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2016 (6) TMI 23 - AT - Income TaxRevision u/s 263 - Eligibility for deduction u/s 80IA - Held that - The Ld. AR has drawn our attention to various pages in the paper book which support the assessee s claims that the A.O., during the assessment proceedings u/s 143(3) of the Act, had made extensive enquiries about the assessee s claim of deduction u/s 80IA. A copy of the reply furnished by the assessee to the A.O in this regard is found to be placed in pages 46 to 51 of the Paper Book. A perusal of the assessment order also shows that on Page 2, the A.O has specifically allowed the claim of deduction u/s 80IA after reducing it by ₹ 6,03,245/- on account of other income not being eligible for the claim of deduction. Therefore, it will be wrong to infer that there has been no application of mind by the A.O while considering the claim of the assessee although he might not have expressed it in terms of a lengthy discussion on the issue In the instant appeal before us, the AO has conducted an enquiry. He has given a consideration to the claim of the assessee also as is evident from the disallowance made by him on account of other income. However, he has not launched a lengthy discussion on the issue of deduction but that does not lead to an inference that there has been a lack of enquiry on his part on the issue. It is clear that an order cannot be termed as erroneous unless it is not in accordance with law. If an AO, acting in accordance with law, makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately. This section does not visualize a case of substitution of the judgment of the Commissioner for that of the AO. Therefore, it cannot be held that in the instant case the AO s order was erroneous and prejudicial to the interest of the revenue within the terms of section 263 of the Act. The impugned action of the Ld. CIT u/s 263 of the Act was patently illegal and liable to be quashed. - Decided in favour of assessee.
Issues Involved:
1. Jurisdiction of the Commissioner of Income Tax (CIT) under Section 263 of the Income-tax Act, 1961. 2. Validity of the assessee's claim for deduction under Section 80IA(4) of the Income-tax Act, 1961. 3. Whether the Assessing Officer (AO) conducted adequate inquiry into the assessee's claim for deduction. Issue-wise Detailed Analysis: 1. Jurisdiction of the Commissioner of Income Tax (CIT) under Section 263 of the Income-tax Act, 1961: The primary issue was whether the CIT had the jurisdiction to invoke Section 263 of the Act, which allows revision of an assessment order if it is deemed erroneous and prejudicial to the interests of the revenue. The assessee argued that the CIT's order was devoid of jurisdiction as no error prejudicial to the interest of revenue had been established. The CIT had set aside the assessment order on the grounds that the AO failed to apply his mind and conduct necessary inquiries. However, the tribunal referred to various judicial precedents, including the Hon’ble Delhi High Court's rulings in CIT vs. Sunbeam Auto Ltd and ITO vs. DG Housing Projects Ltd., which clarified that an order could not be termed erroneous unless it was not in accordance with the law. The tribunal concluded that the AO had indeed conducted inquiries and applied his mind, even if the assessment order did not elaborate on the issue in detail. Thus, the CIT's invocation of Section 263 was deemed inappropriate. 2. Validity of the Assessee's Claim for Deduction under Section 80IA(4) of the Income-tax Act, 1961: The assessee claimed a deduction under Section 80IA(4) for developing, operating, and maintaining an infrastructure facility for bio-medical waste treatment, which it argued fell under solid waste management. The AO had allowed the deduction after reducing it by ?6,03,245/- for other income deemed ineligible. The CIT, however, contended that the AO had not conducted proper inquiries into the eligibility of the deduction. The tribunal found that the assessee had provided detailed justifications and documentary evidence to support its claim, which the AO had considered. The tribunal also noted that bio-medical waste management is included in solid waste management, as supported by the World Bank publication and previous judicial rulings. Therefore, the tribunal upheld the validity of the assessee's claim for deduction under Section 80IA(4). 3. Whether the Assessing Officer (AO) Conducted Adequate Inquiry into the Assessee's Claim for Deduction: The CIT's order suggested that the AO had not conducted adequate inquiries into the assessee's claim for deduction. However, the tribunal found that the AO had indeed made inquiries and considered the assessee's explanations and documentary evidence. The tribunal referred to the Hon’ble Delhi High Court's ruling in CIT vs. Sunbeam Auto Ltd, which distinguished between "lack of inquiry" and "inadequate inquiry." The tribunal concluded that even if the AO's inquiry was not exhaustive, it was not entirely absent. The tribunal emphasized that an order could not be deemed erroneous merely because the AO did not provide a detailed discussion on the issue. Therefore, the tribunal held that the AO had conducted adequate inquiry, and the CIT's order to set aside the assessment was unwarranted. Conclusion: The tribunal quashed the CIT's order under Section 263, deeming it patently illegal and without jurisdiction. The tribunal upheld the validity of the assessee's claim for deduction under Section 80IA(4) and concluded that the AO had conducted adequate inquiry into the claim. The appeal of the assessee was allowed.
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