2020 (11) TMI 16 - HC - Income Tax

Revision u/s 263 - Commissioner took the view that AO had failed to follow the principle of carry forward and a set off as brought out in Section 10A - HELD THAT - Deduction u/s 10A has to be allowed before set off of unabsorbed loss and depreciation of non-eligible business unit of assessee. We find no justification in such order passed by the PCIT who has not taken into consideration this particular aspect of the matter though the same was brought to his notice by the assessee . We find no justification in the order impugned before us which has re-opened the issue u/s 263 of the Act whereas, we find that the order passed by the Learned A0 is just and proper - There is nothing erroneous found in the order of the Learned AO, neither it is prejudicial to the instant of the Revenue. None of the conditions is being fulfilled by the order passed by the Learned PCIT in order to invoke the provision of section 263 - Decided against revenue.

Summary

Issues:
Appeal under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal for the A.Y. 2009-10. Question of law regarding setting aside the order passed under section 263 of the Act.

Analysis:
The appellant, the Revenue, challenged the order passed by the Income Tax Appellate Tribunal for the A.Y. 2009-10. The issue revolved around whether the Appellate Tribunal erred in law and on facts by setting aside the order passed by the Principal Commissioner of Income Tax under section 263 of the Act. The assessee had filed its return of income, claiming deductions and set-offs, including under Section 10A of the Act and business losses from the previous year. The assessment was completed accordingly, with tax paid under the Minimum Alternate Tax provision.

The Principal Commissioner initiated suo motu revision under Section 263 of the Act, deeming the assessment order as erroneous and prejudicial to Revenue's interest due to non-compliance with Section 10A provisions. Consequently, the Principal Commissioner set aside the assessment order and directed a re-assessment. The assessee appealed this decision before the Appellate Tribunal, which ruled in favor of the assessee. The Appellate Tribunal emphasized the precedence set by the Jurisdictional High Court regarding the sequence of allowing deductions and set-offs under Section 10A. It found the Principal Commissioner's order unjustified, as it failed to consider this aspect, leading to the dismissal of the appeal.

Upon reviewing the materials and arguments presented, the High Court, comprising The Chief Justice and Mr. Justice J.B.Pardiwala, found no valid reason to overturn the Appellate Tribunal's decision. Consequently, the appeal by the Revenue was dismissed. The judgment upheld the Tribunal's ruling, emphasizing adherence to legal precedents and the correct interpretation of statutory provisions in tax assessments.