TMI Blog2017 (4) TMI 1102X X X X Extracts X X X X X X X X Extracts X X X X ..... ceeding two AY's. We do not find that there was any change in the provisions of both the sections for the year under appeal and for the subsequent two AY's. Thus there existed the first pre- condition for invoking the provisions of section 263 of the Act as the view taken by the AO was unsustainable in law. The AO had not applied his mind before allowing the deduction to the assessee. We are of the opinion that the CIT was able to demonstrate that the view taken by the AO was not plausible rather it was legally unsustainable and incorrect. Besides it resulted in loss of revenue. Thus both the prerequisites were there when the CIT issued the notice u/s. 263 of the Act. She had decided the issue after considering the available material and legal position prevailing at that point of time. So we hold that the order passed by the CIT does not suffer from any legal or factual infirmity. - Decided against assessee - I. T. A. 2963/Mum/2016 - - - Dated:- 21-4-2017 - Shri Rajendra Accountant Member and Ram Lal Negi Judicial Member Revenue by: Shri Rahul Raman-CIT-DR Assessee by: Shri Vimal Punmiya-AR ORDER Per Rajendra AM Challenging the order dated 30/03/2016 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee. As a result she set aside the order and directed the AO to consider the facts and issues and pass a fresh speaking order after hearing the assessee. 3. During the course of hearing before us the Authorised Representative (AR) contended that where two views were possible and the AO had taken one view with which the CIT did not agree it could not be treated as an erroneous order. There were certain cases that favoured the view taken by the assessee. He referred to the case of Coromandel Stamping and Stones Ltd. (49 taxmann. com 70) Saluja Fabrics Ltd. (181 Taxman132) and Indian Petrochemicals Corporation Ltd. (74 taxmann. com 163). He further argued that order of the AO was neither erroneous nor education to the interest of revenue that as per subsection 5 all the provisions of the act would be applicable to the computation governed by section 115 JB that if any income was not taxable because of a specific provision of the act the same would not form part of book profit that section 80IB(10) excluded the income for taxation purposes that same would not be taxable u/s. MAT provisions also that non-obstante clause of section 80IB(10) should prevail over the non-obstante ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be segregated. Where the order of the AO appears to be erroneous but is not prejudicial to the interests of the Revenue or the order is otherwise valid but prejudicial to the interests of the Revenue that does not invite the invocation of such power by the CIT. Every loss of revenue in consequence of an order of the AO cannot be treated as prejudicial to the interests of the Revenue. For example when an AO adopts one of the courses permissible in law or where two views are possible of which the AO as taken one view the CIT cannot exercise jurisdic - tion u/s. 263 merely because he does not agree with the view of the AO unless the view which is taken by the AO is unsustainable in law. On the other hand where an order has been passed by the AO without application of mind or where the AO has made an incorrect assessment of facts or an incorrect application of law that would satisfy the requirement of the order being erroneous. The phrase prejudicial to the interests of the Revenue mean that if due to an erroneous order of the AO the Revenue is losing tax lawfully payable by a person it will certainly be prejudicial to the interests of the Revenue. There is difference between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 80IB(10) cannot be brought within the fold of the section 115JB. It is a non obstante clause and provisions of section 80IB(10) cannot dilute the rigor encompassing it. As the AO had not given full effect to the provisions of section 115JB so his order would fall in the category of erroneous order. Computation made by him was not as per clear mandate of the law. The assessee itself had in the subsequent two years followed the method as suggested by the CIT in her revisionary order. No reasonable cause was brought on record for not claiming any deduction u/s. 80IB (10) while computing the income under the MAT provisions for the immediate succeeding two AY. s. We do not find that there was any change in the provisions of both the sections for the year under appeal and for the subsequent two AY. s. Thus there existed the first pre- condition for invoking the provisions of section 263 of the Act as the view taken by the AO was unsustainable in law. The AO had not applied his mind before allowing the deduction to the assessee. We are of the opinion that the CIT was able to demonstrate that the view taken by the AO was not plausible rather it was legally unsustainable and incorrect. B ..... X X X X Extracts X X X X X X X X Extracts X X X X
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