2013 (7) TMI 940 - AT - Income Tax

Summary

Issues Involved:
1. Jurisdiction u/s 263 of the IT Act.
2. Merits of the submissions in response to the Show Cause Notice u/s 263.
3. Justification of the CIT in canceling the assessment order and directing a fresh assessment.

Summary:

Issue 1: Jurisdiction u/s 263 of the IT Act
The Assessee challenged the jurisdiction invoked by the CIT u/s 263, arguing that the original assessment framed by the Assessing Officer (AO) for AY 2008-09 was neither "erroneous nor prejudicial to the interests of the revenue." The Tribunal noted that the CIT has the power to revise an order if it is both erroneous and prejudicial to the interests of the Revenue. However, the Tribunal found that the CIT did not adequately address the decisions relied upon by the Assessee, which is a necessary step in exercising jurisdiction u/s 263.

Issue 2: Merits of the submissions in response to the Show Cause Notice u/s 263
The Assessee contended that the CIT failed to appreciate the merits of the submissions filed in response to the Show Cause Notice. The Tribunal observed that the AO had made various inquiries and had duly applied his mind to the evidences placed before him, concluding that the Assessee was entitled to the deduction u/s 80IB(8A). The Tribunal found that the CIT's assertion that the AO accepted the Assessee's contention without proper inquiries was unfounded, as the AO had indeed made several queries and received detailed responses.

Issue 3: Justification of the CIT in canceling the assessment order and directing a fresh assessment
The CIT canceled the assessment order dated 31/12/2010 and directed the AO to make a fresh assessment, citing that there was no evidence on record to show that the condition relating to the transfer of technology developed had been fulfilled. The Tribunal found this approach to be unjustified, noting that the CIT did not ask the Assessee for a copy of the said Annexure-2, which could have been easily presented. The Tribunal also noted that there is no statutory requirement for the technology developed to be granted a patent for availing the deduction u/s 80IB(8A). The Tribunal concluded that the CIT should have given the Assessee an opportunity to produce the requisite details before setting aside the order.

Conclusion:
The Tribunal set aside the order of the CIT and restored the issue back to the file of the CIT to decide afresh after affording sufficient opportunity to the Assessee to furnish the requisite details. The appeal of the Assessee was allowed for statistical purposes.