2013 (10) TMI 1552 - AT - Income Tax

Summary

Issues involved: Appeal against order of CIT-10, Mumbai u/s 263 of the Income Tax Act, 1961.

Summary:
The Appellate Tribunal ITAT Mumbai heard an appeal by the assessee against the order of CIT-10, Mumbai u/s 263 of the Income Tax Act. The assessee contended that the assessment order was not erroneous or prejudicial to the revenue's interest. The CIT set aside the assessment order u/s 143(3) and directed a fresh assessment regarding the treatment of short term capital gains as business income. The assessee argued that the income from sale of shares should be considered as capital gains, not business income. The Tribunal analyzed the case in light of the legal provisions and previous court decisions.

The Tribunal observed that for the CIT to exercise jurisdiction u/s 263, the AO's order must be both erroneous and prejudicial to revenue's interests. The AO had conducted necessary enquiries and accepted the assessee's explanation regarding capital gains. The Tribunal emphasized that the CIT cannot impose his view on the AO's decision merely to increase tax revenue. Referring to the decision in Malabar Industrial Co. Ltd. Vs. CIT, the Tribunal concluded that the AO's decision, even if one of the possible views, was permissible in law. Therefore, the Tribunal set aside the CIT's order and upheld the AO's assessment.

In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing that the CIT's order u/s 263 was not justified based on the facts and legal principles involved.