TMI Blog2021 (10) TMI 1056X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Thus we hold that resorting to revisionary jurisdiction u/s.263 of the Act by the Ld. Pr. Commissioner of Income Tax in this case is not valid in law and hence, we quash the impugned order of the Ld. Pr. Commissioner of Income Tax. - Assessee appeal allowed. - ITA No. 216/PUN/2021 - - - Dated:- 20-10-2021 - Shri R.S.Syal, Vp And Shri Partha Sarathi Chaudhury, Jm For the Assessee : Shri Nikhil Mutha For the Revenue : Shri Shekhar L. Gajbhiye And Shri A.M Mahadevan Krishnan ORDER PER PARTHA SARATHI CHAUDHURY, JM: This appeal preferred by the assessee emanates from the order of the Ld. Pr. Commissioner of Income Tax, Pune-3 dated 31.03.2021 for the assessment year 2014-15 as per the grounds of appeal on record. 2. That going by the grounds of appeal in the appeal memo, the crux of the grievance of the assessee is with regard to assumption of revisionary jurisdiction u/s.263 of the Income Tax Act, 1961 (hereinafter referred to as the Act ) by the Ld. Pr. Commissioner of Income Tax holding that the assessment order is erroneous so as to be prejudicial to the interest of the revenue since the Assessing Officer failed to conduct any enquiry and ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oreign exchange fluctuation loss has been provided by the assessee and therein, it has been explained the net foreign exchange fluctuation loss as per financials at ₹ 82,83,54,234/-. 6. The Ld. Counsel for the assessee also brought to our notice a letter annexed at Pages 125 to 128 of the paper book dated 01.11.2017 written to the Assessing Officer wherein the assessee has explained at Column 4 i.e. Details of other expenses debited to profit and loss account and there also, the assessee has mentioned exchange difference at ₹ 82,83,74,234/-. Thereafter, the assessee GAIPL submitted that it had incurred book loss during the assessment year 2014-15 mainly due to foreign exchange loss of ₹ 82,83,74,234/- which is debited to the profit and loss account. The assessee has also given another letter dated 03.10.2017 to the Assessing Officer wherein it had provided purchase register in respect of raw material, consumable and spares and fuel for the month of May 2013, September 2013 and January, 2014 and the copy of purchase register is enclosed as attachment 1 in the paper book at Pages 101 to 123. 7. Through these details, the Ld. Counsel for the assessee submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is rather progressive vis- -vis the preceding year. In fact the assessee had submitted vide letter dated 16.03.2021 before the Ld. Pr. Commissioner of Income Tax that there was increase in profit (excluding forex loss) vis- -vis increase in turnover. The assessee has explained under tabulated form which is on record as part of the submissions made before the Ld. Pr. Commissioner of Income Tax and from the table it is evident that profits (excluding foreign exchange loss) for the year have increased by 18.35% vis- -vis increase in turnover is meager 4.77%. The Ld. Pr. Commissioner of Income Tax has not specifically dealt with these details filed by the assessee. 11. That at Para 4.2, the Ld. Pr. Commissioner of Income Tax has observed that ₹ 0.847 crores were paid to Viraj Enterprises for contractual labour supply for the whole year for production etc. and that payment of ₹ 3.447 crores was given to Gestamp Global Tooling for technical assistance for tools etc. That further during assessment proceeding, the assessee had declared sub-contracting charges dues to its sister concern of ₹ 1.027 crores. The Ld. Pr. Commissioner of Income Tax stated that the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icial to the interest of the revenue. Availing benefit of this scheme post, the passing of the assessment order cannot be construed as determinative of assessment order amenable to revisionary jurisdiction u/s.263 of the Act. 12.3 In this regard, the Ld. Counsel for the assessee has placed strong reliance on the decision of the Pune Bench of the Tribunal in the case of Nalco Company USA Vs. CIT, ITA No.1217/KOL/2017 for the assessment year 2011-12 dated 05.02.2021 and on the decision in the case of Spectra Shares Scrips (P). Ltd. Vs. Commissioner of Income Tax, (2013) 36 taxmann.com 348 (Andhra Pradesh) . 13. Per contra, the Ld. DR has supported the order of the Ld. Pr. Commissioner of Income Tax and has placed reliance on the decision of the Hon ble Bombay High Court in the case of Vedanta Ltd. Vs. Commissioner of Income Tax (2021) 124 taxmann.com 435 (Bombay) wherein it has been held that where assessment was completed without proper inquiries, Commissioner was competent to invoke revisional jurisdiction and direct Assessing Officer for fresh assessment. We find that this decision is substantially different in facts as compared to the case before us since in the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under consideration. This Explanation states that an assessment order shall be deemed to be erroneous and prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner, the assessment order is deficient on any one or more of the four counts. The words `if, in the opinion of the Principal Commissioner or Commissioner', used in the opening part of the Expl. 2 before referring to four situations as discussed in clauses (a) to (d), do not denote any arbitrary, subjective or unsubstantiated opinion of the CIT. Such an opinion as to the prevalence of one or more of such situations must be objective, logical and tenable in law. If albeit the Pr. CIT or CIT opines about the existence of one of the four clauses, but, on the facts and in the circumstances of the case, the same is non-existent, then the formation of such an opinion cannot be countenanced. To put it differently, the existence of one or more of the four situations discussed in the clauses (a) to (d) is a sine qua non for exercise of the jurisdiction under the Explanation 2. 14. Now, we proceed to examine if the case falls in either of the four clauses of the Explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd tie up the required loan, it sought services of a consultant and thereafter entered into an agreement with ABB - Projects Trade Finance International Ltd., Zurich, Switzerland. The Switzerland company offered its services as Financial Advisor to its project for which it was paid a certain amount as 'Success fee'. The assessee's request for no deduction of tax at source was not accepted. When the matter came up before the Hon'ble Supreme Court, it was held that the Consultancy Services rendered by the Switzerland company were in the nature of 'Fees for Technical services' and the income was to be charged in the country where the source of payment was located. On going through the factual panorama in the case of GVK Industries (supra), we find that it is an absolute mismatch to the Head Quarter service fee received by the assessee under consideration. Thus, clause (d) also fails. 19. Even though the ld. CIT was rightfully entitled to take recourse to the Explanation 2, but thereafter he needed to bring the case with in any one or more of the four clauses given therein. It is palpable that none of the four clauses of the Explanation 2 applies to the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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