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TMI Blog2019 (3) TMI 812X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing substantial questions of law:- "(a) Whether on the facts and in the circumstances of the case, the Tribunal was right in quashing the revisional order passed by the CIT under Section 263 of Income Tax Act, 1961?; (b) Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the claim for deduction of Rs. 1,83,16,468/- being deduction on securitization income from returned income, which was not even claimed in the revised return and as such is contrary to the Judgement of the Supreme court in the case of Goetz India Limited., reported in 284 ITR 323?" 3. Heard Mr.T.R.Senthilkumar, learned Senior Standing counsel for the appellant and Mr.R.Sivaraman, learned counsel for the respondent. 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equently, the claim for deduction was not admissible. 6. In response to the show cause notice, the respondent Assessee stated that the Assessing Officer had made detailed enquiries / investigations and there was no loss to the revenue because the claims of deduction made were according to law. It was also pointed out by the respondent Assessee that in the earlier assessment year, a similar issue had been considered and decided in favour of the Assessee. With respect to the securitization aspect, it was claimed that the income from securitization had been wrongly offered to tax in the year under consideration. The said income was spread over the assessment years from 2005-2006 to 2011-2012. This has been allowed by the Assessing Officer. 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re was no new item of income or expenditure had arisen and the correct computation of income from the same set of transactions can be done in two ways. Two views were possible on the subject. Holding as above, the Tribunal allowed the Appeal of the respondent Assessee. 11. The first substantial question of law relate to whether the Tribunal was right in questioning the revisional order passed by the CIT under Section 263 of the Income Tax Act 1961. Section 263 of Income Tax Act 1961 is as follows:- " Revision of order prejudicial to revenue: 263(1) The Principal Commissioner or Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt that in a case where the Assessing Officer found that the Assessee was following the Mercantile System of Accounting, then both the income as well as the expenditure should be accounted on accrual basis. In view of the same, the Tribunal was of the view that the lower authorities had erred in treating the interest on non-performing assets as income of the Assessee and directed the Assessing Officer to delete the said interest from the computation of taxable income. The interest from such non-performing assets would be taxed in the appropriate assessment years on the basis of actual receipt. It has transpired during arguments that this decision was challenged before the Hon'ble Supreme Court but the Special Leave Petition filed by Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y new income nor any fresh expenditure and it was only computation of income from the same set of transactions in two ways, namely, one treating them as securitized and other treating them as non securitized, no prejudice was caused to the Revenue. 17. Consequently, it is seen that both the pre-requisite requirements for invoking revisional powers under Section 263 were not satisfied namely, an error and a prejudice caused to the Revenue. 18. We therefore hold that the Appeal of Revenue does not have any merit and consequently, the substantial questions of law are answered in favour of Assessee and the Tribunal was right in quashing the revisional order passed by the CIT under Section 263 of the Income Tax Act and the Tribunal was also ri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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