TMI Blog1996 (6) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... ere a perusal of the question would show that the question as framed involves actually two questions, one with regard to the exercise of jurisdiction by the Commissioner under section 263 of the Income-tax Act, 1961, the other question as to whether the Tribunal is right in holding that the disallowance under section 37(3A) should be made for each of the businesses carried on, although tagged along with it is a separate question by itself. Obviously an answer to the exercise of jurisdiction under section 263 of the Act by the Commissioner would only make it necessary, if it is in the negative, to proceed with consideration of the other question. After hearing learned senior standing counsel for taxes at length, we would concentrate on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed deduction under section 37 towards advertisement, publicity and business promotion expenditure for an amount of Rs. 71,921 wrongly because the upper limit of allowance could not exceed Rs. 40,000 under the provisions of section 37(3A) of the Act. The Commissioner felt that this was erroneous. He also felt that this was prejudicial to the interests of the Revenue. He issued a notice dated April 12, 1983, which was replied to on April 16, 1983. The reply contended that the assessment could not be said to be either erroneous or even prejudicial to the interests of the Revenue, urging on the basis that there are no grounds to invoke the powers under section 263 of the Income-tax Act. By the order dated April 22, 1983, the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... completed assessments gets satisfaction from the material on record in view of the statutory provision that the Commissioner of Income-tax has been bestowed with the power of reopening the completed assessment, being prejudicial to the Revenue being the most important consideration in regard thereto. The assessee took up the matter before the Income-tax Appellate Tribunal, Cochin Bench, and it is this order dated June 14, 1985, which is impugned by the Department persuading the Tribunal for reference of the question referred to hereinbefore. The Tribunal considered the question in a two-fold manner. First it considered the question of disallowance contemplated under section 37(3A) whether it is to be applied to the whole of the expend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gard to the amount of Rs. 12,137, particulars placed before it. They are as follows : Rs. Ps. Travelling expenses incurred by Dr. Radhakrishnan 1,028.00 Advertisement in small newspapers 3,075.00 Canvassing expenses paid to Radhakrishnan, Menon and Sasidharan 1,281.40 ------------------- 5,384.40 ------------------- The submission that is considered by the Tribunal with regard to the amount of Rs. 45,247 and the explanation with regard to the amount of Rs. 12,137 attributable to business promotion as would be found from the second column of the statement specified above. The Tribunal considered the submission of the assessee that in view of this marginal difference the assumption of jurisdiction under section 263 of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the concerns, namely, Radhas Perfumery Enterprises, would be so marginal as amounting to Rs. 4,103. The Tribunal further observed that the factual matrix does not justify assumption of jurisdiction under section 263 of the Act. As regards the other aspects, on examining the factual matrix, the Tribunal has recorded that Radhas ayurvedic soap was the product which has been manufactured by the firm of three partners out of which the assessee was one. On April 1, 1978, the remaining two partners retired from the partnership and in the retirement deed dated April 1, 1978, it is clearly stated that from September 1, 1977, up to March 31, 1978, the business was carried on in the name and style of Radhas Perfumery Enterprises and on and f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Income-tax Officer has to be erroneous in so far as it is prejudicial to the interests of the Revenue. In other words, the plain language of the section is more than abundantly clear that it is not every error or mistake that should induce the Commissioner of Income-tax to resort to exercise of the powers under section 263 of the Act. In our judgment, the factual matrix shows that it is a marginal situation and when by a careful and cautious judgment the Tribunal has considered exercise of the powers under section 263 of the Act by the Commissioner as not proper, although the phrase is " not valid ". The situation does not call for any interference in regard thereto. In fact, and as stated at the outset, our endorsement on the con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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