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TMI Blog2020 (12) TMI 1121X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 263 of the Act be set aside. 2. On the facts and under the circumstances of the case and in law, the learned CIT(E) erred in holding that the assessment order passed by the Deputy Commissioner of Income-tax (Exemptions) - 2(1) ('the learned Assessing Officer') was erroneous as due verification was not undertaken by the learned Assessing Officer. The Appellant prays that it be held that the assessment order passed was not erroneous since adequate verification had been undertaken by the learned Assessing Officer. 3. On the facts and under the circumstances of the case and in law, even assuming the assessment order was erroneous, the learned CIT(E) erred in exercising jurisdiction under section 263 of the Act by holding the assessment order was prejudicial to the interest of the Revenue without appreciating that there is no tax effect of the proposed directions given by the CIT(E). The Appellant prays that it be held that assessment order was not prejudicial to the interest of the Revenue since there is no tax effect of the proposed directions / verifications. 4. On the facts and under the circumstances of the case and in law, the learned CIT(E) has erred in dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The trust deed available on record in its clause 9 mentions that the trustee shall be entitled to be paid a sum of Rs. 1000/- only. No other details as to why this sum was paid to Mr. A. N Singh is available on record and as per documents available on record, this is in contravention to the provisions of the Act. 3. The Tata Sons Ltd. vide its letter dated 21.12.2016, vide para 3 of the letter, admitted that up to February 11, 2014 , Mr. R. Venkataramanan served as Vice President of the Company and from February 12, 2014 when he was appointed as Executive Trustee of the assessee trust, his entire remuneration has been reimbursed to Tata Sons and born by the trust. The reason for the amount reimbursed by the trust to the Tata Sons Ltd. is also not available on record and it appears that it has not been examined by the A.O. 4. I have examined the records as well as the order passed by the Assessing Officer as discussed above and I am of the opinion that the order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of the Revenue and therefore requires revision. 5. In view of the above facts, you are requested to explain as to why order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15). A c.opy of the aforesaid letter is attached as Annexure 3. * In this regard, a copy of minutes of the meeting of Board of Trustees of SDTT held on 7 February 2012 appointing Mr Singh as a Trustee and Advisor who would perform the role of a Managing Trustee, for a further period of 3 years effective from 1 April 2012, on prevailing terms and conditions is attached as Annexure 4. The role and responsibilities of Mr Singh were quite expansive in terms of the scope and its importance to the work of the Trust which included close oversight and management of all administrative and operational aspects. He was instrumental in ensuring the institution of mechanisms for: (i) Internal Audit (ii) Evaluation of grant proposals and their recommendation to Trustees; within the approved strategic areas of focus (iii) Scheduling and convening of Grants Committee and Board meeting (iv) Compliance review of the Trust properties (v) Reporting dashboards for Trustees (vi) Human Resource management A more detailed run down under various aspects of management Is as under: Grants & Programs The Trust's work is spread across the country and across six thematic areas of Healt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t management system * Developing a framework for individual grant program and automation of the same while ensuring efficient turnaround time and least hardship to applicant. * Deciding on the design, layout and content of the Annual Report of the Trust in consultation with the process owners and vendor B. Remuneration paid to Mr R. Venkataramanan Please note that no remuneration was paid by the Trust to Mr R. Venkataramanan for AY 2014- 15. We request your goodself to take above on record and oblige. We will be glad to furnish any further information which your goodself shall so desire. 5. The assessee also filed a copy of letter dated 1st October 2007 appointing Shri A N Singh as Managing Trustee of the assessee trust, and a copy of the minutes of the Board of Trustee meeting dated 17th September 2007. A copy of each of the appointment letter dated 24th May 2012, and related minutes of Board of Trustee meeting dated 7th February 2002, were also filed before the learned Commissioner. Vide letter dated 11th March 2019, the assessee made following further submissions before the learned Commissioner: Re: Sir Dorabji Tata Trust('SDTT or the Trust') PAN- AAA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh assessment." 2. From a plain reading of the above. it is clear that the provisions for revision under section 263 of the Act can be invoked only if the following conditions are satisfied: * the order of the Assessing Officer sought to tse revised is erroneous; and * it is prejudicial to the interests of the Revenue. 3. In this regard, the assessee submits that it is legally settled position that the provisions of section 263 of the Act can be invoked only if both the conditions stipulated are satisfied i.e. the order of the AO is not only erroneous but also prejudicial to the interest of the Revenue. Reliance in this regards is placed on the following judicial precedents where it has been held that both these conditions must exist in order for the Commissioner to validly exercise his powers under section 263; * CIT v. Gabriel India Ltd. [1993] 71 Taxman 585 (Born) wherein it has been held as under: "The power of suo motu revision under subsection (1) is in the nature of supervisory jurisdiction and the same can be exercised only if the circumstances specified therein exist. Two circumstances trust exist to enable the Commissioner exercise power of revision under this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indar Singh Chadha v. PCIT [2019] 102 taxmann.com 93 (Delhi Tribunal) wherein it is stated that, where AO has applied his mind and taken a possible view and the Commissioner cannot come to a conclusion on the basis of the relevant record pertaining to subsequent assessment years, that the order passed by AO is erroneous or prejudicial to the interest of the revenue. 4. Accordingly, in the instant case a revisional action under section 263 can be initiated only if the order of the AO is not only erroneous but such erroneous order results in prejudice to the interests of the Revenue. Whether the order of the AO is erroneous 5. The assessee submits that the expressions "erroneous", "erroneous assessment" and "erroneous judgment" have been defined in Black's Law Dictionary. According to the definition, "erroneous" means "involving error, deviating from the law". "Erroneous assessment" refers to an assessment that deviates from the law and is, therefore, invalid, and is a defect that is jurisdictional in its nature, and does not refer to the judgment of the AO. Similarly, "erroneous judgment" means "one rendered according to course and practice of court but contrary to law, u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Commissioner/Director of Income tax when an order passed by the lower authority is erroneous and prejudicial to the interests of the Revenue. Orders which are passed without inquiry or investigation ate treated as erroneous and prejudicial to the interests of the Revenue, but orders which passed after inquiry/investigation on the question/issue are not per se or normally treated as erroneous and prejudicial to the interests of the Revenue because the revisionary authority feels and opines that further inquiry/investigation was required or deeper or further scrutiny should be undertaken." 