TMI Blog2019 (2) TMI 794X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the ITAT in Jindal Power Ltd. [2016 (7) TMI 203 - ITAT RAIPUR] that explanation 2 to section 37(1) comes into effect from 01.04.2015. DR has referred to the decision of ITAT Hyderabad Bench said to be a contrary decision. We find that it is settled law that if two views are possible, one in favour of the assessee should be adopted. In these circumstances, the ld. CIT(A)’s directions to disallow the same is not sustainable. Even otherwise it can be held that there could be two views on this issue and if the A.O. has adopted one view, which admittedly is a plausible one, the ld. CIT(A) is not vested with jurisdiction u/s. 263 qua this issue. This proposition gets support from the Hon'ble Apex Court decision in the case of Malabar Industr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in passing an Order u/s. 263 of the Income-tax Act, 1961. 1 : 2 The Commissioner of Income-tax failed to appreciate that the conditions precedent to passing an Order under the said section were not satisfied and hence the Order u/s. 263 of the Income-tax Act, 1961 is ultra vires and void. 1 : 3 The Commissioner of Income-tax has erred in holding that the Assessment Order dated 19 February 2016 passed by the Assessing Officer was erroneous and prejudicial to the interests of revenue and hence erred in passing an Order u/s. 263 of the Income-tax Act in respect of the same. 1 : 4 The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject the assessment framed by the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces of its case and the law prevailing on the subject the losses / damages written off ought to be allowed as a deduction and the stand taken by the Commissioner of Income-tax in this regard is misconceived, erroneous and not in accordance with law. 3. Brief facts of the case are that in this case the ld. CIT observed as under: As per Note 51 to Accounts the assessee company as per Department of Fertilizers notification dt. 3rd May, 2013 had made reduction in sales of ₹ 19.64 crore on estimate basis on stock held by dealers /retailers expected to be sold at reduced MRP to farmers. Since the reduction in sales was on estimate basis and not on actual basis the reduction should be disallowed Omission has resulted in under assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justed against the losses and balance amount of ₹ 2.52 crore had been accounted as income received in advance to be spent for ensuing year. 7. As the assessee company had accounted the losses in the accounts and has received Insurance claim of ₹ 3 crore and hence balance amount of ₹ 2.52 crore should have been accounted as income for the relevant assessment year. Omission to treat as income has resulted in under assessment of income of ₹ 2.52 crore and short levy of tax of ₹ 81.76 lakhs. 8. Having reached the prima facie satisfaction that the order passed by the A.O, is erroneous in so far as it is prejudicial to the interest of revenue The notice u/s. 263 dated 09,01 2018 was issued to the assessee. 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Explanation 2 lo section 37(1) comes into effect from 01 April 2015. * Accordingly, the said expenditure ought to be allowed as a deduction in terms of section 37(1) of the Income tax Act. 1961 in computing the total income as it is expended wholly and exclusively for the purpose of the business of the assessee Company 10. He was not satisfied. He decided as under: I have carefully considered the issue and find that it is nowhere specifically stated that it will not be effective retrospectively neither is there any judgement specifically on this issue holding it not retrospective . Therefore, AO is directed to disallow the said expenditure. The AO is directed to give effect to the above mentioned order and issue demand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appraisal of the loss I damage the assessee Company had initially lodged a claim for ₹ 1265 crores which was subsequently revised by the Insurance Company to ₹ 10.92 crores which included replacement cost and cost of repairs to certain items with us insurance Company - Reliance General insurance Company Limited. The assessee Company s claim was finally accepted by the said Insurer at ₹ 10.18 crores and the claim disbursed over a period of three years * During the year under consideration, the Insurer granted an ad-hoc claunof ₹ 3,00,00,000/- which was paid by the Insurance Company to the assessee Company as an advance settlement towards the claim Out of ₹ 3.00 crores, in accordance with revenues matchi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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