TMI Blog2018 (2) TMI 1515X X X X Extracts X X X X X X X X Extracts X X X X ..... s claim was accepted by the AO for Assessment Years 2008-09 and 2009-10 by orders passed u/s 143(3) of the Act. It is also a matter of record that there is no change in the facts this year as compared to the earlier assessment years. The Hon’ble Apex Court in the case of Shasun Chemicals and Drugs Ltd. vs. CIT (2016 (9) TMI 1199 - SUPREME COURT OF INDIA), while adjudicating an issue relating to section 35D, held that where a benefit is allowed to the assessee for first two assessment years, the same cannot be denied in the subsequent block period as once the claim of the assessee was accepted and the clock had started running in favour of the assessee, it had to complete the entire period of ten years. The same analogy can be applied to provisions of section 80IA also. CIT, on the facts of the case, at best can be termed as having a ‘different view’ from that of the AO. CIT has not brought on record any finding as to why the view of the AO was not legally sustainable. In our considered opinion, section 263 does not envisage the substitution of the view of the AO by the view of the Ld. Pr. CIT especially when there is no legal infirmity in the view taken by the AO. Impugned acti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are certain omissions in the body of the assessment order, which has resulted into wrong determination of total assessed income . ( ii) On a perusal of the assessment record, it is seen that the assessee company is only operating company for rendering networking services such as Sales/Marketing, NetworK Marketing, Network Management Activities etc. and works for the BT Telecommunication Pic (as telecommunication developer) as per agreement after getting license from DoT and in turn assessee company receives remunerations for the same. Since assessee is not engaged in the business of infrastructure (Telecommunication Service) development, therefore not eligible for deduction u/s 80IA (4)(i). ( iii) The assessee has applied for NLD/ILD license, granted by DoT in 2006.Assessee stated that granting of LND/DIL license merely amounted to migration of IP-VPN services which was provided by BTGC from 2003 onward, therefore, assessee company is eligible for deduction u/s80IA even after the license granted after March, 2005. Provision of section 80IA(4)(ii) of the Act is silent on such migration of license. Thus, in absence of such provision in the Act regarding allowance of ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rejudicial to the interest of the revenue in terms of the section 263 of the Act. 3. The Ld. AR submitted that this was the fourth consecutive year of the assessee for claiming deduction u/s 80IA of the Act and the assessee had been duly allowed the deduction in the earlier three assessment years. Our attention was drawn to assessment orders for assessment years 2008-09 and 2009-10 which were passed u/s 143(3) of the Act and in which the assessee was allowed the benefit of the deduction u/s 80IA. It was submitted that during the year under consideration also the AO had duly verified the claim of the assessee vis a vis deduction u/s 80IA and the same was evidenced by the assesee s reply regarding its eligibility towards the claim and the same was available on pages 83 to 105 of the paper book which contained the assessee s submissions before the AO. It was submitted that it was not the case of the Ld. Pr. CIT that no inquiry had been conducted by the AO as the AO had made proper inquiries and the assessee had also submitted voluminous documents in support of its claim. 3.1 It was further submitted that the Ld. Pr. CIT was of the opinion that the assessee company was only an op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nication services as were being originally rendered under the IP-VPN licence. It was also submitted that the same infrastructure continued to be used by the assessee under the pre existing arrangement and further the same operational, technical, marketing and administrative personnel were continued to be used by the assessee on migration to the new licence. It was also submitted that the same bank account of the assessee for the receipt and payments continued to be used. Our attention was also drawn to clause e(ii) of the Press Note issued by the DoT which permitted the assessee to adjust the entry fee paid to the DoT for providing IP-VPN services against the entry fees payable for obtaining NLD/ILD licence. It was submitted that it was just an extension of the existing undertaking and no new undertaking had come into existence as alleged by the Ld. Pr. CIT. 3.4 Our attention was also drawn to page 3 of the Transfer Pricing study of the assessee which contained the assessee s profile. It was submitted that as per the Transfer Pricing Study, the assessee s activities included providing telecom services under ILD/NISP licence and, thus, the Ld. Pr. CIT had erred in holding that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income- tax Officer. That would not vest the Commissioner with power to reexamine the accounts and determine the income himself at a higher figure. It is because 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the Assessing Officer, who had conducted enquiries and had acted as an investigator, is erroneous, without CIT conducting verification/inquiry. The order of the Assessing Officer may be or may not be wrong. 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/prohibi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered and examined by the Assessing Officer, The Ld. Pr. Commissioner cannot set aside the order without recording contrary finding. This will be contrary to Section 263 of the Act. 5.4 Further, the year under consideration in the fourth consecutive year in which the assessee had claimed deduction u/s 80IA. It is a matter of record that the assessee s claim was accepted by the AO for Assessment Years 2008-09 and 2009-10 by orders passed u/s 143(3) of the Act. It is also a matter of record that there is no change in the facts this year as compared to the earlier assessment years. The Hon ble Apex Court in the case of Shasun Chemicals and Drugs Ltd. vs. CIT reported in 388 ITR 1 (SC), while adjudicating an issue relating to section 35D, held that where a benefit is allowed to the assessee for first two assessment years, the same cannot be denied in the subsequent block period as once the claim of the assessee was accepted and the clock had started running in favour of the assessee, it had to complete the entire period of ten years. The same analogy can be applied to provisions of section 80IA also. 5.5 Further, the view of the Ld. Pr. CIT, on the facts of the case, at best ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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