7. The assesses submits that from the above it can be said that where the AO has applied his mind and adjudicated the issue having regard to the facts and material on record, order passed by the AO not erroneous. Further where the AO while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income then the order cannot be said to be erroneous. In the instant case, during the course of the assessment proceedings, the AO has sought information on both the points mentioned in the notice u/s. 263 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue, if, in the opinion of the Principal Commissioner or Commissioner - (a) the order is passed without making inquiries or verification which, should have been made, (b) the order is passed allowing any relief without inquiring into the claim; (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119: or (d) the order has not been passed in accordance with any decision, prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person. 53.3 Applicability: This amendment has taken effect from 1st day of June, 2015." 10. A reading of the Circular gives an impression that the Explanation 2 was inserted for the purpose of providing clarity on the expression 'erroneous insofar as it is prejudicial to the Interest of the Revenue'. However, the assessee submits that the Explanation being clarificatory would not lead to dilution of the basic requirements of Section 263(1) of the Act. The assessee submits that post the aforesaid amendment, it could not mean that recourse to Section 263 of the Act would be available to the Revisional Author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment in the name of inadequacy in inquiries or verification as perceived in the opinion of the Revisional Authority. It goes without saying that the exercise of statutory powers is dependent on existence of objective facts. The powers outlined under section 263 of the Act are extraordinary and drastic in nature and thus cannot be read to hold that an uncontrolled, unguided and uncanalised powers are vested with the competent authority. The powers under section 263 of the Act howsoever sweeping are not blanket nevertheless. The AO cannot be expected to go to the last mile in an enquiry on the issue or indulge in fleeting inquiries. The action of the Revisional Commissioner based on such expectation requires to be struck down. 9.5 Howsoever wide the scope of Explanation 2(a) may be, its limits are implicit in it. It is only in a very gross case of inadequacy in inquiry or where inquiry per se mandated on the basis of record available before the AO and such inquiry was not conducted, the revisional powers so conferred can be exercised to invalidate the action of AO" * Narayan Tatu Rane [2016] 70 taxmann.com 227 (Mumbai) In this case, after considering the Explanation 2 inserted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be prejudicial. Attention in this connection is invited to the following decision: * Punjab Wool Syndicate, Ludhiana v ITO, [2012] 27 taxmann.com 110 (Chandigarh) wherein it has been held that where the tax effect because of an order passed by the Assessing Officer is nil, such order even if erroneous being not Act prejudicial to the interest of Revenue, is not open to revision under section 263 of the Act. 15. In the instant case, without prejudice to the assessee's contention that all the payments made to the Trustees are in accordance with the provisions of Trust Deed and the Act, even assuming that it is held that the payment is in contravention of the Act, there would not be eligible for the exemption. Considering the fact that the assesseee has already applied more income than was required as per the provisions of the Act and without prejudice been allowed to accumulate the surplus, the assessed income would continue to be at NIL. Consequently, there would be no tax effect and thus, the order of the AO cannot be said to be prejudicial to the interest of the revenue. The assessee thus submits that since the order of the AO is neither erroneous nor preju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is covered by exceptions, it results into denial of exemptions. It is clear that the AO has failed to make basic but necessary verification on this issue. 2. On perusal of records of A.Y.2014-15, it is also noticed that you have continued to hold investment in shares of Tata Sons Ltd and its group of companies. In-fact, in Tata Sons Ltd., you are holding 27.98% shares of the company. As per Article of Association of Tata Sons Ltd. (one of company where you are holding investments), your trustees and the trustees of Sir Ratan Tata Trust jointly also appoint non-executive directors on the board. The clause (h) of sub-section (2) of section 13 provides that if any trust has invested in any concern in which any person referred to in sub-section (3) has substantial interest, it shall be deemed that the assessee trust has used or applied its income for the benefit of such person and thereby operation of section 11 or 12 would cease so as to exclude it from the total income. Despite, your holding of 27.98% shares of Tata Sons Ltd. and close relationship of trustees with the above company, the Assessing officer has not examined the applicability of provisions of section 13(2)(h) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al/factual basis of allegations in show cause was sought from the AO. On the same date, Tata Sons Ltd. also submitted details in response to notice u/s.133(6) of I.T. Act. He did not raise this issue and finalized the assessment. Despite the material being available on records, which could lead to prima facie opinion that the trustees are having control over the affairs of Tata Sons Ltd. The AO has failed to take the issue to any logical conclusion. The above indicates that examination of such material was necessary in order to ascertain the facts as also whether any direct or indirect benefit as stated in section 13(1)(c) of the Act is being taken by the connected persons as referred in section 13(3) of the I.T. Act. 4. The AO has allowed you to accumulate unspent surplus u/s.11(2) amounting to Rs. 10,04,61,710/- (which arises by virtue of the order u/s.143(3)) referring letter dated 29.12.2016 of assessee by noting that the assessee has filed form 10 and copy of Resolution along with it, for exercising its option u/s.11(2). However, neither there is reference of Form 10 in assessee's letter dated 29.12.2016 nor it was found on record. Thus it appears that the benefit of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d net rents profits and income of the said immovable properties and Trust Funds and so much of the corpus thereof as to the Trustees at their discretion shall seem meet in all or any of the following purposes without any distinction of place nationality or creed, that is to say the institution, maintenance and support of schools educational institutions hospitals, relief of any distress caused by the elements of nature such as famine, pestilence, fire, tempest, flood, earthquake or any other calamity in advancement learning in all its branches especially research work in connection with medical and industrial problems or in giving further aid to the Indian Institute of Science at Bangalore by providing funds for instituting professorships or lectureships or giving scholarships or travelling fellowships in any branch of science or art in assisting students to study abroad either by payment of lump sum or by payment of periodical sums or in giving further aid to any other charitable institutions or objects endowed by the Settlor in his lifetime or by the grandfather