TMI Blog2017 (12) TMI 1734X X X X Extracts X X X X X X X X Extracts X X X X ..... he Revenue not only that, the Ld.PCIT failed to address the objections of the assessee on the issues which explained that why the order sought to be revised is not erroneous and prejudicial to the interest of the Revenue. In the case on hand also the Ld.PCIT merely extracted the objections of the assessee and he could not explain why the objections were wrong and lead to the Assessment Order being erroneous and prejudicial to the interest of the Revenue and rather he has simply rested his decision by observing that the Assessing Officer in the subsequent year examined the claim of the assessee and made disallowance and therefore order passed is erroneous and prejudicial to the interest of the Revenue. The claim for deduction u/s. 80IA is to be allowed in the assessment years subsequent to the initial Assessment Year the expected enquiries which could have been made by the Assessing Officer is to call for the computation of profits for the units eligible for 80IA and the units not eligible for 80IA which exactly has been done by the Assessing Officer in the course of Assessment Proceedings for search assessments for the Assessment Years 2005-06 to 2011-12 in order to satisfy hims ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said objection of CAG vide Letter dated 29/11/2016, copy of which is placed at Page Nos. 39 to 42 of the paper book. However, Ld.PCIT has not considered the said submissions of the assessee and issued notice U/s 263 of the Act dated 17/02/2017 on the following issues: - 1. Irregular allowance of deduction u/s.80IA in respect of Power Plant unit SBU 2 (2 X 300MW), which were earlier owned by JSW (Vijaynagar) Ltd. and then transferred to assessee company as a result of merger. 2. Irregular allowance of deduction u/s. 80IA in respect of the amount of income enhanced u/s.92CA of the Act (on account of TP adjustment. 3. Irregular allowance of deduction u/s.80IA on account of increase in profit as a result of disallowance made u/s.14A. 4. Irregular allowance of deduction u/s.80IA in respect of income other than income derived from eligible sources. 4. In response to the said notice U/s 263 of the Act, copy of which is placed at Page Nos. 25 to 42 of paper book, the assessee filed detailed reply. However, Ld.PCIT did not accept the said reply and passed order U/s 263 of the Act dated 29/03/2017 setting aside the assessment order dated 17/04/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aining same. (vii) The Ld. PCIT grossly erred in facts of the case and in law by directing the Learned Assessing Officer to restrict the deduction u/s.80IA of the Act to the extent of taxable business income wrongly interpreting provisions of section 80A of the Act and ignoring the various judicial pronouncements in this regard, including those of Jurisdictional High Court. 6. The Learned Counsel for the assessee before us submitted that Ld.PCIT has issued notice u/s 263 of the Act on the following issues:- a. Irregular allowance of deduction U/s 80IA on enhanced income due to disallowance U/s 14A of the Act; b. Irregular allowance of deduction U/s 80IA on enhanced income due to disallowance U/s 92CA of the Act; c. Irregular allowance of deduction U/s 80IA in respect of income other than income derived from eligible sources; d. Irregular allowance of deduction U/s 80IA of Power Plant unit SBU 2 (2 X 300MW). 7. Regarding irregular allowance of deduction U/s 80IA on enhanced income due to disallowance U/s 14A of the Act, Learned Counsel for the assessee submitted that certain interest and other expenses were disallowed U/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tates that no deduction under chapter VIA shall be allowed on enhanced income due to arm's length adjustment U/s 92CA of the Act. It does not say that deduction claimed by the assessee shall be reduced by the amount of addition made U/s 92CA of the Act. He submits that as evident from the assessment order, since AO has allowed deduction U/s 80IA as claimed by the assessee, question does not arise to reduce it further by the amount of addition made U/s.92CA of the Act. He further submits that in any case the issue of addition U/s.92CA was also subject matter of appeal in this year before Ld CIT(A), which has been dealt with by him on Page No. 19, Para 10 of his order and deleted the entire addition. Thus, he submits that since issue was also considered and decided by the Ld.CIT(A) in favour of the assessee, it cannot be subject matter of jurisdiction U/s.263 of the Act as held by jurisdictional High Court in case of Ranka Jewellers v. Addl. CIT [328 ITR 148]. 