2009 (1) TMI 927 - AT - Income Tax

Summary

Issues Involved:
1. Validity of the Order u/s 263 of the Income Tax Act, 1961
2. Condonation of Delay in Filing the Appeal
3. Computation of Deduction u/s 80HHC vis-à-vis Deduction u/s 80-IB

Summary:

1. Validity of the Order u/s 263 of the Income Tax Act, 1961:
The assessee challenged the order passed u/s 263 by the CIT, arguing that it was "bad in law beyond jurisdiction and void ab initio." The CIT had directed the assessing officer to compute the deduction u/s 80HHC by reducing the profit by the deduction already allowed u/s 80-IB. The Tribunal noted that in the assessee's own case for the assessment year 2001-02, a similar order u/s 263 was canceled by the Tribunal, holding that the view taken by the assessing officer was a possible view and the issue was debatable, thus outside the purview of Section 263.

2. Condonation of Delay in Filing the Appeal:
The appeal was filed with a delay of 322 days. The assessee submitted that the delay was due to a bona fide belief that the matter would be reconsidered by the assessing officer as per the CIT's directions. Upon realizing the necessity of filing an appeal, the assessee promptly did so. The Tribunal condoned the delay, acknowledging that it was due to a bona fide belief and not due to negligence or inaction.

3. Computation of Deduction u/s 80HHC vis-à-vis Deduction u/s 80-IB:
The Tribunal examined whether the assessing officer's order allowing deduction u/s 80HHC without reducing the profit by the deduction allowed u/s 80-IB was erroneous and prejudicial to the interest of the revenue. It was noted that there were conflicting decisions on this issue at the time the assessing officer passed the order. The Tribunal referenced several decisions favoring the assessee, including the Hon'ble Madras High Court's decision in SCM Creations v. Asstt. CIT. The Tribunal concluded that the assessing officer's view was a possible view and thus, the CIT's order u/s 263 was not justified. The Tribunal set aside the CIT's order and restored the assessing officer's order.

Conclusion:
The Tribunal allowed the appeal filed by the assessee, setting aside the CIT's order u/s 263 and restoring the assessing officer's order on the issue involved.