father and brother of the Settlor." Since its inception, the Trust has played a pioneering role in transforming tradi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this connection, at the outset, the assessee submits that as regards the points noted in the notice, the assessment order passed by the Deputy Commissioner of Income-tax (Exemptions) - 2(1). Mumbai (hereinafter referred to as the 'Learned AO, is neither erroneous nor prejudicial to the revenue so as to require any revision of the same. The assessee had furnished all the necessary information at the time of assessment pro-ceedings and thus the assessee denies your goodself's allegation that the Learned AO has not verified the details mentioned in your goodself s notice. In the instant case, during the course of the assessment proceedings, the Learned AO has sought information on the points mentioned in the notice under section 263 of the Act. All the information required by the Learned AO was submitted during the course of the proceedings. Thus, the Learned AO had complete information during assessment proceedings. It was only after considering the information that he had passed the order under section 143(3). Merely because the AO has not discussed Or commented upon the information / details given in the order, it cannot be said to be covered by section 263. Without prejudi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fulfilment of conditions regarding its support of its claim for exemption is grossly unfair. 6) The assessee further submits that after duo verification of an the information furnished by the assesses, if the order does not have an adverse finding regarding the shareholding in the assessment order, this should not warrant a revision under section 261 Further, it may also be pointed out that these details are being asked for and submitted on a year on year basis pursuant to which exemption benefits have been granted consistently. 7) The assesses submits that your goods has stated that "It is clear that the AO has failed to make bass but necessary verification on this issue. In this connection, the assesses submits that: (a) The AO during the course of assessment proceedings had sought details about the investments held by the Trust, (b) The Trust duly replied and filed for all the details and information. (C) Thus, the AO has made enquiries and it cannot be said that the AO has failed to make basic but necessary verification on the issue. In fact, it is submitted that the AO made detailed verification of the claim and was satisfied by the contention of the Trust 8) Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of information sought by the Learned AO under section 133(6), the assessee submits that vide notice dated December 26, 2016, the Learned AO had had provided its explanation on various points comments and the assessee vide its letter dated December 28, 2016 had provided its explanation of various points. 17) The assessee submits that all the points raised by you in Para 3 (b) (c) and (d) have been put to the assessee by the Learned AO and appropriate response has been submitted by the assessee. Accordingly, in assessee's view there is no infirmity in the verification undertaken by the Learned AO. The assessee respectful submits that if after due inquiries, the Learn. AO has not held that the assessee is controlling the business of TSL in his assessment order, it cannot be regarded as erroneous under section 263 and hence, it would not warrant a revision under section 263. Exercise of option under section 11(2) As regards pars 4 of the notice, the assessee submits that even as per the assessment order dated December 30, 2016 as against the income of Rs. 132.32 crs, the assessee has applied an amount of Rs. 122.27 crs i.e. more than 85, of the income. Thus, there is no quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on was made available to the Learned AO and Learned AO has verified. Further, the Learned AO has applied his mind and adjudicated the issue having regard to the facts and material on record and come to an appropriate conclusion on the matter. Therefore, the assessee submits that the order of the Learned AO is neither erroneous nor prejudicial revenue to warrant any revision Without prejudice, in any event, even if the Learned AO has not verified certain details this would not result in any prejudice to the revenue or the sections 11 to 13. The assessee therefore prays that the current proceedings initiated be dropped. Should your goodself require any further clarifications, please let us know. 8. None of these submissions, however, impressed the learned Commissioner. 9. So far as salary paid to Shri A N Singh is concerned, related findings of the learned Commissioner are as follows: 5.3 I have considered the arguments of the assessee and also the records referred by it. It is observed that: a) The first submission of assessee is general in nature in which it is stated that the necessary enquiries and verification has already been carried out by the Assessing Officer and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a copy of which is enclosed as Annexure-1 to this Order). In the last para of this letter, it is stated that Shri R. Venkataramanan who was serving the Company as Vice President, has been appointed as Executive Trustee of the assessee Trust on 12th February 2014. His entire remuneration with effect from February 2014 has been borne by the assessee Trust. Even in this letter, the details of actual payments were not filed. Importantly, there was no reference of any payments to Shri R. Venkataramanan in earlier replies. The Assessing Officer however did not ask any further details. In fact, even the basic details such as quantum of payments being his salary by Tata Sons Ltd. reimbursed by the Trust, were also not sought and the Assessing Officer has proceeded to complete the assessment. ii) Even the salary to Shri A.N. Singh is actually payment to Tata Services Ltd. for his services but the Assessing Officer did not even ask the basis of the remuneration fixed or the reasons why the same was paid through Tata Services Ltd. These facts clearly show that the assessee's contention that the Assessing Officer has made due verification, has no stand and is not accepted. iii) After ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retion at any time to appoint or make provision for the appointment of any persons (including all or any of the trustees) as committee-men or otherwise for the purpose of the administration of the trusts aforesaid in such manner and subject to such rules and regulations as the Trustees may prescribe and may also at any time appoint or provide for the appointment of separate trustees to hold any land or hereditaments acquired or any fund or any other properties or investments at any time subject to the trusts of these presents in such manner and subject to such rules and regulations as the trustees may from time to time think fit. The Trustees are hereby empowered to appoint one of themselves as Managing Trustee and fix his remuneration. Each of the Trustees if he or she shall act and as long as he or she shall act in the Trusts of these presents shall be entitled to be paid a sum of Rs. 1000/- (one thousand) per year. "Clause para 13 : The following provisions shall apply to meetings and proceedings of the Trustees :- 1. The Trustees shall hold ordinary meetings at least twice in each year. A special meeting may at any time be summoned by any Trustee. 