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2017 (8) TMI 195 - HC - Income TaxRevision u/s 263 - applicability of Section 35D - Held that - Assessing Officer sought clarification from the assessee about the correctness of the amount of one-fifth of the total expenses incurred under Section 35D of the Act. The assessee under letter dated 26.10.2004 gave specific explanation on the issue raised by the AO and thereafter, the assessment order was passed. To substantiate his claim, the assessee has placed reliance upon Malabar Industrial Co. Ltd. (2000 (2) TMI 10 - SUPREME Court). The possible view, it appears, was taken by the Assessing Officer. The Tribunal on the said count has held that the revisional jurisdiction ought not to have been exercised by the CIT(A). Only because the Commissioner thought that other view is a better view, would not enable Commissioner of Income Tax to exercise power under Section 263 of the Act. It would not be a reopening of assessment or reassessment. We are not inclined to entertain the present appeal. It is made clear that we have not given any finding in regard to the applicability of Section 35D vis-a-vis the assessee so also have not considered the observations of the Tribunal with regard to exercise of revisional powers only on his own accord and not an application by the Assessing Officer. - Decided against revenue.
Issues involved:
1. Interpretation of Section 263 of the Income Tax Act regarding revisionary power. 2. Application of Section 35D for deduction of expenses incurred by an industrial undertaking. 3. Assessment of the Assessing Officer's decision and the Tribunal's ruling on revisional jurisdiction. Analysis: 1. The primary issue in this case revolves around the interpretation of Section 263 of the Income Tax Act concerning the revisionary power of the Commissioner. The Tribunal set aside the Commissioner's order under Section 263, prompting an appeal. The appellant argued that the Tribunal erred in requiring the initiation of refund proceedings to come solely from the Commissioner, contending that the Assessing Officer's decision to grant benefits under Section 35D was erroneous and prejudicial to revenue, justifying the Commissioner's exercise of revisionary power. 2. The second issue pertains to the application of Section 35D for deduction of expenses incurred by an industrial undertaking. The respondent, supporting the Tribunal's decision, highlighted the Assessing Officer's inquiry and the assessee's explanation for claiming deductions under Section 35D. The respondent cited relevant case law, including the judgment in the case of Commissioner of Income Tax Vs. Emirates Commercial Bank Ltd., to support the industrial undertaking status of the assessee and the eligibility for deductions under Section 35D. 3. Lastly, the assessment of the Assessing Officer's decision and the Tribunal's ruling on revisional jurisdiction is crucial. The Tribunal, considering the Apex Court's decision in Malabar Industrial Co. Ltd., emphasized that when two possible views exist and the issue is debatable, revision under Section 263 is impermissible. The Tribunal found that the Assessing Officer had made inquiries before the assessment order, and the revisional jurisdiction by the Commissioner was unwarranted merely based on a different view. The Court dismissed the appeal, clarifying that no finding was made on the applicability of Section 35D or the Tribunal's observations on the exercise of revisional powers. In conclusion, the judgment delves into the nuanced interpretation of statutory provisions, the application of relevant case law, and the limitations on revisionary powers under the Income Tax Act. The decision underscores the importance of thorough assessment procedures, adherence to legal principles, and the necessity for a clear rationale behind the exercise of revisional jurisdiction.
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