2012 (7) TMI 977 - AT - Income Tax

Revision u/s 263 - Held that - The powers under section 263 clearly cannot be invoked on the facts of this case to simply safeguard the interests of the revenue. This power can only be exercised when order sought to be revised is erroneous and prejudicial to the interest of the revenue, and an order cannot be treated as erroneous as long as the Assessing Officer has taken a possible view of the matter even though, according to the Commissioner, the view so taken is not the correct view of the matter. Bearing in mind all these factors, as also entirety of the case, we find the impugned revision order unsustainable in law, and we, therefore, cancel the same. The assessee gets the relief accordingly.

Summary

Issues:
Challenge to correctness of Commissioner's order under section 263 r.w.s. 143(3) for the assessment year 2008-09 regarding unabsorbed depreciation set off.

Analysis:

Issue 1: Correctness of Commissioner's order under section 263
The appeal challenged the correctness of the Commissioner's order dated 6th March, 2012, under section 263 r.w.s. 143(3) of the Income Tax Act, 1961, for the assessment year 2008-09. The dispute centered around the set off of unabsorbed depreciation against income beyond the specified assessment years. The Commissioner initiated proceedings under section 263 based on the amended provisions of the law, which restricted the set off of unabsorbed depreciation for certain assessment years. The Commissioner disregarded the judicial decisions supporting the assessee's position, citing the binding nature of the amendment. However, the Tribunal noted that the view accepted in the original assessment proceedings aligned with the decision of the Hon'ble Karnataka High Court, making it a reasonable and correct interpretation of the law.

Issue 2: Invocation of powers under section 263
The Tribunal emphasized that the powers under section 263 could only be invoked if the order sought to be revised was erroneous and prejudicial to the revenue's interest. It was clarified that an order could not be deemed erroneous as long as the Assessing Officer had taken a possible view of the matter, even if it differed from the Commissioner's interpretation. In this case, since the Assessing Officer's view aligned with the judicial decisions and was a plausible interpretation of the law, the Tribunal found the revision order unsustainable in law. The Tribunal concluded that the Commissioner's order did not meet the criteria for invoking section 263 and therefore canceled the revision order, granting relief to the assessee.

In conclusion, the Appellate Tribunal held in favor of the assessee, allowing the appeal and canceling the Commissioner's order under section 263. The Tribunal emphasized the importance of a reasonable interpretation of the law and the need for an order to be truly erroneous and prejudicial to the revenue's interest for the invocation of powers under section 263. The decision highlighted the significance of judicial precedents in determining the correctness of tax assessments and underscored the Assessing Officer's authority to adopt a valid view even if it differed from the Commissioner's interpretation.