9911796707
TMI Blog2021 (12) TMI 758X X X X Extracts X X X X X X X X Extracts X X X X ..... 1/Bang/2016 is an appeal by the Assessee against the order dated 11.3.2016 of CIT, Large Tax Payers Unit (LTU) passed u/s.263 of the Income Tax Act, 1961 (Act) in relation to AY 2009-10. ITA No.878/Bang/2018 is an appeal by the Assessee against order dated 18.12.2017 of CIT(A)-5, Bengaluru, in relation to AY 2009-10. This appeal arises out of the order of assessment passed by the AO pursuant to the order dated 11.3.2016 passed under Section 263 of the Act. 2. The Assessee is primarily engaged in the business of trading, manufacturing and sale of computer hardware and peripheral products. The Assessee filed its return of income on 30 September 2009 for AY 2009-10 declaring a loss from business amounting to Rs. 3,956,399. During the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein an adjustment was made on account of deferred revenue. However, the objection filed by the Assessee was rejected vide letter dated 24 February 2015. Without prejudice, the Assessee vide its submissions dated 25 March 2015 and 27 March 2015, submitted the details for a substantial amount (i.e. Rs. 2,133,727,154 out of Rs. 2,168,900,773) explaining the recognition of revenue in tile subsequent years over the period of contract. In this regard, though it was accepted that the Assessee has been able to demonstrate that it has offered to tax substantial amount out of Rs. 2,168,900,773, however, it was mentioned that there is no concept of deferred revenue under the Income-tax Act and accordingly the order u/s 147 of the Act was passed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .147 of the Act were initiated and a sum of Rs. 216,89,00,773/- was brought to tax as revenue accrued but deferred by the Assessee by an order of assessment u/s.147 of the Act dated 30.3.2015. Thereafter show cause notice dated 22.1.2016 u/s.263 of the Act was issued by the CIT seeking to revise the order dated 31.1.2014 on the ground that a sum of Rs. 216,89,00,773/- was revenue accrued but deferred by the Assessee and not offered to tax and consequently there was loss to the revenue. In fact by virtue of the order dated 30.3.2015 passed u/s.147 of the Act, the deferred revenue was already brought to tax. There was no prejudice or loss to the revenue whatsoever when the show cause notice u/s.263 of the Act, dated 22.1.2016 was issued by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest of the revenue? The Hon'ble Supreme Court in the case of Malabar Industries (supra) held that this phrase i.e. "prejudicial to the interest of the revenue" has to be read in conjunction with an erroneous order passed by the Assessing Officer. The said principal has been reiterated by Hon'ble Court in its subsequent judgment titled as CIT V/s Max India Ltd. (295 ITR 282). The Hon'ble Karnataka High Court in the case of V. G. Krishnamurthy - [1985] 20 Taxman 65 has held that Section 263 can be invoked by the Commissioner only when he prima facie finds that the order made by the ITO was erroneous and was prejudicial to the interests of the revenue.Both these factors must simultaneously exist. An order that is erroneous must also ..... X X X X Extracts X X X X X X X X Extracts X X X X
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