TMI Blog2016 (6) TMI 1076X X X X Extracts X X X X X X X X Extracts X X X X ..... case of CIT vs. Indo Nippon Chemicals Co.Ltd.(2003 (1) TMI 8 - SUPREME Court ) has held that unavailed MODVAT credit cannot be construed as income and there is no liability to pay tax on such MODVAT credit. Before us, Revenue has not brought any material record to demonstrate that the view taken by the AO was an impermissible view and was contrary to law or was upon erroneous applications of legal principles necessitating the exercising of revisionary power u/s.263 of the Act. In view of the aforesaid facts, we are of the view that in the present case Ld.CIT was not justified in resorting to revisionary powers u/s.263 of the Act - Decided in favour of assessee - ITA No. 809/Ahd/2015 - - - Dated:- 3-6-2016 - SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER For The Assessee : Shri Sunil Talati, CA For The Revenue : Shri Jagdish, CIT-DR ORDER PER ANIL CHATURVEDI, ACCOUNTANT MEMBER: This appeal filed by the assessee is directed against the order of the Principal Commissioner of Income-tax-1, Ahmedabad dated 02.03.2015 passed u/s.263 of the Act for Assessment Year 2010-11. 2. Facts of the case for AY as culled out from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01/02/2013 and directed the AO to make afresh assessment. Aggrieved by the aforesaid order of the ld.CIT, assessee is now in appeal before us and has raised the following grounds:- 1. The learned Pr. C.I.T. has erred in passing order u/s 263 without jurisdiction and appropriate powers available under the Act. It is submitted that the order passed u/s 263 is bad in law, void ab initio and the same be deleted. 2. Without prejudice to the above, it is submitted that the order passed u/s 263 of the I.T. Act is not correct on facts and in law inasmuch as the original order passed u/s 143(3) was neither prejudiced to the interest of revenue nor it was erroneous. It is submitted that the finding given by the learned C.I.T. is not correct on the facts and far from truth. It be so held now. 3. The learned Pr. C.I.T. has erred in holding that assessee company has following the exclusive method of accounting and had not taken into account unutilized balance of CENVAT credit in terms of section 145A of the Act and thus understating the profit by not including it in closing stock. The Ld. Pr. C.I.T. has not considered the explanations/submissions furnished by your appellant dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icals Co.Ltd. reported at (2003) 261 ITR 275 (SC) and submitted that MODVAT credit cannot be considered as income of the assessee. With respect to the disallowance u/s.14A of the Act, he submitted that the assessee had considered the net interest for the purpose of disallowance. He further submitted that the AO while framing the assessment order had raised specific queries and after considering the submissions of the assessee and application of mind, the issue was decided by AO. He also pointed out copy of the notices issued u/s.143(2) and 142(1) of the Act which were placed at page No.14 of the paper-book of the assessee. He submitted that since the issue has been examined by the AO, CIT cannot resort to revisionary proceedings u/s.263 of the Act. He further submitted that the error envisaged by section 263 of the Act should be an actual error either of facts or of a law and when two views are possible and AO has taken one view with which CIT does not agree, the order of the AO cannot be treated as erroneous and to the prejudicial to the interests of Revenue unless the view taken by the AO is unsustainable in law and for this proposition he relied on the decision of Hon ble Apex C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovision cannot be invoked to correct each and every type of mistake or error committed by the AO; when an ITO adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the ITO has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the ITO is unsustainable in law. 8. In the present case, it is seen that section 263 of the Act has been invoked on two grounds; namely, (i) non-inclusion of MODVAT credit to the closing stock and (ii) the disallowance u/s.14A r.w.Rule 8-D of I.T. Rules, 1962. On these issues, we find that the AO had raised specific query in the notice issued u/s.142(1) of the Act. The queries raised by the AO were replied by the assessee and these details also formed part of the tax Audit Report that were filed by the assessee before AO. Thus, it can be seen that after making the necessary queries with respect to the issues under consideration and on receiving replies from the assessee, the AO was satisfied with the submission of Assessee and, therefore no additions were made by the AO. We find t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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