2019 (2) TMI 56 - HC - Income Tax

Revision u/s 263 - Deduction u/s 80IC - Held that - In the present case, the claim of the assessee for 100% deduction under Section 80IC of the Act after the expiry of initial five years from assessment year 2006-07 when the commercial activities in the firm M/s M A Industries were started, whereas substantial expansion was carried out during the period relating to assessment year 2011-12 was not admissible. AO had not expressed any view in that behalf as is discernible from the assessment order. Tribunal in the case of M/s Hycron Electronics s case 2015 (6) TMI 725 - ITAT CHANDIGARH had also held similar issue against the assessee. No doubt, the Himachal Pradesh High Court did express contrary view in appeal against the said decision of the Tribunal which was reversed by the Apex court in Commissioner of Income Tax Vs. M/s Classic Binding Industries 2018 (8) TMI 1209 - SUPREME COURT OF INDIA . Thus, contention of the assessee that where two views are possible, recourse to proceedings under Section 263 of the Act is unwarranted, does not come to his rescue in the present factual matrix as noticed hereinbefore. Claim of 100% deduction under Section 80IC for the assessment year 2011-12 when the industrial unit had been set up in the financial year 2005-06 relating to assessment year 2006-07, it could not be disputed that the matter is no longer res integra and is concluded by the decision of the Apex court in Classic Binding Industries case 2018 (8) TMI 1209 - SUPREME COURT OF INDIA against the assessee and in favour of the revenue.

Summary

Issues:
1. Jurisdiction under Section 263 of the Income Tax Act
2. Admissibility of deduction under Section 80IC of the Act
3. Interpretation of legal provisions and precedents

Jurisdiction under Section 263 of the Income Tax Act:
The court analyzed the conditions for the assumption of jurisdiction under Section 263 of the Act. It was emphasized that the order must be both erroneous and prejudicial to the interests of the revenue for the Commissioner to exercise revisional power. The purpose of this provision is to correct orders that are detrimental to revenue interests. Legal precedents were cited to support the interpretation, highlighting that revisional power cannot be used for every mistake but only for orders that are erroneous and prejudicial to revenue interests. The court also discussed the need for providing an opportunity of hearing to the assessee before passing any order under Section 263.

Admissibility of deduction under Section 80IC of the Act:
The court examined the case of an assessee who claimed 100% deduction under Section 80IC after the initial five years from the assessment year 2006-07. The issue arose when substantial expansion was undertaken during the assessment year 2011-12. The court noted that the Assessing Officer had not expressed any view on this matter in the assessment order. The Commissioner, in exercising revisional jurisdiction, found the claim for 100% deduction inadmissible and held that the order was both erroneous and prejudicial to revenue interests. Legal principles were cited to support the decision, emphasizing that where two views are possible, the invocation of Section 263 is warranted based on the specific facts of the case.

Interpretation of legal provisions and precedents:
The court referred to legal interpretations of Section 263 of the Act from previous judgments. It highlighted the need for a clear finding that the order is both erroneous and prejudicial to revenue interests for the Commissioner to exercise revisional power. The court also discussed the applicability of legal principles in different cases, emphasizing that the decision to invoke Section 263 depends on the specific facts and circumstances of each case. The judgment concluded by dismissing the appeals based on the answers to the substantial questions of law raised by the assessee, which were analyzed and decided in light of legal precedents and the specific facts of the case.

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