2. Three Trustees presen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry 2014, two Trustees are seemingly paid more than Rs. 1,000/- per year. This itself shows that the payments to atleast One Trustee is in violation of the Trust Deed. Any benefit given to a Trustee beyond what is permitted in the Trust Deed itself is direct or indirect benefit which may attract the provisions of Section 13(1)(c), the application of which results into denial of exemption u/s.11 of the I.T. Act. The Assessing Officer, therefore, was expected to examine the terms of appointment of both the Trustees their remuneration, and violation of Trust Deed. (f) Even if the payment to the Trustees is permitted by the Trust Deed, it has to commensurate with the services provided by him. Therefore, it is expected that the Assessing officer will go into the reasonableness of such payment. The same was not done by the A.O. rather he did not even have basic details to do so. The same is clear from the following : i) In respect of Shri R. Venkataramanan, no details of remuneration were asked. Under these circumstances, the examination of reasonableness of the same was not possible at all. ii) In respect of Shri A.N. Singh except obtaining the detail of payment, no other detail as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n section 11(5) r.w.s. 13(1)(d) is concerned, the conclusions arrived at by the learned Commissioner are as follows: 8.3 I have considered the arguments of the assessee and also the records referred by it. It is observed that : (a) Vide letter dated 02.12.2016, the AO asked certain details of investment in shares. (b) Vide letter dated 09.12.2016, it was stated that none of the investment are covered by section 13(1)(d) of the I.T. Act, Further, the details of investment in shares have been submitted in "Annexure-1". It shows holding of shares in following companies:- Quoted Share Unquoted Shares viii) Indian Hotel Co. Ltd. i) Tata Sons Ltd. ix) Tata Steel Ltd. ii) Central IND SPG Weaving And manufacturing Co. Ltd. x) Tata Motors Ltd. iii) Tata Mills Co. Ltd. xi) Tata Powers Ltd. xii) Tata Chemical Ltd. xiii) Associated Cement Co. Ltd. xiv) State Bank of India (c) In the details so provided, the shares were shown as held on 01 June, 1973 and subsequently, accretion of bonus shares is there. However, nowhere, it is mentioned that the shares were part of the corpus as on 01.04.1973. The only other facts mentioned in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot become clear as to whether the same were held as 'corpus', which was necessary to be verified because only the shares held in corpus and accretion of bonus to them are exempt from provisions of section 13(1)(d). To sum up, the above reply and details on records do not show as to whether the above investments in shares are covered by exception provided in proviso (i) & (ia) to section 13(1)(d) or not. As the investment in shares such as above is normally a prohibited mode of investment and unless it is covered by exceptions, it results into denial of exemptions. It is clear that the AO has failed to make basic but necessary verification on this issue. 8.4 It is also submitted in reply dated 27/03/2019 that all the shares are held by it as corpus and the income earned by way of dividend from them is used for carrying out the charitable objects. Virtually, all the shares are held by it today. The position is continuing for 4 decades. The assessee has been consistently granted the exemption u/s. 11 of the Income-tax Act. Therefore, calling upon the assessee to demonstrate the fulfilment of conditions is grossly unfair. In this regard, it is stated that: a) It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of section 13(2)(h) of the I.T Act. Similarly, assessee's reply dated 28/12/2016 (Annexure-5 of assessee's reply) also does not have any reference of applicability of provisions of section 13(2)(h). Both these documents are about the control and management of business of Tata Sons Ltd. Therefore, assessee's contention that this issue was discussed by the Assessing Officer is not factually correct. 9.4 The assessee has also submitted that none of the Trustees as on 31.03.2014 hold substantial interest in Tata Sons Limited and therefore, the provisions of section 13(2)(h) of the I.T Act should not be applicable. This submission of assessee however requires verification because in Section 13(3) there are different clauses, the application of which needs to be examined to find out whether the investment is with any connected person. It is although more necessary in the case of assessee because the investment of assessee itself in above company is more than 20%. The A.O ought to have examined the applicability of examination 3 of below section 13. In this regard, it is also pertinent to mention that in the case of the Tata Trust Group, i.e. Jamshedji Tata Trust, it has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of directors appointed by the trust. But it was done without mentioning the facts or evidence on the basis of which the above preliminary inference was drawn by the Assessing Officer. iii) In the reply besides giving some explanation to the queries of Assessing Officer, the material/factual basis of allegations in the show cause notice was sought by the assessee from the Assessing Officer. In the assessee's reply, besides giving some explanation to the queries of Assessing Officer, the assessee itseslf had asked for the material/ factual basis of allegation in the show cause notice, to which the Assessing Officer did not respond. The above facts and circumstances clearly show that the Assessing officer has not conducted verification/ enquiries properly, which could take the issue to the logical conclusion. iv) Importantly, the Assessing Officer, in the Office Note with the assessment order u/s. 143(3) of the I.T. Act, after referring to his show cause notice dated 26/12/2016 and assessee's reply dated 28/12/2016, has noted that: One of its Directors and Chairman for the time being Mr. Cyrus Mistry filed a letter received in this office on 22/12/2016 along with 2 box ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer, Therefore, it would be in the fitness of things that the same are verified by the Assessing Officer. 12.4 Regarding the application of exempt income of dividend towards the object of the Trust, it is pertinent to mention that the Id. ITAT, Mumbai, in the case of Jamshedji Tata Trust, for A.Y. 2010-11, in ITA No. 7006/Mum/2013, has held that: "For the purpose of application of income in terms of section 11(1) and (2), the entire income of the trust has to be considered including the dividend and long term capital gain claimed as exempt u/s. 10. It is pertinent to mention that for availing the exemption u/s 11, the income derived from the property held under trust has to be considered irrespective of the fact that some of the income so derived is also exempt u/s. 10, therefore, 85% of the entire income without exclusion of dividend and long term capital gain on shares has to be applied for such purpose in India for availing deduction u/s, 22." Therefore, irrespective of the decision of Hon'ble High Court to allow exemption u/s. 10 on such dividend income, the Assessing Officer ought to have asked the assessee to demonstrate that the entire income of the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itional support to dominant object of the Act in order to make it meaningful and purposeful, (d) an Explanation cannot in any way interfere with or change the enactment or any part thereof but where some gap is left which is relevant for the purpose of the Explanation, in order to suppress the mischief and advance the object of the Act if it can help or assist the Court in interpreting the true purport and intendment of the enactment, and (e) It cannot, however, take away a statutory right with which any person under a statute has been clothed or set at naught the working of an Act by becoming an hindrance in the interpretation of the same. At this stage, it will therefore be relevant to refer to the Memorandum to Finance Bill 2015 which is as under: "Memorandum to Finance Bill 2015 Revision of order that is erroneous in so far as it is prejudicial to the interests of revenue The existing provisions contained in sub-section (1) of section 263 of the Income- tax Act provides that if the Principal Commissioner or Commissioner considers that any order passed by the assessing officer is erroneous in so far as it is prejudicial to the interests of the Revenue, he may, after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion & Memorandum to Finance Act has also held this amendment only declaratory and charificatory in nature. It is held that the amendment to section 263 of the Act by insertion of Explanation 2 to Section 263 is declaratory in nature and is inserted to provide clarity on the issue as to which orders passed by the AO shall constitute erroneous and prejudicial to the interest of Revenue whereby it is provided, interalia, that if the order is passed without making inquiries or verification by the AO which, should have been made or the order is passed allowing any relief without inquiring into the claim, the order shall be deemed to be erroneous and prejudicial to the interest of Revenue. 