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TMI Blog2019 (2) TMI 1462X X X X Extracts X X X X X X X X Extracts X X X X ..... pursuant to the directions of the then Commissioner of Income Tax-1, Mumbai (*CIT). 1 .4. On the facts and in the circumstances of the case and in law, the learned Prin. CIT has legally erred in setting aside the relief granted by the AO based on the directions of the then CIT, as no adverse inferences were considered on those issues. 1 .5. The learned Prin. CIT failed to appreciate that all the issues involved have been examined by the AO in detail during the proceeding before him for giving effect to the then CIT's order and the same were not overlooked by him. 1 .6. The learned Prin. CIT erred in setting aside the order of the AO and directing to undertake fresh assessment on issues which were already examined by the AO. 2. Liability of contingent nature of Rs. 1,13,20,765 2.1. On the facts and in the circumstances of the case and in law, the learned Prin. CIT has erred in directing the AO to examine the disallowance on account of contingent liability and its effect on computation under the normal provisions of the Act and also under section 1 15JB of the Act on the ground that AO has not examined facts properly. 2.2. The learned Prin. CIT failed to apprecia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in initiating revision proceedings on the said issue which is time barred and unwarranted." 2. The brief facts of the case are that the assessee company filed its return of income for AY 2008-09 on 26-09-2008 declaring total income at Rs. Nil. The assessment was completed u/s 143(3) r.w.s. 144C(13) of the I.T. Act, 1961 on 22-10-2012 determining total income under normal provisions of the Act, at Nil and book profit u/s 115JB of the I.T. Act, 1961 at Rs. 7,09,43,856. Thereafter, revision proceedings u/s 263 were initiated by the then CIT-1 vide notice dated 03-07-2014. The CIT, passed order u/s 263 on 11-03-2015 and held that the assessment order passed u/s 143(3) r.w.s. 144C(13) is erroneous insofar as it is prejudicial to the interest of the revenue. In the said order, the Ld.CIT has discussed six issues and directed the AO to examine the issues in the light of discussions brought out in his order u/s 263. Consequent to order u/s 263, the AO issued notice u/s 142(1) calling upon the assessee to file necessary explanation with regard to all six issues discussed by the CIT in his order u/s 263. In response, the assessee has filed detailed submissions and argued that the issues d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en reproduced at para 4 on pages 2 to 8 of Ld.PCIT's order. The assessee, primarily objected for revision of assessment order on the ground that earlier 263 proceedings have been initiated on similar issue by the then CIT-1, Mumbai and the AO, on the basis of directions issued by the Principal CIT in his order u/s 263 examined all issues thoroughly in light of submissions made by the AO to make addition towards two issues, i.e. excise duty not paid and claim of reversal of provision. However, remaining four issues have been thoroughly examined and after verification of submissions, held that no observation or finding has come to light that warrants addition or disallowance in respect of those four items including liability of contingent nature, capital expenditure debited to P&L Account, disallowance u/s 40(ia) and wrong working of book profit u/s 115JB of the I.T. Act. The Ld.AR further submitted that even otherwise, the assessee itself, in its statement of total income, has suo moto disallowed the amount of contingent liability for AY 2008-09 amounting to Rs. 1,13,20,765. The Ld.AR further submitted that even on capital expenditure, the assessee has made disallowance in his state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.25 p.m., which has been considered and the AO is directed to take cognizance of same while passing a speaking order.(This copy is also forwarded lo AO for his consideration] 11. No further submissions have been made by the assessee. 1 have aiso gone through the facts of the case and do not i'ind any force in assessee's submission for the following reasons: a. The AO needs again to examine the short disallowances of contingent liability of Rs. 88,7^068/-. b. The issue of fixed assets written off in the P & L account, amounting to Rs.I,35,05,595/- and whether these are required to be adjusted to the block of assets for grant of depreciation need to be examined by AO. c. The issue of non-disallowance of TDS amount of Rs. 24,13.850/-, which was deposited late, in the light of the !TAT Special Bench decision which has held that the amendment, to the provisions of Sec.40(a)(ia) are not retrospective, needs to be examined by the AO. d. The issue of excess claim of deduction u/s. 43(6} of Rs. 13.94,044/ consequent to write off of asset of Rs. 1.21,80,653/- as per the 1 T Act by the assessee. needs to be examined again by the AO. c. The issue of wrong working of Book Profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estioned by the PCIT , i.e. liability of contingent in nature, capital expenditure debited to P&L Account, disallowance u/s 40(a)(ia) and excess deduction u/s 43(6) was already subject matter of first revision proceedings. The Ld.AR further submitted that even on merits, there is no prejudice caused to the revenue on account of those four items as the assessee has already suo moto disallowed liability of contingent nature, capital expenditure debited to P&L Account. Insofar as disallowance u/s 40(a)(ia), the assessee has paid TDS deducted before due date of filing return of income. The amendment brought to section 40(a)(ia) by the Finance Act 2010 relaxing the time limit to deposit tax upto the date of filing of return is held to be retrospective in nature and accordingly no disallowance could be made u/s 40(a)(ia) for not depositing tax within the due date prescribed under the respective provisions of Act. As regards excess deduction u/s 43(6), the assessee has given right treatment in respect of deduction claimed u/s 43(6) which did not result in any loss of revenue. Therefore, the PCIT was erred in assuming jurisdiction u/s 263 of I.T. Act, 1961. In this regard, he relied upon t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessment order if the twin conditions prescribed under the said provisions are satisfied. In order to invoke the jurisdiction u/s 263, the CIT has to satisfy that the order of the AO sought to be revised is erroneous and it is prejudicial to the interest of the revenue. The order sought to be revised must be erroneous insofar as it is prejudicial to the interest of the revenue. Thus, u/s 263, an order must be both erroneous and prejudicial to the interest of the revenue. If order is erroneous, but there is no loss of revenue or if order is not erroneous, but there is loss to revenue, then section 263 cannot be invoked. We further notice that when a particular issue has been subject matter of assessment proceedings or appellate or revision proceedings and also the authorities have taken a particular view on examination of facts and submissions of the assessee, then the PCIT cannot invoke jurisdiction u/s 263 on same issues on the ground that there was lack of enquiry or inadequate enquiry in respect of those issues, because once a particular issue is subject matter of verification by the AO and he has taken a particular view on being satisfied with the explanation furnished by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come. The Ld.AR further made it clear that this issue had not been questioned by the then CIT-1, Mumbai in the first found of proceedings u/s 263 and hence, under similar set of facts, the issue cannot be questioned once again by the PCIT. 13. Coming to the case laws relied upon by the assessee. The assessee has relied upon the decision of Hon'ble Supreme Court in the case of Malabar Industrial Co Ltd vs CIT (supra) wherein the Hon'ble Supreme Court in the light of provisions of section 263 has observed as under:- "The phrase prejudicial to the interests of the revenue is not an expression of art and is not defined in the Act. Understood in its ordinary meaning it is of wide import and is not confined to loss of tax Mr. Abaraham relied on the judgment of the Division Bench of the High Court of Madras in Venkatakrishna Rice Company Vs. Commissioner of Income-tax [163 ITR 129]interpreting prejudicial to the interests of the revenue. The High Court held, In this context, it must be regarded as involving a conception of acts or orders which are subversive of the administration of revenue. There must be some grievous error in the Order passed by the Income-tax Officer, which might se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he conclusion that the order of the Income-tax Officer was erroneous is irresistible. We are, therefore, of the opinion that the High Court has rightly held that the exercise of the jurisdiction by the Commissioner under Section 263(1) was justified. The second contention has to be rejected in view of the finding of fact recorded by the High Court. It was not shown at any stage of the proceedings, the amount in question was fixed or quantified as loss of agricultural income and admittedly it is not so found by the Tribunal. The further question whether it will be agricultural income within the meaning of Section 2(1A) of the Act as elucidated by this Court in Commissioner of Income-tax, West Bengal, Calcutta Vs. Raja Benoy Kumar Sahas Roy [32 ITR 466] does not arise for consideration. It is evident from the Order of the High Court that findings recorded by the Tribunal that the appellant stopped agricultural operation in November 1982 and the receipt under consideration did not relate to any agricultural operation carried on by the appellant, were not questioned before it. Though, we do not agree with the High Court that the said amount was paid for breach of contract as indeed it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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