10. Regarding third issue of irregular allowance of deduction U/s 80IA in respect of income other than income derived from eligible sources, Learned Counsel for the assessee submitted that the Ld.PCIT has stated th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd.) as a result of merger as per the scheme of amalgamation being effective from 11th December 2008 and the appointed date of merger is 1st April 2008. In view of the specific provision of section 80IA(12A) of the Act, deduction U/s 80IA is not available to units which were transferred under demerger or amalgamation after 1.4.2007. He submits that this observation of Ld.PCIT was based on audit objection raised by CAG. The Learned Counsel for the assessee submitted that in the objection CAG stated that legislature was intent to give deduction to the person who took risk of investment hence unit transferred in merger and amalgamation are not eligible for deduction u/s 80IA of the Act. 12. In this regard he submits that, JSW Energy Vijaynagar Ltd.(JSWEVL), a subsidiary of the Company was in the process of setting up 2 X 300 MW power plants at Vijayanagar at an estimated cost of ₹ 1,860 crores (these 2 power generating undertakings referred to as SBU 2). As on 31.03.2008 the power plants were only under construction stage with a CWIP of ₹ 1,129.16 crores. The assessee company was holding 74% of the total equity of JSWEVL as on 31.3.2007. He submits that a scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lgamated or the resulting company as they would have applied to the amalgamating or the demerged company if the amalgamation or demerger had not taken place. The main intention in providing benefit under section 80-IA had been to provide incentive to those who had taken initial investment and entrepreneur risk. Hence, it was felt that there was no justification for passing on the benefit to someone who had not taken these risks and had only acquired the eligible undertaking much later when the risks had reduced. Hence, a new subsection (12A) has been inserted in section 80-IA so as to provide that the provisions of sub-section (12) shall not apply to any undertaking or enterprise which is transferred in a scheme of amalgamation or demerger after 31.3.2007. Thus, if an undertaking or an enterprise is transferred in a scheme of amalgamation or demerger after 31.3.2007, the benefit of deduction under section 80-IA will not be available to the amalgamated or demerged undertaking or enterprise. The content of this circular will supercede whatever contrary has been stated, on this issue, in any other circular, issued by the Central Board of Direct Taxes earlier. 14. Referring t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Reliance is also placed on the decision of Hon'ble Delhi High Court in case of CIT v. Tata Communication Internet Services Ltd [204 Taxman 606] where it was held that eligibility of deduction U/s 80IA can be examined only in first year and in subsequent years it cannot be disturbed unless there is change in facts of the case 17. He further submits that the Hon'ble jurisdictional Bombay High Court in the case of Prudential Assurance Co. Limited v. DIT (IT) [324 ITR 381] held that assessment order following binding precedent is not amenable to revision u/s.263 of the Act. Learned Counsel for the assessee submits that in this case, it was held that the AAR ruling was binding despite contrary rulings on the subject. 18. Therefore, the Learned Counsel for the assessee submits that the said deduction u/s. 80IA has been allowed after due examination of the relevant facts and circumstances of the case first time in Assessment Year 2010-11 and hence, it would not be possible to be revised u/s.263 of the Act in subsequent years. 19. The Learned Counsel for the assessee further submits that Ld PCIT has initiated proceedings u/s 263 on this issue on the bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer. Learned Counsel for the assessee further submits that except stating that Assessing Officer has examined the issue of claim for deduction u/s. 80IA while scrutinizing the case of the assessee for the Assessment Year 2012-13 and disallowed the claim and DRP also directed to disallow the claim and no proper enquires were made by the Assessing Officer during this year, Ld.PCIT did not examine the issue independently to come to the conclusion as to how the order of the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. Learned Counsel for the assessee submits that, Ld.PCIT has not made any sort of enquiries and he rested his decision only on the basis of Assessment Order for the Assessment Year 2012-13 and without making any independent enquiry. Learned Counsel for the assessee placing reliance on the Hon'ble Delhi High Court in the case of PCIT v. Delhi Airport Metro Express Pvt. Ltd. in ITA.No.705 of 2017 dated 05.09.2017 submitted that it has been held in this case that if the Ld.PCIT is of the view