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2022 (8) TMI 1235 - HC - Income TaxRevision u/s 263 - difference of opinion with the assessing officer in determining the nature of income of the settlement amount received by the assessee company from M/s. Danone Group, Singapore - whether the Commissioner could have invoked his power under Section 263 of the Act on the ground that the Assessing Officer did not conduct proper enquiry? - HELD THAT - We need not labour much to decide this issue as the learned Tribunal has elaborately discussed the factual position and brought out as to how the Assessing Officer had conducted an enquiry into the aspect as to how the amount received by the assessee from foreign entity towards settlement of a civil dispute pertaining to a trademark has to be treated. Hon ble Supreme Court in the case of Pr. CIT vs. Canara Bank Securities Ltd. 2019 (10) TMI 1512 - SC ORDER by order dismissed the department s appeal affirming the view taken by the Bombay High Court 2019 (2) TMI 2020 - BOMBAY HIGH COURT wherein the High Court held that the question whether the income should be taxed as business income or has arisen from other source was a debatable issue and the Assessing Officer had taken the plausible view that it was a business income after due enquiries and therefore not open for the Commissioner to take such an order in revision. We are of the considered view that the learned Tribunal had rightly granted reliefs in favour of the assessee.
Issues:
1. Whether the Tribunal erred in quashing the order of the Principal Commissioner of Income Tax under section 263 of the Income Tax Act, 1961? Analysis: The High Court of Calcutta heard an appeal filed by the revenue challenging the order of the Income Tax Appellate Tribunal. The main issue was whether the Commissioner could invoke his power under Section 263 of the Act due to the Assessing Officer not conducting a proper enquiry. The Tribunal extensively discussed how the Assessing Officer had investigated the nature of income received by the assessee from a foreign entity in a settlement agreement. The Tribunal highlighted that the settlement did not involve conceding or admitting claims, and both parties retained their rights. The Assessing Officer had considered various factors and concluded that the income in dispute should be treated as capital gains. The Court referred to precedents like the Malabar Industrial Co. Ltd. case to determine that the Assessing Officer's decision, even if resulting in revenue loss, cannot be considered erroneous unless unsustainable in law. Additionally, the Court cited the Canara Bank Securities Ltd. case where it was held that if the Assessing Officer had taken a plausible view after due enquiries, the Commissioner cannot revise the order. The Court concluded that the Tribunal correctly granted relief to the assessee. Therefore, the appeal was dismissed, and the substantial question of law was answered against the revenue.
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