15.5 From the reply of assessee dated 11,03.2015, it is clear that it has also accepted that Explanation (2) to Section 263 is clarificatory in nature. However, by relying on the following two judgments; (i) Torrent Pharmaceuticals Ltd. vs DCIT [2018] 97 Taxmann.com 671 (Ahemadabad Tribunal) (ii) Narayan Tatu Rane [2016] 70 Taxmann.com 227 (Mumbai), It is claimed that the explanation being clarificatory in nature, it would not lead to dilution of basic requirements of Section 263 (1) of the I.T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artmental Representative, and a lot of emphasis is placed on the fact in the light of Explanation 2 to Section 263 once Commissioner is of the view, as he has been on the facts of this case, that "the order is passed without making inquiries or verification which should have been made", the order is required to be treated as erroneous and prejudicial to the interest of the revenue. Therefore, we must examine the nature of inquiries conducted by the Assessing Officer and whether these inquiries were so deficient as to render the order 'erroneous and prejudicial to the interests of the revenue', within meanings of that expression assigned under section 263. 19. The question that we also need to address is as to what is the nature of scope of the provisions of Explanation 2(a) to Section 263 to the effect that an order is deemed to be "erroneous and prejudicial to the interests of the revenue" when Commissioner is of the view that "the order is passed without making inquiries or verification which should have been made". 20. Undoubtedly, the expression used in Explanation 2 to Section 263 is "when Commissioner is of the view," but that does not mean that the view so formed by the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the detriment of anyone, unless circumstances so justify or warrant. What essentially follows is that unless the Assessing Officer does not conduct, at the stage of passing the order which is subjected to revision proceedings, inquiries and verifications expected, in the ordinary course of performance of duties, of a prudent, judicious and responsible public servant- that an Assessing Officer is expected to be, Commissioner cannot legitimately form the view that "the order is passed without making inquiries or verification which should have been made". The true test for finding out whether Explanation 2(a) has been rightly invoked or not is, therefore, not simply existence of the view, as professed by the Commissioner, about the lack of necessary inquiries and verifications, but an objective finding that the Assessing Officer has not conducted, at the stage of passing the order which is subjected to revision proceedings, inquiries and verifications expected, in the ordinary course of performance of duties, of a prudent, judicious and responsible public servant that the Assessing Officer is expected to be. 21. That brings us to our next question, and that is what a prudent, judici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as said, to approach his work with suspicion or with a foregone conclusion that there is something wrong. He is a watch-dog, but not a bloodhound.". Of course, an Assessing Officer cannot remain passive on the facts which, in his fair opinion, need to be probed further, but then an Assessing Officer, unless he has specific reasons to do so after a look at the details, is not required to prove to the hilt everything coming to his notice in the course of the assessment proceedings. When the facts as emerging out of the scrutiny are apparently in order, and no further inquiry is warranted in his bonafide opinion, he need not conduct further inquiries just because it is lawful to make further inquiries in the matter. A degree of reasonable faith in the assessee and not doubting everything coming to the Assessing Officer's notice in the assessment proceedings cannot be said to be lacking bonafide, and as long as the path adopted by the Assessing Officer is taken bonafide and he has adopted a course permissible in law, he cannot be faulted- which is a sine qua non for invoking the powers under section 263. In the case of Malabar Industrial Co Ltd Vs CIT [(2000) 243 ITR 83 (SC)], Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r not. It does not authorise or give unfettered powers to the Ld Pr. CIT to revise each and every order, if in his opinion, the same has been passed without making enquiries or verification which should have been made. 22. Having said that, we may also add that while in a situation in which the necessary inquiries are not conducted or necessary verifications are not done, Commissioner may indeed have the powers to invoke his powers under section 263 but that it does not necessarily follow that in all such cases the matters can be remitted back to the assessment stage for such inquiries and verifications. There can be three mutually exclusive situations with regard to exercise of powers under section 263, read with Explanation 2(a) thereto, with respect to lack of proper inquiries and verifications. The first situation could be this. Even if necessary inquiries and verifications are not made, the Commissioner can, based on the material before him, in certain cases straight away come to a conclusion that an addition to income, or disallowance from expenditure or some other adverse inference, is warranted. In such a situation, there will be no point in sending the matter back to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shows that the Assessing Officer, during the course of the assessment proceedings, has not conducted due inquiries in the matter, and it is this inertia of the Assessing Officer which has rendered the related assessment order erroneous and prejudicial to the interest of the revenue. It has also been noted that since, in addition to A N Singh, R Venkatraman was appointed Executive Trustee of the Trust, with effect from 12th February 2014, more than one trustees were paid more than Rs. 1,000 p.a. whereas, in terms of the trust deed, only one trustee could have been paid more than Rs. 1,000 p.a. 25. We find that, vide letter dated 2nd December 2016, the Assessing Officer, inter alia, desired to know "whether any fees, remuneration or salary or prerequisite has been paid by the Trust to any of the trustees" and directed that, if so, "please provide the details." In reply to this requisition, and vide letter dated 9th December 2016, the assessee duly furnished the details of payments made to the trustees, for fees as trustees, and added that further to these details, "the details of salary, allowance or otherwise paid to a person referred to in section 13(3)", are being furnished. In A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he trust, is entitled to such remuneration as may be decided by the trustees. In other words, there are no restrictions on the remuneration for the managing trustee. Of course, in terms of the provisions of Section 13(2)(c) when a trustee is paid any amount out of the resources of the trust or institution for services rendered by that person to such trust or institution and the amount so paid "is in excess of what may be reasonably paid for such services" such income or property shall, for the purposes of that clause, be deemed to have been used or applied for the benefit of the trustee, and, accordingly, tax exemption will be lost to that extent. 