AR submitted that the order u/s 263 being bad in law deserved to be quashed. 9. The Ld. DR, while supporting and defending the order of the Ld. CIT, submitted that there was no application of mind by the A.O and that the A.O had not conducted proper enquiries before allowing the claim of deduction. He submitted that the Ld.CIT has covered all these aspects in the impugned order which ought to be upheld. It was submitted that it is a fact on record that the claim of deduction u/s 80IA was made by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of each and every item of deduction, etc. Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. Learned counsel for the assessee is right in his submission that one has to keep in mind the distinction between lack of inquiry and inadequate inquiry . If there was any inquiry, even inadequate that would not by itself give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has a different 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 Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue . It is not an arbitrary or unchartered power, it can be exercised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 what was just has been imposed. . . We may now examine the facts of the present case in the light of the powers of the Commissioner set out above. The Income-tax Officer in this case had made enquiries in regard to the nature of the expenditure incurred by the assessee. The assessee had given detailed explanation in that regard by a letter in writing. All these are part of the record of the case. Evidently, the claim was allowed by the Income-tax Officer on being satisfied with the explanation of 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 Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT cannot direct reconsideration on this ground but only when the order is erroneous. An order of remit cannot be passed by the CIT to ask the Assessing Officer to decide whether the order was erroneous. This is not permissible. An order is not erroneous, unless the CIT hold and records reasons why it is erroneous. An order will not become erroneous because on remit, 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 time of examination by the CIT [see CIT vs. Shree Manjunathesware Packing Products, 231 ITR 53 (SC)]. Nothing bars/prohibits the CIT from collecting and relying upon new/additional material/evidence to show and state that the order of the Assessing Officer is erroneous. 18. It is in this context that the Supreme Court in Malab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 presumptive or a suspicion and mere repetition of words but this does not satisfy the requirements under Section 263 of the Act. Order under Section 263 must be clear and must set out logical ground and reason as to why the assessment is erroneous and prejudicial to the interest of the Revenue. Decision in Gee Vee Enterprises (supra) is not applicable as enquiry was conducted by the Assessing Officer and he formed an affirmative opinion accepting the claim of the respondent. 19. In DLF Power Ltd. (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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