2019 (2) TMI 1272 - HC - Income Tax

Revision u/s 263 - scope of Commissioner s power under Section 263 - HELD THAT - The Hon ble Supreme Court in the case of Malabar Industrial Co. Ltd., vs. CIT 2000 (2) TMI 10 - SUPREME COURT held that in order to revise an order under Section 263 of the Act, it must be erroneous and prejudicial to the interest of the Revenue. Tribunal rightly found that the completion certificate could be available only when the project is physically completed and as far as assessee s case is concerned, they had produced the completion certificate with reference to the previous year 2007-08 relevant to the assessment year 2008-09. Considering the factual aspects, we are of the view that the Revenue has not made out any case for interference with the order passed by the Tribunal. No substantial question of law.

Summary

Issues:
1. Appeal against the order of the Income Tax Appellate Tribunal for assessment years 2004-05 and 2005-06.
2. Substantial Question of Law: Whether the Tribunal was right in setting aside the Commissioner's order under Section 263 of the Income Tax Act.

Analysis:
The High Court, comprising Mr. Justice T.S. Sivagnanam and Mr. Justice N. Sathish Kumar, heard the appeals filed by the Revenue against the Income Tax Appellate Tribunal's order for the assessment years 2004-05 and 2005-06. The appeals were admitted based on the substantial question of law regarding the Tribunal's decision to set aside the Commissioner's order under Section 263 of the Income Tax Act. The main issue under consideration was whether the Commissioner had the authority to exercise power under Section 263 of the Act.

Referring to the decision in Malabar Industrial Co. Ltd. vs. CIT, the High Court emphasized that for an order to be revised under Section 263, it must be both erroneous and prejudicial to the Revenue's interest. The Court noted that the completion certificate for a project is typically available only when the project is physically completed. In the case at hand, the assessee had presented the completion certificate for the previous year 2007-08, relevant to the assessment year 2008-09.

After considering the factual aspects, the Court concurred with the Tribunal's findings and concluded that the Revenue had not established a case warranting interference with the Tribunal's order. Consequently, the High Court held that no substantial question of law had emerged for consideration and dismissed the appeals, ruling in favor of the respondent. The judgment was delivered without any costs imposed on either party.