that Assessing Officer did not undertake enquiry it becomes incumbent on the Ld.PCIT to conduct such enquiry. Therefore Learned Counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court] 24. We have heard the rival submissions, perused the orders of the authorities below and the case laws relied on. A search and seizure action u/s. 132 of the Act was conducted on 16.03.2011 on JSW Group. The assessee was also covered in the Search action. The period covered in search assessment was Assessment Years 2005-06 to 2011-12. The assessment for the Assessment Year 2010-11 was completed u/s. 153A of the Act. However the assessment for the current Assessment Year i.e. 2011-12 was completed u/s. 144C(3) r.w.s. 143(3) on 17.04.2014 determining the total income of the assessee at ₹.79,16,99,428/- under normal provisions of the Act and book profits at ₹.1166,18,01,549/- u/s.115JB of the Act. In the course of the Assessment Proceedings, Assessing Officer issued letter dated 15.03.2013 for the Assessment Years 2005-06 to 2011-12 calling for information to furnishing computation of profit eligible for deduction u/s. 80IA in respect of each unit. Assessing Officer also required the assessee to explain why disallowance u/s. 14A should not be made u/s. 14A r.w. Rule 8D under normal computation as well as book profits u/s. 115JB of the Act. Assessee subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judicial to the interest of the Revenue and lastly it is stated by the Ld.PCIT in the show cause notice that on perusal of the Assessment Order it is seen that the income computation under the head income from the house property income from capital gains and income from other sources amounted to ₹.100,35,34,962/- and whereas after allowing the claim for deduction u/s.80IA to the assessee the total income is computed at ₹.79,16,99,428/- which is less than ₹.100,35,34,962/-, therefore the order passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. 26. In response to the show cause notice, assessee filed a detailed reply dated 06.03.2017 in respect of all the four issues raised by the Ld.PCIT in the show cause notice. In so far as the objection of the assessee in respect of allowance of deduction u/s. 80IA of the Act on the enhanced income/profit on account of disallowance made u/s. 14A and the TP Adjustment made, we find that the assessee contested these issues before the Ld.CIT(A) and the Ld.CIT(A) by order dated 26.12.2016 deleted the TP Adjustment as well as the addition made u/s. 14A r.w. Rule 8D while computing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s concerned the Ld.PCIT revised the Assessment Order observing as under:- 5.1 Irregular allowance of deduction u/s.80IA in respect of power plant unit SBU 2(2 x 800MW) As regards the issue of irregular allowance of deduction u/s.80IA in respect of power plant unit SHU 2 (2 x 300MW), the assessee submitted that the erstwhile company JSW Energy (Vijaynagar) Ltd. did not own power plant but was in the process of setting up two power plants which were under construction with a CWIP of ₹ 1,129.16 crores prior to the merger on 01.04.2008. The assessee further submitted that the two power plants were commissioned in the year 2009-10 i.e. after the date of merger and the claim u/s.80IA in respect of these units were made since A.Y. 2010-11 in the hands of the assessee company and the same was allowed after thorough examination regarding eligibility and quantum of deduction. However, a plain reading of the assessment order clearly shows that there has been no deliberation on this issue by the Assessing Officer and accordingly the contention of the AR that the claim of deduction u/s.80IA has been allowed after thorough examination cannot be accepted. 5.1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .) in which the assessee company had invested ₹ 188 crore and JSW Steel Ltd., has invested ₹ 80.01 crores; that the cost of the project (of power plants referred as SEW 2 units) as on 31.03.2008 amounted to ₹ 1129 crores; that before commissioning of those plants the subsidiary company got merged with the assessee company in a scheme of the company arrangement as approved by the Hon ble Bombay High Court vide its order dated 10/12/2008; that the merger got effective w.e.f. 01.04.2008. 