28. Clearly, therefore, no part of the payment to the trustees is in violation of the provisions of the trust deed, inasmuch as all the trustees, as detailed in the reply filed by the assessee before the Assessing Officer, are paid only Rs. 1,000 per annum, and only one of the trustees, i.e. A N Singh, has been paid a remuneration of Rs. 91,11,654 for the rendition of services to the trust as a person managing affairs of the trust i.e., managing trustee. There is no payment to R Venkatraman in the present year, and, as such, there cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , and it cannot be, anybody's case that the payment of A N Singh's cost to the trust, at Rs. 91.11 lakhs p.a., was so high that it should have provoked a detailed inquiry into the matter. The fact that these payments were made through Tata Services Limited is nothing unusual on the facts of this case. The assessee trusts is one of the entities related to Tata group, and Tata Services Limited is an entity of the group which provides services to the entities within, or related to, Tata Group. It's a common practice in the large business groups to have centralized entities providing services to all the group entities and related entities, particularly as it is not possible for each entity to have the benefit of their own standalone units dealing with support services. There is nothing unusual about it so as to warrant detailed investigations into the matter. We are unable to share the perceptions of the learned Commissioner in this regard. We have also noted the observations of the learned Commissioner to the effect that "surprisingly, even the copy of form 10B is also not found to be part of the record," but then this observation is incorrect as there is a categorical finding by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 1st June 1973, and accretion in these holdings on account of allotment of bonus shares thereafter, were in 9 pages- and copies of these details were also furnished before us at pages 216-223 of the paper book filed before us. All these details were also furnished in the year-end financial statements, which were duly filed with the Assessing Officer. The Assessing Officer categorically notes this and observes that "the assessee has to follow the accumulation provisions of Section 11(2), specific modes of investment/ deposits under section 11(5) and other related provisions of Section 13". Satisfied with the details filed by the assessee, the Assessing Officer had no issues with respect to section 11 and 15, and he noted that the income derived from property held under trust, which included these investments, is covered by the exemption under section 11 and, accordingly, he disallowed exemption of dividend under section 10(34). Learned Commissioner does not dispute these facts but adds that the Assessing Officer did not examine the fundamental question as to whether these shareholdings, as on 1st June 1973, were part of the corpus or not. Unless, according to the learned Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being constantly accepted for over four decades- particularly when there is no occasion or trigger to re-examine that aspect of the matter in this particular year and when there is no change in legal or factual position in this particular year. It may also be noted that, as pointed out to us by the learned counsel, the assessee trust was notified as an institution established for charitable purposes under section 10(23C)(iv), and this notification has been renewed from time to time. The conditions precedent for grant of notification under section 10(23C) were similar to section 13(1)(d) inasmuch as it was provided that if the funds were invested in modes other than those specified under section 11(5), the benefit of 10(23C) would not be available but an exception was made if such assets were to form part of the corpus as on 1st June 1973. On these facts, while granting the exemption under section 10(23C), Under Secretary in the Central Board of Direct Taxes, Govt of India, vide letter no 197/126/91-ITA-I dated 31st July 1992, had written a letter to the assessee trust seeking clarification whether all the shares form part of the corpus. The assessee trust, vide letter dated 21st A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not able to point out any distinguishing features in the present facts, which would warrant a different view in the subject assessment year from that taken in the earlier and subsequent assessment years. So far as the decision of Radhasoami Satsang (supra) is concerned, it is true that there are observations therein that restrict its applicability only to that decision and the Court has made it clear that the decision should not be taken as an authority for general applicability. 8. However, subsequently the Apex Court in Bharat Sanchar Nigam Ltd. v. Union of India [2006] 282 ITR 273 has after referring to the decision of Radhasoami Satsang (supra) has observed as under :- "20. The decisions cited have uniformly held that res judicata does not apply in matters pertaining to tax for different assessment years because res judicata applies to debar courts from entertaining issues on the same cause of action whereas the cause of action for each assessment year is distinct. The courts will generally adopt an earlier pronouncement of the law or a conclusion of fact unless there is a new ground urged or a material change in the factual position. The reason why courts have held pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e were no reasons to provoke such an inquiry. 36. In any event, even if these investments were to be held to be contrary to the provisions of Section 11(5), all that could have been done by the Assessing Officer was to decline exemption under section 11 in respect of income from these investments, i.e., dividends, which, for the reasons we will set out now, is completely tax neutral for the assessee. In support of this consequence of investment being in violation of the provisions of Section 11(5), we may draw support from the following observations made by Hon'ble jurisdictional High Court, in the case of DIT Vs Sheth Mafatlal Gaganbhai Foundation Trust [(2001) 249 ITR 533 (Bom)]: In other words, only the non-exempt income portion would fall in the net of tax as if it was the income of an AOP. Section 11(5) lays down various modes or forms in which a trust is required to deploy its funds. Section 13(1) lays down cases in which section 11 shall not apply. Under section 13(1)(d)(iii), it has been laid down that any share in a company, not being a Government company, held by the trust after 30-11-1983 shall result in forfeiture of exemption. By virtue of the proviso (iia) it has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tax exemption under section 10(34), so far as the present assessment year is concerned, cannot be disturbed. In any event, since the income from dividends was exempt under section 10(34), as the aforesaid amendments had not come into effect at that point of time, it was completely tax neutral, even if these amendments can be said to have any influence on the