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2015 (6) TMI 606 - AT - Income TaxRevision u/s 263 - CIT(A) cancelled the registration granted to the assessee u/s 12A - Held that - AO granted relief u/s. 11 to 13 of the Act to the assessee in ITNS 150 because registration u/s. 12AA was restored in favour of the assessee by the Tribunal and the capital expenditure and benefit u/s. 11 were allowed to the assessee. These deductions are allowable when the registration is effective in favour of the assessee and have also been granted originally in favour of the assessee. Therefore, the AO is bound to follow the decision of superior authorities. Merely because the AO has followed the order of superior authorities, would not give rise to occasion to treat ITNS 150 as erroneous and prejudicial to the interest of Revenue. The order u/s. 263 thus could not be sustained. The ld. Counsel for the assessee also relied upon the decision of the Supreme Court in the case of S.RM.M.CT.M Tiruppani Trust vs. CIT, 1998 (2) TMI 3 - SUPREME Court , in which it was held that capital expenses to be allowed as deduction. Thus we are of the view that the AO has correctly gave appeal effect in favour of the assessee u/s. 11 to 13 because the assessee got registration u/s. 12AA of the IT Act as per directions of the Tribunal. Therefore, there is no error in ITNS 150 to be revised u/s. 263 of the IT Act. Thus, the ld.CIT has acted without jurisdiction in the matter. We accordingly set aside the impugned order u/s. 263 for all the assessment years under appeals and quash the same. - Decided in favour of assessee.
Issues Involved:
1. Validity of the notice issued under Section 263 of the IT Act. 2. Examination of compliance with Sections 11 and 13 of the IT Act. 3. Whether ITNS 150 is an order that can be revised under Section 263. 4. Whether the order dated 01.12.2011 is erroneous and prejudicial to the interests of revenue. 5. Application of the doctrine of merger. 6. Limitation for passing a revisionary order under Section 263. Issue-wise Analysis: 1. Validity of the Notice Issued Under Section 263 of the IT Act: The Commissioner of Income Tax (CIT) issued a notice under Section 263 of the IT Act, proposing to revise the orders passed by the Assessing Officer (AO) for the assessment years 2001-02 to 2005-06. The assessee challenged the notice, arguing that the orders sought to be revised had not been served upon them. Initially, the proceedings were dropped due to non-service of orders, but were later re-initiated once the orders were served. The Tribunal found that the CIT had addressed the objection regarding non-service of orders and thus, the notice under Section 263 was valid. 2. Examination of Compliance with Sections 11 and 13 of the IT Act: The CIT argued that the AO, while revising the demands, did not examine whether the assessee had complied with the provisions of Sections 11 and 13 of the IT Act, which rendered the orders erroneous and prejudicial to the interest of revenue. The Tribunal noted that the AO had already examined the applicability of Sections 11 to 13 in the original assessment order and granted relief to the assessee based on the valid registration under Section 12A. Therefore, the AO's subsequent actions were in compliance with the provisions of Sections 11 and 13. 3. Whether ITNS 150 is an Order That Can Be Revised Under Section 263: The Tribunal considered whether ITNS 150, a form used for determining tax payable, constitutes an order that can be revised under Section 263. The Tribunal referred to the Supreme Court's decision in Kalyankumar Ray vs. CIT, which held that ITNS 150 is an order in writing determining the tax payable within the meaning of Section 143(3). Therefore, ITNS 150 can be considered an order and is subject to revision under Section 263. 4. Whether the Order Dated 01.12.2011 is Erroneous and Prejudicial to the Interests of Revenue: The Tribunal examined whether the AO's order dated 01.12.2011, which gave appeal effect to the Tribunal's order restoring the registration under Section 12AA, was erroneous and prejudicial to the interests of revenue. The Tribunal found that the AO had followed the directions of the Tribunal and granted relief based on the valid registration under Section 12A. The AO had already examined the applicability of Sections 11 to 13 in the original assessment order. Therefore, the order dated 01.12.2011 was neither erroneous nor prejudicial to the interests of revenue. 5. Application of the Doctrine of Merger: The Tribunal considered the doctrine of merger, which states that the assessment order merges with the appellate order. The Tribunal found that the original orders, including the order dated 28.12.2010, stood merged with the appellate order dated 21.11.2013. Since the issue of exemption under Sections 11 to 13 was already decided in the appellate order, it could not be subject to revision under Section 263. 6. Limitation for Passing a Revisionary Order Under Section 263: The Tribunal noted that the original assessment orders were passed on 28.12.2010, and the revisionary order under Section 263 was passed on 25.03.2014. The Tribunal referred to the decision in Bharti Airtel Ltd., which held that the limitation for passing a revisionary order begins from the date of the original order. Since the revisionary order was passed beyond the period of limitation, it was barred by time. Conclusion: The Tribunal concluded that the AO had correctly given appeal effect in favor of the assessee under Sections 11 to 13, as the assessee had a valid registration under Section 12AA. The order dated 01.12.2011 was not erroneous or prejudicial to the interests of revenue. The doctrine of merger applied, and the revisionary order under Section 263 was barred by limitation. Therefore, the Tribunal set aside and quashed the impugned order under Section 263 dated 25.03.2014 for all the assessment years under appeal. The appeals of the assessee were allowed.
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