TMI Blog2020 (10) TMI 602X X X X Extracts X X X X X X X X Extracts X X X X ..... m/2020 - - - Dated:- 28-9-2020 - Shri Shamim Yahya (AM) And Shri Ravish Sood (JM) For the Assessee : Shri Madhur Agarwal For the Department : Shri A. Mohan ORDER PER SHAMIM YAHYA (AM) :- This is an appeal by the assessee directed against the order of learned CIT under section 263 of the I.T. Act dated 12.12.2018 and pertains to A.Y. 2015-16. 2. In the grounds of appeal the assessee has challenged the order of learned CIT passed under section 263 of the I.T. Act. 3. Brief facts of the case are that the learned CIT in this case observed that the company claimed exemption u/s.10(20A) of the Act till A.Y. 2002-03. That Section 10C20A) of the Income Tax Act was omitted by the Finance Act w.e.f. 01.04.2003. That therefore, under income Tax Act, 1961, no exemption is available to the company. That following the omission of section 10(20A) of the I.T.Act, 1961, the income of the assessee is taxable as per the provisions of the I.T. Act under various heads. The order passed by the ITO-15(1)(3) u/s. 143(3) on 28.12.2017 is erroneous in so far as it is prejudicial to the interest of revenue, following the omission of section 10(20A) of the I.T. Act 1961, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act, 1961. As per the provisions of section 4, the income of the previous year of every person is chargeable to income tax. As per the provisions of section 5, the total income of any previous year of a person who is resident will include all income from whatever sources derived which is received or to be received in India, accrues or arises or deemed to accrue or in India or accrues or arises to him outside India during the previous year. Taken into consideration together, it can be said that any income of a person who is in India received, accrues or arises in India, or India during the previous year is taxable as per the provisions of the income Tax Act, 1961. The incorporated as a Company on 19.03.1970 with which was wholly and exclusively subscribed by the Government of Maharashtra with the object of creation of New Town of Navi Mumbai, New Aurangabad, New Nasik etc. Therefore, In is a company which is incorporated as a Company on 17.03.1970 with the subscribed by the Government of Maharashtra, But this fact riot prove that the tasks performed by this company are the of the Government, Even if the company is fully owned by the Government, it cannot be held that it is pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 to 11 are in respect of certain components of income mentioned in show notice u/s. 263 which are not considered relevant to take the decision as to whether the order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of revenue. In the order by the Officer u/s. 143(3) on 28.12.2017 is considered as erroneous, in so far as it is prejudicial to the interest of revenue, in response to the notice u/s.283 dated 12.12.2018 then, suitable directions will be given in respect of these aspects also. 12. At last on 11, the assessee has cites the Judgement of Hon'ble Supreme Court of India in the case of India in the case of Malabar Industrial Company Ltd. Vs. Commissioner of Income Tax 243 ITR 81 and CIT vs Max India Ltd. 295 ITR 282. The judgements of the Hon'ble Supreme Court are full respect to the judgements, it is submitted that in the case of the assessee only one view is possible and that is the acts of the assessee company are not the acts of the State and, therefore, the income of the company must be subject to the provisions of the Income Tax Act, 1961 and income Tax Rules, 1962. 13. The company is stated to be appointed as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed as deduction to such undertaking under the gains of the business. 15. The company is taking a that if is an Agent of the Government and that the remuneration of ₹ 5,00,000/- is the only taxable income in its hands. This proposition is totally wrong as there is no exemption available under the income Tax Act for the to claim any sort of exemption of the income out of its operations, In fact, the assesses was duty bound to cast the balance sheet and profit and loss account so as to reflect the exact and true account of the incomes arising out of such invitees being performed by the assessee. The assessee has not adhered to the accounting standards and instead choose to show the entire income accrued as transferred to the State, The taxability of such an income in the hands of the before apportionment to the State Government is the precise issue which is the subject matter of the revision under 263. 16. Therefore, I consider the order by the Assessing Officer u/s.143(3) on 28.12,2017 as erroneous and in so far as it is prejudicial to the interest of revenue and, therefore, the order passed by the Assessing Officer is set with a direction to pass the order denovo aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of Jurisdictional ITAT. From the facts brought out by the Ld. Sr. Counsel that in the previous assessment years commencing from AY 2003-04 to 2013-14 except AY 2006-07 and 2007-08, in all the AYs, the revenue has accepted that assessee is an agent of the Govt. of Maharashtra and completed the assessments, that means in all AYs commencing from AY 2003-04 except AY 2006-07 and AY 2007-08 , the department has accepted the assessee is an agent and whatever income offered by the asessee as agent was accepted by the department. The addition in the previous AY 2013-14, the assessment was completed u/s 143(3) by accepting the assessee as agent and income offered by the assessee as income from the business. 24. From the order passed by Pr. CIT u/s 263, we noticed that he intends to correct the assessments made by the AO u/s 143(3) by observing that the case of the assessee fall under Article 289(1) and presumed that assessee is claiming the exemption under Article 289(1), whereas all these years, assessee has filed the return of income and declared income earned from the Govt. of Maharashtra as an agent. As per the resolution passed by the Govt. of Maharashtra, the remuneration fix ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue , unless the view taken by the Income Tax Officer is unsustainable in law . 25. Respectfully, following the above decision, in our considered view that Pr. CIT has adopted one possible view in the present case and the order passed by Pr. CIT u/s 263 of the Act is accordingly dismissed as assessment order may be prejudicial but not erroneous. Further, the main dispute arouse due to whether assessee is an agent or not. In the civil appeal, Hon ble high court held that assessee is an agent as per Section 113(3A) of MRTP Act. PCIT refused to consider this decision as it is not adjudicated under Income Tax Act. We cannot neglect the Hon ble high court findings, we have to accept the definition/meanings by higher court and most of the time, meanings and definitions are adopted from other law or from wisdoms of higher courts in Income Tax proceedings. PCIT has taken a strange stand not to follow the Judicial precedents in order to defend his proceedings u/s 263. Accordingly order u/s 263 is set aside. 9. Since the facts are identical fol ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