5.1.3 The assessee has further submitted that the generation of power started only after those units were taken over by the assessee company as a result of merger. With that view of the matter, it is contended that the restriction imposed by subsection 12A to section 80IA is not applicable to the facts of its case. 5.1.4 It is noted that the AO examined the issue of claim of deduction u/s 80 IA in respect of units SBU 2(2X300MW) while scrutinizing the case of assessee for subsequent assessment year [AY 2012-13] and passed a draft order u/s 144C(1) on 26.03.2016 whereby the AO denied the claim so made by the assessee on this issue. The draft order was forwarded to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice. We also find that the Ld.PCIT has not given any finding as to how and in what manner the order of the Assessing Officer was erroneous and prejudicial to the interest of the Revenue. The Ld.PCIT has not made any enquiry on his own but simply directed the Assessing Officer to make further necessary enquiries and investigation. On the other hand, we see that the Assessing Officer called for the details in respect of the claim made u/s. 80IA for the Assessment Years 2005-06 to 2011-12 and the assessee furnished necessary details and the Assessing Officer allowed the claim for deduction u/s. 80IA in the Assessment Year 2010-11 and in the current Assessment Year as well. 30. The Hon'ble Delhi High Court in the case of PCIT v. Delhi Airport Metro Express Pvt. Ltd. (supra) has categorically held that for the purpose of exercising jurisdiction u/s. 263 of the Act and reaching a conclusion that the order is erroneous and prejudicial to the interest of the Revenue the Ld.PCIT has to undertake some minimal enquiry if the Ld.PCIT is of the view that Assessing Officer had not undertaken any enquiry it becomes incumbent on the Ld.PCIT to conduct such enquiry. In the case on ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Delhi High Court in the case of DIT v. Jyoti Foundation (supra) held that enquiries were certainly conducted by the Assessing Officer and it was not a case of no enquiry, the order u/s. 263 itself recorded that the Director felt that the enquiries were not sufficient and further enquiries and details should have been called for. The enquiry should have been conducted by the Director himself to record the finding that the Assessment Order was erroneous. It was held that the CIT should not have set-aside the order and direct the Assessing Officer to conduct the enquiry. 33. In the case on hand before us also on a reading of the order of Ld.PCIT, we find that the allegation of the Ld.PCIT was that the Assessing Officer did not make proper enquiries. It is not the case of the Ld.PCIT that there was no enquiry at all. In such circumstances the enquiry should have been conducted by the Ld.PCIT himself to record a finding that the Assessing Officer was erroneous. Nothing has been recorded by the Ld.PCIT as to why the order passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. There is no whisper in the order of the Ld.PCIT as to why the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mely the order of the Assessing Officer must be found to be erroneous and further it must also be found to be prejudicial to the interests of the Revenue unless both the conditions are satisfied the commissioner does not get jurisdiction to pass the order u/s. 263 of the Act revising the Assessment Order. It was also held that it is not necessary that every order which is found erroneous is also prejudicial to the interests of the Revenue. 36. In the case of Malabar Industrial Co. Ltd. v. CIT [243 ITR 83] the Hon'ble Supreme Court held that the provisions of section 263 cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer and it is only when the order is erroneous, section 263 of the Act will be attracted. It was held that the incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. It was also held that the order passed without adhering to principles of natural justice or without application of mind will satisfy the requirement of section 263 of the Act. The Ld.PCIT in his order could not point out that the action of the Assessing Officer in allowing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statutory provision. The underlying purpose of affording of such an opportunity of being heard to the assessee is to give an opportunity to him to explain as to how the order passed by the A.O on the issues on which the same is sought to be revised by the CIT, is not erroneous and prejudicial to the interest of the revenue. We are of the considered view that the very purpose of affording of an opportunity of being heard to the assessee, on the issues on which the order passed by the A.O is sought to be revised by the CIT would be lost and rendered otiose, in case the reply of the assessee explaining as to why the order sought to be revised is not erroneous and prejudicial to the interest of the revenue is not judicially deliberated upon by the CIT. We are of the considered view that it is obligatory on the part of the CIT to consider the reply of the assessee in respect of the issues on which the order of the A.O is sought to be revised by him. It is only if the conviction of the CIT that the order of the A.O is erroneous and prejudicial to the interest of