2011 (9) TMI 1062 - AT - Income Tax

Summary

Issues Involved:
The appeal challenges the order passed by the ld. CIT-I, Chandigarh u/s 263 of the Income-tax Act, 1961.

Grounds of Appeal:
1. The ld. CIT-I, Chandigarh erred in invoking jurisdiction u/s 263 for Assessment Year 2005-06.
2. The ld. CIT wrongly adjudicated that deductions u/s 80IB and 80IC are not allowable.
3. The ld. CIT's order was framed on conjectures and surmises.

Facts of the Case:
The assessee-company converted two partnership firms into a public limited company and claimed deductions u/s 80IB and 80IC. The AO raised queries during scrutiny, and the ld. CIT-I, Chandigarh issued a notice u/s 263, setting aside the assessment order.

Contentions:
- The ld. AR argued that the case does not fall under section 263 as the AO had duly considered the eligibility u/s 80IB/80IC.
- The ld. DR supported the ld. CIT's action u/s 263, citing legal provisions and case laws.

Judgment:
The Tribunal held that the AO had considered and adjudicated the issue, taking a legally permissible view. The ld. CIT cannot substitute his opinion under section 263. Deductions u/s 80IB/80IC are available to the undertaking, not the assessee. The provisions of section 80IA(12) were found inapplicable. The decision in Malabar Industrial Co. v. CIT supported the assessee's case. The Tribunal quashed the order u/s 263, ruling in favor of the assessee.

Conclusion:
The Tribunal allowed the appeal, stating that the case did not fall under section 263 of the Act. The impugned order was quashed.