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2013 (10) TMI 830 - AT - Income TaxRevision u/s 263 Held that - The assessing officer did not examine about the applicability of provisions of sec. 80P (4) of the Act to the assessee Following Grasim Industries Ltd. V CIT 2010 (2) TMI 4 - BOMBAY HIGH COURT - Section 263 of the Income-tax Act, 1961 empowers the Commissioner to call for and examine the record of any proceedings under the Act and, if he considers that any order passed therein, by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, to pass an order upon hearing the assessee and after an enquiry as is necessary, enhancing or modifying the assessment or canceling the assessment and directing a fresh assessment - The key words that are used by section 263 are that the order must be considered by the Commissioner to be erroneous in so far as it is prejudicial to the interests of the Revenue - the Ld CIT was justified in passing the impugned revision orders by invoking the provisions of sec. 263 of the Act. Deduction u/s 80P Held that - The Ld CIT has directed the AO to withdraw deduction granted u/s 80P of the Act - Hence the AO will not have any other option but to comply with his direction - the order of Ld CIT modified and the AO was directed to examine independently about the applicability of sec. 80P(4) of the Act to the facts of the instant case untrammeled by the observations of Ld CIT and take appropriate decision in accordance with law, after affording necessary opportunity of hearing to the assessee Decided Partly in favour of Assessee.
Issues:
Challenge to revision order u/s. 263 of the Act regarding deduction under sec. 80P for assessment year 2008-09. Analysis: 1. Background and Facts: The appeal challenges the revision order passed by the Ld. CIT under sec. 263 of the Act related to the assessment year 2008-09. The assessee, a cooperative bank engaged in banking, trading, and running a shop, had claimed deduction u/s. 80P except for interest income from Treasury deposits. 2. Revision Proceedings Initiation: The Ld. CIT initiated revision proceedings after observing that the activities of the assessee resembled those of a cooperative bank, making it ineligible for sec. 80P deduction under sub-sec (4) of sec. 80P. The Ld. CIT found the deduction allowed by the AO to be incorrect and directed for revision of the assessment order. 3. Contentions and Legal Precedents: The assessee argued that the AO had examined and allowed the deduction after due consideration, citing the decision of the Supreme Court in CIT v. Max India Ltd. The DR countered, stating the AO did not assess the applicability of sec. 80P(4), justifying the revision proceedings by the Ld. CIT. 4. Judicial Interpretation and Application: The ITAT referred to the Bombay High Court's decision in Grasim Industries Ltd. v CIT, emphasizing that sec. 263 applies when the AO's order is erroneous and prejudicial to revenue. The Delhi High Court's ruling in Toyoto Motor Corporation highlighted the necessity of reasoned orders in quasi-judicial proceedings. 5. Decision and Modification: The ITAT found the AO's failure to consider sec. 80P(4) made the assessment order erroneous and prejudicial to revenue, justifying the Ld. CIT's revision order. However, to ensure an independent review, the ITAT directed the AO to reevaluate the applicability of sec. 80P(4) without influence from the Ld. CIT's observations. 6. Conclusion: The appeal was partly allowed, modifying the Ld. CIT's order to enable an unbiased assessment by the AO. The judgment emphasized the importance of reasoned decisions in tax matters and upheld the principles of fair assessment procedures. This detailed analysis covers the issues, arguments, legal interpretations, and the final decision rendered by the ITAT in response to the challenge against the revision order under sec. 263 of the Act.
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