the revenue outweighs the reply/explanation furnished by the assessee, that the CIT remains vested with the jurisdiction to pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neous and prejudicial to the interest of the revenue are not judicially considered and brought to a logical end by the CIT. We would not hesitate to observe that despite the fact the assessee had during the course of the revisional proceedings placed on record irrefutable material which inescapably established that the order of the A.O was not erroneous and prejudicial to the interest of the revenue in respect of certain issues on which the same was sought to be revised, however, the same did never see the light of the day and except for forming part of the record and finding a mention in the order passed by the CIT u/s 263, were however as a matter of fact never deliberated upon and brought to a logical end by the CIT. We are of the considered view that in the backdrop of the explanation/objections filed by the assessee during the course of revisional proceedings in respect of certain issues on which the CIT had sought to revise the order passed by the A.O under Sec. 143(3), the CIT had failed to point out as to how the order of the A.O was found to be erroneous . We are of the considered view that in the absence of clear observations of the CIT as to how the order of the A.O aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, for example, the CIT has observed in the order passed by him that the assessee has not filed certain documents on the record at the time of assessment. Assuming it to be so, in our opinion, this does not justify the conclusion arrived at by the CIT that the AO had shirked his responsibility of examining and investigating the case. More so, in view of the fact that the assessee explained that the capital investment made by the partners, which had been called into question by the CIT was duly reflected in the respective assessments of the partners who were income-tax assessees and the unsecured loan taken from M/s Stutee Chit Finance (P) Ltd. was duly reflected in the assessment order of the said chit fund which was also an assessee. We find that a similar view was also arrived at by the Hon ble High Court of Punjab Haryana in the case of CIT Vs. R.K. Metal Works (1978) 112 ITR 445 (P H), wherein stressing on the statutory obligation on the part of the CIT to deal with the points raised by the assessee in its explanation/objection filed with him during the course of the revisional proceedings to show that the order passed by the A.O was not erroneous and prejudicial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Order was erroneous and prejudicial to the interest of the Revenue not only that, the Ld.PCIT failed to address the objections of the assessee on the issues which explained that why the order sought to be revised is not erroneous and prejudicial to the interest of the Revenue. In the case on hand also the Ld.PCIT merely extracted the objections of the assessee and he could not explain why the objections were wrong and lead to the Assessment Order being erroneous and prejudicial to the interest of the Revenue and rather he has simply rested his decision by observing that the Assessing Officer in the subsequent year examined the claim of the assessee and made disallowance and therefore order passed is erroneous and prejudicial to the interest of the Revenue. 38. In the case of CIT v. DLF Limited [350 ITR 555] the Hon'ble Delhi High Court held that under the provisions of section 263 of the Act, it is not that mere prejudice to the Revenue or mere erroneous view which can be revised but there should be added element of unsustainability in the order of the Assessing Officer which clothes the Commissioner of Income Tax with jurisdiction to issue notice and proceed to pass a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ari materia, i.e., an independent, unpolluted and unadopted application of mind by the officer, invoking the provision. 23. We have seen from the impugned order of the CIT, dated 11.02.2011, the CIT admits, A proposal was received on 10.06.2010 from the AO under section 263 of the Income Tax Act, 1961, pointing out some discrepancies/short comings in the assessment order . This clearly shows that in so far as the CIT was concerned, he did not apply his own mind, which the Hon ble Supreme Court of India has said in ICICI Bank (supra) that there should be an independent application of mind. 24. On perusal of the SCN and the impugned order, we find that there is a departure from the reasons taken to invoke the provisions under section 263, this also finds favour with the arguments advanced by the AR and get covered by the decisions cited by him. 25. We also have to accept the arguments of the AR with respect of applicability