TMI Blog2019 (1) TMI 1627X X X X Extracts X X X X X X X X Extracts X X X X ..... ee during the proceedings u/s 263. In the present case the Assessing Officer has not properly adjudicated the issue of claim u/s 80IC before allowing the same to the assessee company, therefore, the Pr. CIT has rightly invoked Section 263 of the Act and passed the order. Therefore, the Order under Section 263 of the Income Tax Act, 1961 passed by the Principal Commissioner of Income Tax is just and proper. There is no need to interfere with the same. The appeal of the assessee is dismissed. - ITA No. 3046/DEL/2016 ( A.Y 2009-10) - - - Dated:- 11-1-2019 - Shri G. D. Agrawal, Vice President And Ms Suchitra Kamble, Judicial Member Appellant by Sh. Nageshwar Rao Sh. Parth, Advs Respondent by Smt. Sulekha Verma, CIT (DR) ORDER Suchitra Kamble, This appeal is filed by the assessee against the order dated 29/03/2016 passed by Pr. CIT(A) , Gurgaon u/s 263 of the Act, for Assessment Year 2009-10. 2. The grounds of appeal are as under:- 1. That on facts and circumstances of the case and in law, order dated 29.3.2016 passed by the Ld. Principal Commissioner of Income Tax [ PCIT ] u/s 263 is grossly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the extent of ₹ 53,48,23,878/-. Draft assessment order was passed u/s 144C of the Income Tax Act, 1961 on 06.03.2013 working out the total income at ₹ 176,23,92,422/-. In the order so proposed to be passed, addition to the extent of ₹ 163,04,12,982/- was made on account of TP adjustment. The draft order was sent to the assessee. The assessee approached the Dispute Resolution Panel (DRP). The DRP issued direction u/s 144C (5) of the Income Tax Act, 1961 on 18.12.2013 confirming the additions suggested in draft order. The assessment was completed u/s I44C (13) of the Income Tax Act on 07.01.2014 determining the total income at ₹ 176,23,92,422/-. 4. The Pr. CIT, Gurgaon observed that the company has three units at Rudrapur, Manesar and Chennai. The company claimed deduction u/s 80IC only on one unit situated in Rudrapur (Uttrakhand). The other units at Manesar (Gurgaon) and Chennai are bigger and older than the Rudrapur (Uttrakhand) unit. Income of Rudrapur unit is shown to the extent of ₹ 53,48,23,878/-. Net profit as per P L account is ₹ 49,78,05,000/- which includes other income of ₹ 11,11,10,000/- which means the assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009-10, the Assessing Officer did not examine the issue in respect of claim of deduction u/s 80IC of the Income Tax Act made by the assessee company. The Pr. CIT also observed that the Assessment Order was passed without making any enquires or verification regarding the claim of deduction u/s 80IC of the I.T. Act, which should have been made although it is apparent from the records particularly the report of Auditor that the claim is not allowable as per provisions of the Act. Further, the Pr. CIT mentioned that the Assessing Officer did not examined/verified the allocation of expenses between three units run by the assessee to ascertain the correct income derived by the unit at Rudarpur. In the order so passed the claim of deduction u/s BOTC was allowed resulting in under assessment to the extent of ₹ 53,48,23,878/-. The assessee company was provided an opportunity to show cause as to why the assessment order passed by the DCIT, Circle-2, Gurgaon u/s 144C(13) r.w.s. 143(3) dated 07.01.2014 for A.Y. 2009-10 in its case should not be revised u/s 263 of the Income Tax act, 1961 by the Pr. CIT. The CA of the assessee company attended the hearing and furnished the submissions. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sponse, the assessee furnished written submissions. The Ld. DR submitted that the Pr. CIT after perusal of the quarterly statement furnished by the assessee company with the Commissioner, Central Excise, Meerut for F.Y. 2008-09, noticed that the assessee company had also manufactured other products such as chewing gum , toffee and bubble gum in addition to manufacturing of Pharma Products for which the assessee company is not entitled for deduction u/s 80IC of the Act as these article or things are not specified in the Fourteenth Schedule. But the Assessing Officer has not made any enquiries or verification which should have been made before allowing any relief u/s 80IC of the Act to the assessee company in the assessment order passed. Thus, the Assessment Order passed by the Assessing Officer u/s 143(3) r.w.s. 144C(13) of the Act dated 07.11.2014 for A.Y. 2009-10 is erroneous and prejudicial to the interest of the Revenue. The Ld. DR submitted that the present case is covered by the decision of the Hon ble Apex Court in case of Deniel Merchants Private Limited Anr. Vs. Income Tax Officer (Appeal No. 2396/2017 order dated 29.11.2017). The Ld. DR also relied upon following de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aspect of the Assessment Order in the present case to the extent of erroneous and thus, Section 263 of the Act is attracted in the present case. Section 263 of the Act is not invoked simply for correcting mistake or error committed by the Assessing Officer in the present case. It can be observed that the Pr. CIT has considered all the contentions of the assessee and thereafter rightly come to the conclusion that the Assessing Officer failed to consider the fact that whether the assessee is entitled for claim under Section 80IC or not in respect of the products which do not come under the ambit of Fourteenth Schedule. It can be seen that the Pr. CIT has properly invoked the provisions of Section 263 and there is no procedural lapse on the part of the Pr. CIT. In fact, the Assessing Officer did not made any inquiry and there is no mention of the same in the Assessment Order itself which proves that the order is passed without making inquiries or verification which should have been done by the Assessing Officer before allowing the claim u/s 80IC of the Act. Thus, it is prejudicial to the interest of the Revenue and there is loss of revenue. The Pr. CIT after issuing the Show Cause Not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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