2008 (3) TMI 504 - AT - Income Tax

Summary

Issues involved:
The appeal challenges the treatment of the order passed by the Assessing Officer u/s 143(3) as erroneous and prejudicial to the interest of the Revenue, specifically regarding the withdrawal of set off for unabsorbed depreciation against business income.

Details of the Judgment:

Issue 1: Treatment of order under section 143(3) as erroneous and prejudicial to Revenue
The CIT observed that the Assessing Officer allowed deduction under section 80-IA for both eligible and ineligible units, resulting in an incorrect total income calculation. The CIT revised the order, directing assessment of income at a different amount. The Appellate Tribunal noted that the CIT invoked section 263 of the IT Act based on differing views on the treatment of unabsorbed depreciation set off against profit. The Tribunal emphasized that the Commissioner can only revise an order if it is both erroneous and prejudicial to Revenue. It clarified that mere difference of opinion between the CIT and Assessing Officer does not render the original order erroneous. The Tribunal held that the Assessing Officer's order, made after due examination and consideration of relevant provisions, cannot be deemed erroneous solely due to differing interpretations. Therefore, the Tribunal quashed the CIT's order as not sustainable in law.

Conclusion:
The appeal of the assessee was allowed by the Appellate Tribunal, emphasizing the importance of meeting the dual criteria of error and prejudice to Revenue for invoking section 263 of the IT Act.