of section 50C on lease hold properties, because, this is an undisputed fact that the impugned property was a leased property, even though, it is a long lease, but the title of the same shall always remain with the actual owner, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Tribunal in the case of Span Overseas Ltd v. CIT in ITA.No.1223/PN/2013 dated 21.12.2015, it has been held as under:- 7. A perusal of the impugned order shows, that the Commissioner of Income Tax in the instant case has merely reproduced the deficiencies pointed out by the Dy. Commissioner of Income Tax in the assessment order. The Commissioner of Income Tax has not given the reasons as to how the findings of the Assessing Officer are erroneous in so far as prejudicial to the interest of revenue. The contention of the assessee is that all the relevant documents were placed on record by the assessee during the course of assessment proceedings. The Assessing Officer has passed the order after considering the same. The duty of the assessee is bring all the relevant documents before the Assessing Officer. The manner in which the order is to be passed is the prerogative of the Assessing Officer. 8. The order of the Assessing Officer may be brief and cryptic but that by itself is not sufficient reason to hold that the assessment order is erroneous and prejudicial to the interest of revenue. It is for the Commissioner to point out as to what error was committed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for deduction u/s. 80IA is Assessment Year 2010-11. As this is a search case details are called for, for the Assessment Years 2005-06 to 2011-12 and during the course of Assessment Proceedings for all these years including the current i.e. Assessment Year 2011-12 the Assessing Officer vide letter dated 15.03.2013 which is placed at Page No.111 of the Paper Book required the assessee to furnish the following information: - 2. In addition to the requirements, you are requested to furnish following details in the case of M/s. JSW Energy Ltd (JSWEL) and M/s. JSW Energy (Ratnagiri) Ltd (JSWERL) (now merged with M/s. JSW energy Ltd) separately: i. You are requested to furnish the working of disallowance u/s. 14A. Please explain why disallowance u/s.14A r.w. Rule 8D for all the years should not be made. ii. Please furnish details of capital work in progress. iii. Details of merger related expenses and its treatment in the accounts. Please explain why such expenditure should not be treated as capital in nature. iv. Please furnish computation of profit eligible for deduction u/s. 80IA in respect of each unit. v. Please furnish details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind had been applied to it. 47. There is a difference between lack of enquiry and inadequate enquiry and it is for the Assessing Officer to decide the extent of enquiry to be made as it is in his satisfaction as to what is required under the law. In the case of CIT v. Sunbeam Auto Ltd [332 ITR 167], the Hon'ble Delhi High Court has held that if there was any enquiry even inadequate that would not by itself give Commissioner to pass order u/s. 263 of the Act merely because the Commissioner has a different opinion in the matter and that only in cases where there is no enquiry the power u/s. 263 of the Act can be exercised. 48. Even though there has been an amendment in the provisions of section u/s. 263 of the Act by which Explanation 2 is inserted with effect from 01.06.2015 in our considered opinion the same does not give unfettered powers to the Ld.PCIT to assume jurisdiction u/s. 263 of the Act to revise every order of the Assessing Officer to re-examine the issue already examined during the course of Assessment Proceedings. At this stage it is relevant to refer to the decision of the Coordinate Bench in the case Narayan Tatu Rane v. ITO [17 taxman.com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd every type of mistake or error committed by the Assessing Officer and it is only when an order is erroneous that the section will be attracted . The Supreme Court held that an incorrect assumption of fact or an incorrect application of law, will satisfy the requirement of the order being erroneous. An order passed in violation of the principles of natural justice or without application of mind, would be an order falling in that category. The expression prejudicial to the interests of the Revenue , the Supreme Court held, it is of wide import and is not confined to a loss of tax. What is prejudicial to the interest of the Revenue is explained in the judgment of the Supreme Court (headnote). The phrase 'prejudicial to the interests of the Revenue' has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer, cannot be treated as prejudicial to the interests of the Revenue, for