2014 (7) TMI 1199 - HC - Income Tax

Deduction under Section 80-IA - revision u/s 263 - Whether the Tribunal was correct in holding that the order of assessment computing deduction under Section 80-IA of the Act was neither erroneous nor prejudicial to the interest of the Revenue as percentage of expenditure adopted by the assessee from Bhuvaneshwar unit and Bangalore unit was permissible? - Held that - Assessing Authority has taken into consideration all the details mentioned in the computation statement which is taken from the books of account maintained by the assessee and has recorded the finding. The Commissioner proceeds on the basis that the figures found in the calculation statement has no basis ignoring that these figures are taken from the books of account. In that view of the matter, the Tribunal was justified in setting aside the order passed by the Commissioner and restoring the order of the Assessing Authority. - Decided in favour of the assessee

Summary

Issues:
1. Appeal challenging Tribunal's order under Section 263 of the Income Tax Act.
2. Correctness of assessment order under Sections 80-IA and 80HHC.
3. Tribunal's decision on the assessment order.
4. Substantial question of law regarding deduction under Section 80-IA.

Analysis:

1. The Revenue appealed under Section 260A of the Income Tax Act against the Tribunal's decision setting aside the Commissioner's order under Section 263. The Commissioner initiated revisionary proceedings due to differential treatment of expenses in the assessment without proper enquiry. The Tribunal found fault with the Commissioner's order, stating the assessment was not erroneous or prejudicial to the Revenue's interest, and restored the original assessment order.

2. The Assessing Officer restricted the benefit of Sections 80-IA and 80HHC in the assessment order. The Commissioner, under Section 263, found certain expenses prorated unevenly and set aside the assessment for reexamination. The Tribunal disagreed, noting that all relevant expenses were apportioned correctly in the computation statement, and the claim under Section 80-IA was accurate. Consequently, the Tribunal set aside the Commissioner's order and reinstated the assessment.

3. The Tribunal's decision was based on a thorough review of the materials, concluding that the Assessing Officer had considered all details from the computation statement. The Tribunal found the Commissioner's order unjustified as it disregarded that the figures were from the assessee's maintained books of account. Therefore, the Tribunal rightfully set aside the Commissioner's order and upheld the original assessment order.

4. The substantial question of law revolved around whether the Tribunal correctly determined that the assessment order under Section 80-IA was not erroneous or prejudicial to the Revenue's interest. The Court, after hearing both parties, agreed with the Tribunal's decision, emphasizing that the figures in the calculation statement were based on the assessee's books of account. Consequently, the Court ruled in favor of the assessee, dismissing the appeal brought by the Revenue.