2015 (4) TMI 105 - HC - Income Tax

Revision u/s 263 - disallowance if the deduction under section 80IB(10) - The Tribunal has concluded that the assessee had offered an explanation that the plan was approved by the Pune Municipal Corporation on the condition of making available an approach road - Held that - In the circumstances and with this stand that the assessee was supported by the Tribunal's order, then, we do not see as to how the Commissioner could have exercised powers under section 263 of the I.T. Act. It was not open to the Commissioner then to have taken into consideration the same documents and to arrive at a different conclusion. The Tribunal has explained in the impugned order that as to how the issue raised before the Commissioner and prior thereto before the assessing officer is debatable. If there was a view on the issue taken by the Tribunal itself, then, the Commissioner cannot invoke powers under section 263 of the I.T. Act only to record a different view. Thus such finding of the Tribunal and being consistent is not required to be gone into under section 260A of the I.T. Act as it is clear that the orders of the assessing officer and the Commissioner, do not raise any substantial question of law. The Tribunal has applied its mind to the entire issue and found that the assessee had placed necessary and requisite material before the assessing officer. The assessing officer took a view on the basis of these material and that view cannot be questioned in an exercise under section 263 of the I.T. Act only because the Commissioner does not agree with the same. We are of the opinion that neither is there any perversity in the order of the Tribunal on this issue nor its conclusion can said to be vitiated by any error of law apparent on the face of the record - Decided in favour of assessee.

Summary

Issues:
Challenge to order by Revenue under section 263 of the Income Tax Act regarding deduction claimed under section 80IB(10) - Whether Commissioner's order erroneous and prejudicial to revenue's interest - Tribunal's decision to set aside Commissioner's order - Interpretation of law and application of mind by assessing officer - Possibility of two views under section 263 - Substantial question of law raised in appeal.

Analysis:
The High Court of Bombay heard an appeal by the Revenue challenging the order of the Income Tax Appellate Tribunal Bench at Pune regarding the deduction claimed under section 80IB(10) of the Income Tax Act for the assessment year 2004-05. The Commissioner of Income Tax-II, Pune found the assessing officer's order erroneous and prejudicial to the revenue's interest, leading to the order under section 263 of the Act. The assessing officer disallowed the deduction, resulting in an appeal by the assessee, which was allowed. The Revenue contended that the Tribunal erred in setting aside the Commissioner's order, emphasizing the Commissioner's findings regarding the incorrect application of law by the assessing officer. On the contrary, the respondent argued that if two views are possible, an order under section 263 cannot be sustained, citing a Supreme Court decision. The High Court reviewed the Commissioner's order, Tribunal's decision, relevant judgments, and section 263 of the Act.

The Tribunal concluded that the assessing officer had verified the claim of the assessee before allowing deductions, including a personal site visit, and the Commissioner's order was not based on misapplication of law or lack of application of mind. The Tribunal found the assessee's explanation regarding the approved plan by the Pune Municipal Corporation and the acquisition of land for the approach road satisfactory. The High Court noted that the Tribunal's view was supported by prior decisions, making the issue debatable. It emphasized that the Commissioner cannot invoke section 263 to arrive at a different conclusion when there is a debatable issue with a view taken by the Tribunal. The High Court found that the Tribunal's conclusion did not raise a substantial question of law and dismissed the appeal, stating that the assessing officer's and Commissioner's orders were based on necessary material, and the Tribunal's decision was not erroneous or vitiated by any legal error.

In conclusion, the High Court upheld the Tribunal's decision, emphasizing that the Commissioner could not invoke section 263 to change a debatable issue's view already taken by the Tribunal. The Court found no substantial question of law raised in the appeal and dismissed it, stating that the Tribunal's decision was well-founded and not legally flawed.