taxability of dividends, as to whether or not income from the dividends in these shares is eligible for exemption under section 11 or not. As a matter of fact, the Assessing Officer has declined the exemption under section 10(34) only on the ground that the assessee was eligible for exemption under section 11 on this income. Therefore, even if the assessee is to be declined exemption under section 11 in respect of dividend income on these shares, he will be eligible for exemption under section 10(34). In the case of DIT Vs Jasubhai Foundation [(2016) 374 ITR 315 (Bom)], Hon'ble jurisdictional High Court has also observed as follows: .......The provisions, namely, sections 10 and 11 fall under a Chapter which is titled "Incomes Which Do Not Form Part of Total Expenditure" (Chapter III). Section 10 deals with incomes not i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp;"A bare reading of this provision makes it clear that the pre-requisite to exercise of jurisdiction by the Commissioner suo motu under it, is that the order of the ITO is erroneous insofar as it is prejudicial to the interests of the revenue. The Commissioner has to be satisfied with twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the revenue. If one of them is absent - if the order of the ITO is erroneous but is not prejudicial to the revenue or if it is not erroneous but is prejudicial to the revenue - recourse cannot be had to section 263(1)" 39. These reasons are, however, not the only reasons as to why the stand of the Commissioner, in invoking section 263, is wholly unsustainable in law. Even on merits, for the reasons we will set out now, it is clear that the investments in questions were held as the corpus, and, as such, the provisions of Section 13 (1)(d) were not attracted. 40. Explaining the scope of expression "corpus," Hon'ble Karnataka High Court, in the case of DIT Vs Shri Ramakrishna Seva Ashram [(2013) 357 ITR 731 (Kar)] has observed as follows: 11. The word ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income thereof they must be so applied. The contribution made expressly to the capital or corpus of trust fall within the purview of sub-section (2) of Section 12. Therefore, such contributions cannot be be deemed to be the income derived from the property for the purpose of Section 11 of the said Act and provisions of Section 11 will not apply. 15. The Rajasthan High Court in the ease of Sukhdeo Charity Estate v. ITO [1991] 192 ITR 615 (Raj.) dealing with such contributions held that, the principles enunciated in various cases when applied to the present case, leave no room for debate that the intention of the donor-trust as well as donee-trust was to treat the money as capital to be spent for Ladnu Water Supply Scheme. It is of no consequence whether the amount had since been paid to the State Government or kept in the account of the above-referred scheme by the assessee-trust. From whatever angle it may be seen, the deposited amount cannot be said to be income in the hands of the recipient-trust. Therefore, what ultimately reveals that,-(i) the intention of the donor and (ii) how the recipient-assessee treat the said income. If the intention of the donor is that the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any benefit is derived by any of the persons referred to in Section 13(3) of the Act, and if so, tax implications thereof. 44. Let us once again take a quick look at some relevant facts so far as Commissioner's stand on this issue is concerned. We have noted that, as the learned Commissioner himself records in the impugned order "The Assessing Officer vide show cause notice dated 26.12.2016 raised the issue of close relationship of trustees of the trust and Tata Sons Ltd. through appointed directors seeking reply as to whether the activities are in accordance with the objects of the trust, what kind of control trust is exercising on business of Tata Sons Ltd. and also the issue that the trustee who were earlier directors/employees of Tata Sons Ltd. are taking benefit from the company through the control of directors appointed by the trust" but does not find that inquiry to be sufficient on the ground, as is stated in the immediately following sentence, that " but it was done without mentioning the facts or evidence on the basis of which the above preliminary inference was drawn by the Assessing Officer". What essentially follows is that not putting the material on the basis of wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned Commission, in the impugned order in this respect, cannot meet any judicial approval. 45. Learned Commissioner had also taken note of the office note appended to the assessment order, which records the fact that, on 22nd December 2016 i.e. just a week before the assessment under section 143(3) was to be finalized, one Cyrus Mistry wrote a letter to the Assessing Officer, and sent two box files containing documents in support of the content of his letter, informing the assessee the trustees of having control over the business of Tata Sons Ltd and that the trustees are "taking lots of services and benefits from Tata Sons Ltd". This note also records that while prima facie there may be substance in trustees having control over the affairs of Tata Sons Ltd, since the matter is getting time-barred on 31st December 2016, the order is being passed as of now, and, the remedial measures, if required on a detailed examination of allegations made by Cyrus Mistry and on new facts coming to knowledge, will be taken. Learned Commissioner's stand is that these observations "clearly shows that the Assessing Officer did not use the material available with him to take the matter to the logical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... long for decades, but it can surely be reason enough to leave a window for appropriate action being taken against the assessee, if so warranted- and that is exactly what the Assessing Officer has done. The stand of the Assessing Officer is, in our humble understanding, quite apt and bonafide. It cannot be faulted. 37. As we have seen above, one of the allegations that the learned Commissioner has made is against the Assessing Officer's "not using the material available with him to take the matter to the logical conclusion," and it is also observed by the learned Commissioner that "this note itself makes the order of Assessing Officer on this issue erroneous and prejudicial to the interests of the assessee." What is being done now is to send the matter back to the Assessing Officer for examination de novo so as to inquire into the allegations so made by Cyrus Mistry. What this approach overlooks is that it is only elementary that what can not be done directly cannot be done indirectly either. If receipt of some inputs at the last minute from a third party cannot result in an extension of time for completion of assessment under section 143(3) directly, it cannot be done by way of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer was not in a position, in the course of completion of the scrutiny assessment proceedings, to examine the correctness or otherwise of the contents of this material received from Cyrus Mistry. That, however, cannot be the end of the matter. It is open to the Assessing Officer to examine the material so coming into his possession and take action, for example, under section 147 in the event of his coming to the conclusion that income has escaped assessment. There are several other consequences, as prescribed under the Act, that investigation into material received from third party, i.e. other than the assessee, can ensue, but such consequences do include the extended time for completion of a scrutiny assessment. However, in effect, that is precisely what is being sought to be done as a result of the scrutiny assessment order being subjected to revision proceedings on this count. We cannot approve of this approach. 