2016 (12) TMI 1492 - AT - Income Tax

Revision u/s 263 - error in the claim of deduction u/s 10B - Held that - We find from the perusal of the said contents of the paper book, that there is absolutely no error in the claim of deduction u/s 10B of the Act made by the ld AO and for the sake of clarity, we would like to state that the assessee had claimed deduction u/s 10B of the Act only to the extent of ₹ 5,12,79,987/- in the return of income which was also duly supported by a Chartered Accountant certified in Form No.56G to that extent. This return was initially processed u/s 143(1) of the Act wherein the ld. AO had granted deduction u/s 10B of the Act for an amount of ₹ 5,12,79,987/-. Later on in the scrutiny proceedings u/s 143(3) AO while examining the claim of deduction u/s 10B went through the entire workings of the assessee and found that the assessee is not entitled for deduction u/s 10B of the Act in respect of certain receipts to the tune of ₹ 86,85,103/- which according to him are not attributable to 100% EOU and accordingly made disallowance u/s 10B of the Act thereon to that extent. While completing the assessment u/s 143(3) of the Act, the ld. AO started the computation of the total income from the assessed income u/s 143(1) of the Act ₹ 16,46,29,551/- and later on proceeded to make regular disallowances in the assessment to that income. Hence it is very clear that the AO had granted deduction only to the extent of ₹ 5,12,79,987/- u/s 10B of the Act. Hence, we are thoroughly convinced that there is no error in the order of the ld. AO warranting revisionary proceedings u/s 263 - Decided in favour of assessee

Summary

Issues:
- Whether the CIT was justified in invoking revisionary jurisdiction u/s 263 of the Income Tax Act in the case.

Analysis:
1. Issue of Revisionary Jurisdiction: The appeal concerned the invocation of revisionary jurisdiction u/s 263 of the Income Tax Act by the CIT. The assessee, a public limited company engaged in manufacturing/trading, claimed deduction u/s 10B of the Act. The CIT initiated revision proceedings based on a perceived discrepancy in the claimed deduction amount. The CIT contended that the assessee had claimed a higher deduction amount than certified by the Chartered Accountant. The assessee argued that the claimed amount was duly supported by the Chartered Accountant and accepted by the AO. The AR presented detailed documents supporting the deduction claim. The Tribunal found no error in the AO's computation of the deduction, confirming that the deduction was correctly granted only to the extent of the claimed amount. The Tribunal concluded that the revisionary proceedings were unwarranted as the AO had thoroughly examined the deduction claim, leading to the allowance of the appeal and quashing the revision proceedings.

2. Assessment Proceedings: The AO initially processed the return u/s 143(1) granting deduction u/s 10B of the Act for the claimed amount. Subsequently, during scrutiny u/s 143(3), the AO disallowed a portion of the deduction not attributable to the Export Oriented Unit (EOU). The AO made disallowances to the total income calculated in the assessment. The Tribunal emphasized that the AO had correctly granted the deduction only to the extent supported by the Chartered Accountant's certification. The Tribunal's detailed analysis of the assessment proceedings highlighted the accuracy of the AO's actions, reinforcing the dismissal of the revisionary proceedings.

3. Grounds of Appeal: The grounds of appeal raised by the assessee challenged the CIT's decision to invoke revisionary jurisdiction. The grounds emphasized that the assessment was neither erroneous nor prejudicial to the revenue's interest. The appeal also contended that the CIT failed to appreciate the thorough investigation conducted by the AO regarding the deduction claim. The Tribunal, after considering the arguments and documentary evidence, upheld the grounds of appeal, emphasizing the correctness of the AO's actions and the inappropriateness of the revisionary proceedings.

In conclusion, the Tribunal allowed the appeal, quashing the revisionary proceedings initiated by the CIT u/s 263 of the Income Tax Act. The detailed analysis of the deduction claim, assessment proceedings, and grounds of appeal highlighted the accuracy of the AO's actions and the lack of justification for the revisionary intervention.