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2018 (4) TMI 744

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..... Devi, Judicial Member And Shri B. Ramakotaiah, Accountant Member For The Assessee : Shri Sunil Kumar Jain For The Revenue : Shri K. Srinivas Reddy DR ORDER Per Smt. P. Madhavi Devi, J.M. This is assessee s appeal for the A.Y 2012-13 against the order of the learned Pr. CIT-2, Hyderabad, dated, 22.02.2017 passed u/s 263 of the Act. 2. Brief facts of the case are that the assessee, a nonbanking finance company, engaged in the business of granting of loans and advances, has filed its return of income for the A.Y 2012-13 on 21.09.2012 declaring total loss of ₹ 45,71,884. During the assessment proceedings u/s 143(3) of the Act, the AO accepted the loss returned by the assessee. Thereafter, the CIT perused the assessment records by invoking the provisions of section 263 of the Act and observed that the assessee has claimed an amount of ₹ 8,00,750 as revenue expenditure in the P L A/c and that the same was allowed by the AO, though it is not allowable because it is capital expenditure. 3. CIT considered this as an error causing prejudice to the interest of revenue. Therefore, a show cause notice u/s 263 was issued to the assessee on 21.1 .....

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..... ore, according to him, the assessment order is not erroneous and therefore, cannot be revised u/s 263 of the Act. According to him, both the conditions of the assessment, being erroneous and also prejudicial to the interests of the Revenue, have to be satisfied for invoking the provisions of section 263 of the Act. Further, even on merits of the issue, the learned Counsel for the assessee submitted that the assessee company has booked the profit on trading of shares as income and therefore, any loss from similar transactions should also be treated as revenue expenditure. 5. The learned DR, on the other hand, supported the orders of the CIT and placed reliance upon the judgment of the Hon'ble Supreme Court in the case of CIT vs. Amitabh Bachchan reported in Civil Appeal No.5009 of 2016 dated 11th May, 2016 to submit that the assessment order is erroneous in the facts and circumstances of the case. 6. She also relied on the decision of the Hon'ble Karnataka High Court in the case of Dy. CIT vs. BPL Sanyo Finance Ltd reported in (2009) 312 ITR 63 (Kar.) to submit that the loss on account of forfeiture of share application money because of failure by the assessee to p .....

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..... by him, such conversion or treatment; 8. The Tribunal has considered the meaning of the word allotment , as appeared in the Guide to the Companies Act, 1956. The same is reproduced herein below : What is termed 'allotment is generally neither more nor less than the acceptance by the company of the offer to take shares. To take the common case, the offer is to take a certain number of shares or such a less number as may be allotted. That offer is accepted by the allotment either of the total number mentioned in the offer or a less number, to be taken by the person who made the offer, This constitutes a binding contract to take that number according to the offer and acceptance. To my mind, there is no magic whatever in the term 'allotment' as used in these circumstances. It is said that the allotment is an appropriation of a specific number of shares. An allotment is an appropriation, not of specific shares, but of a certain number of shares. 9. The above passage has been quoted in the Commentary of the Companies Act mentioned herein above from a decision in Florence Land and Public Works Co., In re [1885] 29 Ch D 421 at 426. 10. On account .....

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..... sing Officer thought that the matter ought not to be investigated any further. This, according to the learned counsel for the assessee, is a possible view and when two views are possible on an issue, exercise of revisional power under Section 263 would not be justified. Reliance in this regard has been placed on a judgment of this Court in Malabar Industrial Co. Ltd. vs. CIT[3] which has been approved in Commissioner of Income-tax vs. Max India Ltd. [4] 21. There can be no doubt that so long as the view taken by the Assessing Officer is a possible view the same ought not to be interfered with by the Commissioner under Section 263 of the Act merely on the ground that there is another possible view of the matter. Permitting exercise of revisional power in a situation where two views are possible would really amount to conferring some kind of an appellate power in the revisional authority. This is a course of action that must be desisted from. However, the above is not the situation in the present case in view of the reasons stated by the learned C.I.T. on the basis of which the said authority felt that the matter needed further investigation, a view with which we wholly agree. .....

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