2017 (10) TMI 1100 - HC - Income Tax

Revision u/s 263 - AO upheld the assessee s contention with regard to applicability of Section 10B to its unit - Section 263 was invoked primarily on the ground that the approval did not conform to the CBDT s circular dated 09.03.2009 (F.No.178/19/2008) - Held that - The invocation of Section 263 in the opinion of this Court cannot be faulted. As to whether in fact there was no necessity for a further ratification, in the light of the appellant s contention that a general or a specific circular, which delegated the powers of the Board of Approvals, applied after the issuance of the 09.03.2009 circular, is however kept open for consideration. In case such contention is urged by the appellant before the Income Tax authorities, the same shall be considered on its own merits.

Summary

Issues:
1. Invocation of power by the Commissioner under Section 263 of the Income Tax Act, 1961.
2. Applicability of Section 10B to the assessee's unit.
3. Interpretation of circulars issued by the CBDT.

Analysis:

1. The appellant was aggrieved by the invocation of power by the Commissioner under Section 263 of the Income Tax Act, 1961. The AO had initially upheld the assessee's contention regarding the applicability of Section 10B to its unit for the relevant year 2011-12. However, Section 263 was invoked based on the ground that the approval did not conform to the CBDT's circular dated 09.03.2009. The counsel for the appellant argued that a previous decision of the Division Bench in Commissioner of Income-Tax v. Enable Exports (P.) Ltd. was conclusive and that a subsequent ruling by the ITAT in Commissioner of Income Tax v. Valiant Communications Ltd. did not consider the relevant circulars of 2008-09 and the decision in Enable Exports (P.) Ltd.

2. The Court noted that Enable Exports (P.) Ltd. had taken into account the circular of 09.03.2009, which stated that an approval granted by the Development Commissioner for a hundred percent export-oriented unit would be considered valid once ratified by the Board of Approval for EOU scheme. The counsel for the appellant contended that the approval of the Development Commissioner was sufficient, citing previous binding circulars of the concerned Ministry consistently applied by the CBDT. The Court considered these submissions but ultimately concluded that the invocation of Section 263 was justified.

3. The Court left open the question of whether there was a necessity for further ratification, considering the appellant's argument that a circular delegating powers of the Board of Approvals applied after the issuance of the 09.03.2009 circular. The Court directed that if such a contention was raised before the Income Tax authorities, it should be considered on its merits. The appeal was dismissed, subject to these observations.