41. That brings us to the core question that the learned Commissioner has raised apprehensions about, whether any direct or indirect benefit as stated in section 13(l)(c) is being taken by the connected persons as referred in section 13(3). However, as we do so, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, a member of the family; (cc) any trustee of the trust or manager (by whatever name called) of the institution; (d) any relative of any such author, founder, person, member, trustee or manager as aforesaid; (e)any concern in which any of the persons referred to in clauses (a), (b), (c), (cc) and (d) has a substantial interest. Explanation 3 to Section 13 further adds that for the purposes of this section, "a person shall be deemed to have a substantial interest in a concern, (i) in a case where the concern is a company, if its shares (not being shares entitled to a fixed rate of dividend whether with or without a further right to participate in profits) carrying not less than twenty per cent of the voting power are, at any time during the previous year, owned beneficially by such person or partly by such person and partly by one or more of the other persons referred to in sub-section (3)......". What follows is that when one or more of the specified persons hold more than 20% equity shares, carrying not less than 20% voting powers, in a company in which the trust has made investments, such an investment can be treated, to be an application of trust funds for the benefit of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ord, as it states that "As far as the violation of clause (h) of section 13(2) is concerned we find that the author of the assessee trust and its relative definitely have a substantial interest in the Tata Sons Ltd, therefore, the investment in the shares of Tata Sons Ltd is a clear violation of clause (h) of section 13(2)". No basis of this observation, or relevance of the same to the present fact situation, is evident from the material on record. We see no relevance of this observation in the present context. We are thus unable to find anything in support of the contention that any direct or indirect benefit under section 13(1)(c) read with Section 13(2)(h) was obtained by the specified persons under section 13(3), or that lack of reasonable inquiries in this regard would render the subject assessment order erroneous and prejudicial to the interests of the revenue. When none of the specified persons under section 13(3) are stated to have any substantial interest in Tata Sons Ltd, and when there is nothing on record to even suggest incorrectness of this averment of the assessee, the question of direct or indirect benefit under section 13(1)(c) read with section 13(2)(h) does not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Group, for the benefit of the general public at large. The investments made by a charitable institution in furtherance of its objects, and the investments being held by a charitable institution, as its core corpus, for the furtherance of its objects are qualitatively very different. 45. In any case, once we hold that the shareholdings in Tata Sons Limited is in the nature of corpus, and as such, covered by the proviso to Section 13(1)(d), as we have indeed held in paragraphs 22 to 32 earlier in this order, it cannot be open to hold that the exemption will be forfeited by Section 13(2)(h). The CBDT, after a detailed examination of that aspect of the matter, has come to the conclusion that these shares were held as the corpus, which was a precondition for the issuance of notification under section 10(23C), and notified the assessee trust under section 10(23C) as such. The material facts remain exactly the same as these were at that point in time, and there is, thus, no occasion to revisit those factual findings. The application of Section 13(2)(h), in such a situation, is wholly academic. It is so for the reason that, as held by Hon'ble Bombay High Court in the case of CIT Vs Trust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese rights are exercised, and there are no legal restrictions to the rights that the assessee trust can have like any other shareholder in the company in which investments are made. There is no question of the assessee trust not exercising its rights as a shareholder in any manner less than an ordinary shareholder, as the position of the assessee trust, as a shareholder, is the same as that of any other shareholder. It is the duty of the assessee trust to protect the assets held by the assessee trust in a fair and reasonable and lawful manner. 48. As we have noted, the business model of ownership of Tata Sons Ltd, a holding company having investments in the group companies, is somewhat unique in the sense that majority shareholding in this holding company is collectively in the hands of various charitable institutions, including the assessee before us, and the articles of association of Tata Sons Ltd has, in recognition of this ownership model, granted certain rights to these charitable institutions on a collective basis- as long as these charitable institutions collectively hold not less than 40% of the shareholdings in Tata Sons. It is important to bear in mind the fact that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd is a property of the assessee trust- a proposition blatantly erroneous in law and in concept. What has been paid to the persons holding office as trustees, though in consideration for other roles played by them such as former directors and employees, has nothing to do with the determination of benefits to the trustees. The pension payments to Ratan N Tata and N A Soonawala, for example, have been held to be wholly and exclusively for the purposes of the business of Tata Sons Ltd (ITA No. 4630/Mum/16), and, therefore, the stand that these payments amounted to benefit to the trustees is ex facie incorrect. 50. In any case, as we have noted earlier, all these aspects were duly examined at the assessment stage, and the defects that the learned Commissioner has pointed out in the said examination during the assessment proceedings, for the detailed reasons we have set out earlier, cannot meet our judicial approval. 51. We are, therefore, of the considered view that learned Commissioner was not justified in subjecting the assessment order to revision proceedings on the ground that the Assessing Officer did not examine the matter regarding assessee's control over Tata Sons Ltd, and w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uspicion that some of the interest income may be from sources that are not qualified for exemption under section 11, and, for that reason, the verification about sources of interest income is required to be done extensively. Once all these details were on record, and there is not even a suggestion that any part of interest income is not qualified for exemption under section 11, we are unable to uphold the stand of the learned Commissioner that the subject assessment order was erroneous and prejudicial to the interest of the revenue for want of verifications of interest income sources. We disapprove of the action of the learned Commissioner on this point as well. 54. Learned Commissioner has also noted that even though the income from dividend was treated as exempt under section 10(34), the Assessing Officer should have nevertheless examined whether the entire income of the assessee trust was applied for the purposes of the assessee trust. 55. The observations so made by the learned Commissioner show that he has not even applied his mind to the undisputed facts of the case. If he had cared to look at paragraph 8 of the subject assessment order, he would have noticed that the Asses ..... 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