example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Income-tax Officer has t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial on record to show that the tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed The Hon'ble High Court has considered the definitions given to the words erroneous , erroneous assessment and erroneous judgment in Black's Law Dictionary and accordingly held that an order cannot be termed as erroneous unless it is not in accordance with law. An order can be termed as erroneous only if it is not in accordance with the law. 17. The Hon'ble Delhi High Court has also followed the above said view in the case of CIT Vs. Sunbeam Auto Ltd (2011)(332 ITR 167). The Hon'ble Delhi High Court has also extracted following observations made by the Tribunal:- 38. Still further, the Hon'ble Supreme Court in Malabar Industrial Co. (2000) 243 ITR 83 has held that when two views are possible and the Assessing Officer has taken one of the possible view, then the order cannot be held to be prejudicial to the interest of the Revenue. Since the Commissioner of Income tax could not come to a definite findi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew has been expressed by Hon'ble Madras High Court in the case of CIT Vs. Amalgamations Ltd (238 ITR 963). 19. The law interpreted by the High Courts makes it clear that the Ld.Pr. CIT, before holding an order to be erroneous, should have conducted necessary enquiries or verification in order to show that the finding given by the assessing officer is erroneous, the Ld Pr. CIT should have shown that the view taken by the AO is unsustainable in law. In the instant case, the Ld Pr. CIT has failed to do so and has simply expressed the view that the assessing officer should have conducted enquiry in a particular manner as desired by him. Such a course of action of the Ld Pr. CIT is not in accordance with the mandate of the provisions of sec. 263 of the Act. The Ld Pr. CIT has taken support of the newly inserted Explanation 2(a) to sec. 263 of the Act. Even though there is a doubt as to whether the said explanation, which was inserted by Finance Act 2015 w.e.f. 1.4.2015, would be applicable to the year under consideration, yet we are of the view that the said Explanation cannot be said to have over ridden the law interpreted by Hon'ble Delhi High Court, referred above. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght in by way of Explanation 2(a) shall have retrospective or prospective application shall not be relevant. 49. The Coordinate Bench in the case of Crompton Greaves Ltd v. CIT in ITA.No. 1994/Mum/2013 and ITA.No. 2836/Mum/2014 by order dated 01.02.2016 held that the Explanation 2 to section 263 of the Act which was inserted by Finance Act 2015 w.e.f 01.04.2015 is retrospective and applicable to Assessment Years prior to Assessment Year 2015-16. However, the Coordinate Bench of Mumbai Tribunal in another case i.e. in the case of M/s.Metacaps Engineering Mahendra Construction Co. (J.V) v. CIT in ITA.No. 2895/Mum/2014 dated 11.09.2017 held that Explanation 2 of section 263 cannot be construed to be retrospective in nature. It was further noted that similar view has been taken in the following cases: - (i) A.V. Industries v. ACIT in ITA.No. 3469/Mum/2010 dated 06.11.2015 (ii) Jayanth Murthy v. DCIT in ITA.No. 870 1234/Ahd/2014 dated 20.05.2016 The Hon'ble Supreme Court in the case of CIT v. Vegetable products [88 ITR 192] it was held that when two views are possible the view in favour of the assessee should be adopted. 50. Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IA(3) cannot he considered for every year of claim of deduction, but can he considered only in the year of formation of the business. 51. Therefore, as could be seen from the above decision the eligibility of a claim for deduction u/s. 80IA and the bar if any is to be considered only in the first year of claim for deduction made under u/s. 80IA of the Act. It was held that since the assessee had been granted claim of deduction right from the Assessment Year 2004-05 u/s. 80IA of the Act consequently it cannot be denied deduction for the subsequent years. In as much as restraint of section 80IA(3) cannot be considered for every year of claim of deduction but can be considered dividend only in the year of formation of business. In the case on hand since the Assessing Officer examined the issue thoroughly, called for various details in the initial Assessment Year being Assessment Year 2010-11 and allowed the claim of the assessee even during the current Assessment Year i.e. subsequent to 2010-11, the same cannot be revised unless there is change in facts or change in law. 52. In view of the above discussions we are of the view that the Ld.PCIT has failed to show that ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
