TMI Blog2016 (6) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... he established principles of law. Therefore, applying the ratio of aforesaid decision, we hold that the order dt:12-08-2014 passed by the CIT-IV is bad under law which is liable to be set aside. - Decided in favour of assessee. - ITA No. 2222/Kol/2014 - - - Dated:- 26-4-2016 - Shri P. M. Jagtap, A.M. Shri S.S.Viswanethra Ravi, J.M. For The Appellant : Shri Nageshwar Rao, Advocate For The Respondent : Shri G. Mallikarjuna, CIT,DR ORDER Per Shri S.S.Viswanethra Ravi, J.M . This is an appeal filed by the assessee against the order dated 12.08.2014 passed by the CIT-IV, Kolkata for the assessment year 2010-11 framed under section 263 of the I.T.Act. 2. The assessee raised the following grounds: Based on the facts and circumstances of the case and in law, the Appellant respectfully submits that the learned Commissioner ofIncome-tax - N, Kolkata ['CIT'] has erred in invalidly initiating the revisionary proceedings and passing an order under Section 263 of the Income-tax Act, 1961 ('Act'). In this regard, the Appellant respectfully craves leave to prefer an appeal under Section 253 of the Act against the order passed by the learned CIT u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein. The AO accepted the return of income as filed above and an assessment order dated 22.11.2012 was passed under section 143(3) of the Act. 4. The CIT-IV, exercising revisionary powers as contemplated under section 263 of the Act, found that the assessee got foreign exchange gain of ₹ 31,16,05,186/- against the interest free loan of USD 5,00,00,000/- availed from Asian Telecommunication Investments (Mauritius) Ltd. 5. CIT-IV found that the assessee deducted the foreign exchange gain from the net profit under the normal provisions of the Act and the same was not reduced from net profit while computing the income under book profit under section 115JB of the Act. CIT-IV was of the view that the fluctuation in foreign exchange is revenue gain and the assessee is not entitled to adjust the same in computing the total income under the normal provisions of the Act. Accordingly, CIT-IV set aside the assessment order dated 27.11.2012 and directed the AO to examine the entire case de novo to work out taxable income as per law. 6. The question that arose for consideration before us, whether the CIT-IV properly exercised his jurisdiction in setting aside the assessment ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Tribunal as to Whether, on the facts and in the circumstances of the case, the Tribunal was justified in setting aside the order passed by the CIT under s. 263 of the Act ? The facts involved therein that the assessment of 1973-74, where the assessee-company had claimed deduction of a sum of ₹ 99,326 describing it as `Plant relayout Expenses'. It was explained by the assessee that it incurred in connection with the merger of two existing plants for the manufacturing of shock absorber which were located side by side at its factory at Mulund. According to the assessee, it was a business expenditure allowable as deduction in computation of his income. The ITO accepted the explanation of the assessee and allowed the deduction as claimed by it. The CIT was of the view that the ITO had allowed the same on the presumption that it was revenue expenditure and Commissioner opined that the expenditure was in the nature of capital expenditure with out giving any specific finding regarding the order of AO is to how it was erroneous in so far as the prejudicial to the revenue. The Hon ble High Court supra held as follows. 15. We may now examine the facts of the presen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come in the hands of the trust is exempt and taxable in the hands of beneficiaries. The ITO completed the assessments. CIT, not being satisfied with the explanation of the assessee under Section 263 proceedings, the CIT set aside the assessment orders for both the years directing the ITO to make the assessments de novo. On appeal, the Tribunal set aside the order of the CIT. The Hon ble High Court observed as under: 6. There is no finding by the CIT that the ITO reached an erroneous conclusion and that, on the facts and circumstances of the case, the conclusion would have been different. The orders of the ITO may be brief and cryptic, but that by itself is not sufficient reason to brand the assessment orders as erroneous and prejudicial to the interest of the Revenue. Writing an order in detail may be a legal requirement, but the order not fulfilling this requirement, cannot be said to be erroneous and prejudicial to the interest of the Revenue. It was for the CIT to point out as to what error was committed by the ITO in having reached the conclusion that the income of the trust was exempt in its hands and was assessable only in the hands of the beneficiaries. The Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iticism of the Tribunal is well-founded. There is no indication in the order of the CIT as to the basis on which he came to the prima facie conclusion that the capital borrowed by the firm was utilised for purposes other than that of the firm's business. When the assessee filed a detailed written statement before him, the CIT did not deal with any of the points raised in the statement. He thought that the best course in the circumstances was to remand the matter to the ITO for consideration of the points raised in the assessee's written statement. That certainly was not the proper course to be adopted by him. It was necessary for the CIT to state in what manner he considered that the order of the ITO was erroneous and prejudicial to the interests of the Revenue and what the basis was for such a conclusion. After indicating his reasons for such a conclusion, it would certainly have been open to him to remand the matter to the ITO for such other investigation or enquiry as might be necessary. But that was not the course which the CIT pursued. The Tribunal was, therefore, justified in setting aside the order of the CIT. The learned counsel for the Revenue urged that, while s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the ITO was erroneous and was prejudicial to the interests of the Revenue. Since no decision about the erroneous nature of the order was firmly taken, the Tribunal was right in vacating the order. Accordingly, we answer the question in favour of the assessee, that is, in the affirmative, with no order as to costs. 16. On the case on hand, the order of the CIT does not show any firm reasons as required under section 263 of the Act to declare the assessment order was erroneous and was prejudicial to the interests of the Revenue, as observed above a direction was given to AO to work out the taxable income as per law. In our view it is against the established principles of law. Therefore, applying the ratio of aforesaid decision, we hold that the order dt:12-08-2014 passed by the CIT-IV is bad under law which is liable to be set aside. 17. In the light of above, Respectably following the same, we allow the ground no-1 raised by the assessee and in view of the decision on ground no-1 as above and ground no-2 needs no adjudication and hence , therefore it is dismissed. 18. In the result the appeal filed by the Assessee is allowed Order Pronounced in the Open ..... X X X X Extracts X X X X X X X X Extracts X X X X
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