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2014 (2) TMI 172 - AT - Income TaxRevision u/s 263 of the Act - Set off of brought forward unabsorbed business losses against income from interest, commission and sale of assets holding that these income are not assessable under the head income from business Held that - CIT wanted that the Assessing Officer should make re- verification, therefore, it cannot be said that the assessment order passed by the Assessing Officer was without making proper enquiry and when the Assessing Officer has taken one of the possible view, it cannot be said that the assessment order passed by the Assessing Officer was erroneous or prejudicial to the interest of the revenue. Relying upon CIT Vs. Green World Corporation 2009 (5) TMI 14 - SUPREME COURT OF INDIA - the jurisdiction exercised by the revisional authority pertains to his appellate jurisdiction - while making the orders of assessment the Assessing Officer should be bound by the statutory circulars issued by the CBDT but it is another thing to say that the assessing authority exercising quasi-judicial functions, keeping in view the scheme contained in the Act, would lose his independence to pass an independent order of assessment - When a statute provides for different hierarchies providing for forums in relation to passing of an order as also appellate or revisional order, by no stretch of imagination can a higher authority interfere with the independence which is the basic feature of any statutory scheme involving adjudicatory process the CIT was not justified in setting aside the assessment order by invoking the provisions of Section 263 of the Act order set aside and decided in favour of Assessee.
Issues Involved:
1. Jurisdiction and validity of invoking provisions of Section 263 of the IT Act, 1961. 2. Assessment of income from interest, commission, and sale of assets. 3. Legitimacy of set-off of brought forward unabsorbed business losses against income from interest, commission, and sale of assets. Issue-Wise Detailed Analysis: 1. Jurisdiction and Validity of Invoking Provisions of Section 263 of the IT Act, 1961: The assessee contested the invocation of Section 263 by the Ld. CIT, arguing it was without jurisdiction, wrong, and bad in law. The Ld. CIT had issued a notice under Section 263, proposing to set aside the assessment order dated 30/11/2009, on the grounds that the Assessing Officer (AO) had erroneously allowed the set-off of brought forward unabsorbed business losses against income from interest, commission, and sale of assets. The Tribunal noted that for invoking Section 263, the CIT must record satisfaction that the AO's order is erroneous and prejudicial to the interests of the Revenue. The Tribunal observed that the AO had made inquiries and applied his mind to the facts and circumstances of the case before allowing the set-off, thus the CIT's invocation of Section 263 was not justified. 2. Assessment of Income from Interest, Commission, and Sale of Assets: The Ld. CIT argued that the AO wrongly treated the income from interest, commission, and sale of assets as business income, whereas it should have been assessed under "Income from Other Sources" and "Capital Gains." The assessee contended that the interest received was from advances made out of business funds to reduce the burden of interest payable to the bank, thus it was business income. Similarly, the commission was received for rendering services related to the business, and the profit on the sale of assets was treated in accordance with Section 32 by reducing the sale value from the WDV of block assets. The Tribunal found merit in the assessee's submission, noting that similar incomes were treated as business income in earlier years, and thus the rule of consistency applied. 3. Legitimacy of Set-Off of Brought Forward Unabsorbed Business Losses: The Ld. CIT held that the AO allowed an incorrect set-off of brought forward unabsorbed business losses against income from interest, commission, and sale of assets, which should be taxed under separate heads. The assessee argued that the AO had considered all details and rightly allowed the set-off as business income. The Tribunal noted that the AO had adopted one of the permissible views, and the CIT's disagreement did not render the AO's order erroneous or prejudicial to the revenue. The Tribunal referred to the Supreme Court's ruling in CIT Vs. Green World Corporation, emphasizing that an assessment order should not be interfered with simply because another view is possible. Conclusion: The Tribunal concluded that the Ld. CIT was not justified in setting aside the assessment order by invoking Section 263. The AO had made proper inquiries and applied his mind before allowing the set-off, and the CIT's invocation of Section 263 was not warranted. Consequently, the Tribunal set aside the impugned order and restored the assessment order passed by the AO. Result: The appeal of the assessee was allowed.
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