2019 (12) TMI 905 - AT - Income Tax

Revision u/s 263 - tax liability under the normal provision of the Act and under section 115JB Minimum Alternate Tax - HELD THAT - Tax liability of the assessee under the normal provisions of I.T Act comes at 42, 93, 91, 857/-(after adjusting the disputed amount by ld PCIT) whereas the tax liability u/s 115JB-MAT comes to the tune of 53, 51, 67, 527/- which is more than normal income tax liability. As per the scheme of the Act the assessee is supposed to pay the income tax as per Minimum Alternate Tax under section 115JB which is more than the tax liability computed under the normal provision of the Act. If for the time being we presume that the issue discussed by the ld. PCIT is correct and after giving the effect of the issue raised by the ld. PCIT even then the tax liability under the normal provision would be below than the tax liability u/s 115JB of the Act therefore there is no loss to the Revenue. Therefore we can conclude that the order of the Assessing Officer may be erroneous but it is not prejudicial to the interest of the revenue. In order to exercise the jurisdiction u/s 263 of the Act the ld PCIT needs to satisfy two conditions namely i) the order is erroneous and ii) the order is prejudicial to the interest of revenue. In the assessee s case under consideration one of the conditions prejudicial to the interest of the revenue is not satisfied therefore the order passed by the ld. PCIT needs to be quashed. As the issue is squarely covered in favour of the assessee by the decision of M/s ARL Infratech Ltdin 2018 (1) TMI 1552 - ITAT JAIPUR and there is no change in facts and law and the Revenue is unable to produce any material to controvert the aforesaid findings of the Division Bench (supra). We find no reason to interfere in the said order of the Division Bench therefore respectfully following the judgment of the Division Bench we conclude that order passed by the assessing officer is not prejudicial to the interest of Revenue hence we quash the order of ld PCIT under section 263 of the Act. - Decided in favour of assessee

Summary

Issues Involved:
Challenge to correctness of order passed by ld Pr. CIT under section 263 of the Income Tax Act, 1961.

Detailed Analysis:

1. Challenge to Correctness of Order under Section 263:
The appeal filed by the Assessee was directed against the order passed by the Pr. Commissioner of Income Tax, Central-1, Kolkata, under section 263 of the Income Tax Act, 1961. The Assessee challenged the correctness of the order, arguing that even if the order of the Assessing Officer was considered erroneous, it was not prejudicial to the interest of the Revenue. The Assessee relied on a previous order by the Division Bench of Jaipur Tribunal in a similar case, where it was held that the tax liability under Minimum Alternate Tax (MAT) was more than the normal tax liability, making the order not prejudicial to the Revenue's interest.

2. Adjudication Based on Previous Tribunal Order:
The Tribunal reviewed the order of the Division Bench of Jaipur Tribunal, which observed that even if certain claims were disallowed, the tax liability under MAT would still be higher than the normal computation. The Tribunal emphasized that the Commissioner can invoke the provision of Section 263 only when the order of the Assessing Officer is both erroneous and prejudicial to the interest of the Revenue. Since the condition of being prejudicial to the Revenue was not satisfied in this case, the Tribunal concluded that the order passed by the Assessing Officer was not prejudicial to the interest of Revenue.

3. Computation of Tax Liability:
The Tribunal analyzed the tax liability under normal provisions of the Income Tax Act and under section 115JB-MAT. It was observed that the tax liability under MAT was higher than the tax liability under the normal provisions. Even after considering the issues raised by the ld. PCIT, the tax liability under the normal provision would still be lower than the tax liability under section 115JB-MAT. Therefore, it was concluded that while the order of the Assessing Officer may be erroneous, it was not prejudicial to the interest of the Revenue.

4. Jurisdiction under Section 263:
To exercise jurisdiction under section 263, the ld PCIT needs to satisfy two conditions - that the order is erroneous and that it is prejudicial to the interest of revenue. In this case, as one of the conditions, being prejudicial to the interest of the revenue, was not satisfied, the order passed by the ld. PCIT was quashed. The Tribunal relied on the decision of the Division Bench in a previous case and found no reason to interfere with the said order, ultimately allowing the appeal of the Assessee.

Conclusion:
The Tribunal, based on the analysis of tax liabilities and the precedent set by a previous Tribunal decision, concluded that the order passed by the Assessing Officer was not prejudicial to the interest of Revenue. Therefore, the order passed by the ld PCIT under section 263 of the Act was quashed, and the appeal of the Assessee was allowed.