TMI Blog2019 (9) TMI 489X X X X Extracts X X X X X X X X Extracts X X X X ..... essee is allowed and the AO is directed to allow the deduction as claimed by the assessee u/s.80IB(11A) Revision u/s 263 - HELD THAT:- We failed to understand on which basis the CIT held that the assessment order dated 27.12.2016 is erroneous or prejudicial to the interest of revenue without calling and perusing the relevant assessment records an merely on the basis of proposal for revision sent to him by the ITO, Ward-1, Ranchi. From the assessment order dated 27.12.2016 AO has examined the claim of the assessee u/s.80IB and thereafter held that the assessee is entitled for claim of deduction u/s.80IB(11A) hence, it is not a case of no enquiry. CIT is empowered to revise the assessment order where such assessment order is erroneous or prejudicial to the interest of revenue after calling and examining the relevant assessment records and holding that either there is no enquiry or there is insufficient or inadequate enquiry by the AO on a particular issue but no such exercise has been undertaken by the ld. Pr. CIT while passing the impugned order u/s.263 of the Act either - no hesitation to hold that Pr. CIT has proceeded to revise the scrutiny assessment order and directing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aimed by the assessee u/s.80IB(11A) of the Act. 4. Now, the assessee is in further appeal before the Tribunal. 5. I have heard arguments of the both the sides and carefully perused the material available on the record of the Tribunal. 6 Ld. Authorised Representative (AR) of the assessee submitted that the ld. CIT(A) has erred in confirming the disallowance made by the ld. AO for claim of deduction u/s.80IB(11A) of the Income Tax Act, 1961 (for short the Act, 1961 ) amounting to ₹ 16,74,407/-. 7. Placing reliance on the decision of Hon ble Madras High Court in the case of CIT Vs. M/s Muthuramalingam Modern Rice Mill, in Tax Case Appeal Nos.51 to 55 of 2009, judgment dated 20.02.2019, ld. AR submitted that the Hon ble High Court in paras 14 to 20 has decided that the activity of dehusking of paddy into rice will not amount to manufacture or production and there is no justification to give a narrower meaning to these terms, which, by themselves independently or jointly as employed in the said provisions of Section 80IA of the Act are wide enough to cover the industrial activity undergone by the assessee. Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m para 5 of the judgment of the Hon ble High Court, I observe that Their Lordships adjudicated the issue/question raised by the Revenue that the process of dehusking paddy for obtaining rice does not amount to manufacture or production and, therefore, assessee was not entitled to said benefit u/s.80IA/80IB of the Act. As I have noted above that in operative paras 14 to 20, the Hon ble Madras High Court in the case of M/s Muthuramalingam Modern Rice Mill (supra) answered the question in negative i.e against the Revenue and in favour of the assessee by holding that there is no reason to hold that the activity of dehusking of paddy into rice will not amount to manufacture or production and there is no justification to give a narrower meaning to these terms, therefore, the assessee is entitled for claim of deduction u/s.80IB(11A) of the Act. 12. On the basis of foregoing discussions, I am inclined to hold that the AO was not correct in disallowing the benefit of Section 80IB(11A) of the Act to the assessee and, thus, the ld. CIT(A) was not also correct and justified in confirming the disallowance made by the AO. Accordingly, the sole ground of assessee is allowed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons the assessment order passed by the AO is erroneous and prejudicial to the interest of revenue. Ld. AR also submitted that it is not a case of non-enquiry or inadequate enquiry which could allege the assessment order as erroneous and prejudicial to the interest of revenue, therefore, the revision of scrutiny assessment order u/s.263 of the Act is not permissible. Therefore, the impugned order may kindly be quashed. 16. Replying to the above, ld. DR vehemently relied on the impugned order passed by ld. Pr. CIT and submitted that during the scrutiny assessment proceedings, the AO did not consider the first appellate order passed by the ld. CIT(A) for A.Y.2013-2014 and did not make any enquiry or verification pertaining to the claim of the assessee u/s.80IB(11A) of the Act, therefore, ld. Pr.CIT was right in invoking the provisions of Section 263 of the Act for revision of the assessment order which is not only erroneous but prejudicial to the interest of revenue. 17. On careful consideration, first of all, from careful reading of the impugned order passed by ld. Pr. CIT u/s.263 of the Act, I observe that in para 2 ld. Pr. CIT note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in a case of insufficient or inadequate enquiry. Further necessary enquiry has to be conducted by the revisionary authority and thereafter only the assessment order can be tagged as erroneous or prejudicial to the interest of revenue. In absence of such exercise, revision of assessment order u/s.263 of the Act has to be held as passed without application of mind and without following mandate of the legislature provided u/s.263 of the Act. Keeping in view the foregoing discussions, I have no hesitation to hold that the Pr. CIT was not justified and correct in revising the scrutiny assessment order u/s.263 of the Act merely on a proposal sent to him by the ITO, Ward-1,Ranchi without verification and examination of relevant assessment record and without any positive findings that the order of the AO is erroneous or prejudicial to the interest of revenue. Therefore, the issuance of notice u/s.263 of the Act and the impugned order of ld. Pr. CIT and all consequential proceedings and orders, if any, are hereby quashed and appeal of the assessee is allowed. 19. In the result, both appeals of the assessee are allowed. Order pronounced ..... X X X X Extracts X X X X X X X X Extracts X X X X
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