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2015 (12) TMI 1329 - AT - Income TaxDeduction under Section 80-IB - revision u/s 263 - Held that - AO is bound to record reasons one way or other for the conclusion reached in the assessment order. The Assessing Officer is expected to discuss the claim of the assessee under Section 80-IB of the Act and record his own reason either for allowing or disallowing the claim of the assessee. Since this exercise has not been done by the Assessing Officer, this Tribunal is of the considered opinion that the order of the Assessing Officer is not only erroneous but also prejudicial to the interests of Revenue. Therefore, this Tribunal do not find any reason to interfere with the order of the Commissioner. However, the Assessing Officer, while passing consequential order, shall consider the decision of this Tribunal in the assessee s own case for assessment year 2010-11 in I.T.A. No.1174/Mds/2015 dated 29.09.2015 and other judgments, if any, brought to the notice of the Assessing Officer by the assessee in the course of proceeding. In other words, the Assessing Officer shall independently examine the issue afresh in accordance with law and thereafter decide the same after giving reasonable opportunity to the assessee.
Issues Involved:
1. Deduction under Section 80-IB of the Income-tax Act, 1961 for rental charges, cylinder service charges, and cylinder transportation charges. 2. The necessity for the Assessing Officer to record reasons in the assessment order. 3. The jurisdiction of the Commissioner under Section 263 of the Income-tax Act, 1961. Issue-wise Detailed Analysis: 1. Deduction under Section 80-IB of the Income-tax Act, 1961: The assessee claimed deductions under Section 80-IB for rental charges, cylinder service charges, and cylinder transportation charges amounting to Rs. 2,08,43,604/-. The Commissioner directed the Assessing Officer to re-examine these claims in light of the Supreme Court judgment in Liberty India Ltd. v. CIT (317 ITR 218). The Tribunal previously ruled in favor of the assessee for the assessment year 2010-11, stating that cylinder transport charges should be considered part of the sale consideration for liquid carbon dioxide, thereby qualifying for Section 80-IB deduction. The Tribunal held that delivery charges have a direct nexus with the industrial undertaking and should be included in the turnover for deduction purposes. 2. Necessity for the Assessing Officer to Record Reasons: The Tribunal emphasized the importance of recording reasons in the assessment order. It is a well-settled principle that both administrative and judicial orders must contain the rationale for the conclusions reached. This requirement ensures transparency, clarity, and fairness, and allows appellate or revisional authorities to understand the basis of the decision. The Tribunal cited the Supreme Court's judgment in S.N. Mukherjee v. Union of India, which highlighted that recording reasons minimizes arbitrariness and guarantees consideration by the authority. The Tribunal found that the Assessing Officer failed to discuss or record reasons for allowing the assessee's claim under Section 80-IB, rendering the order erroneous and prejudicial to the interests of Revenue. 3. Jurisdiction of the Commissioner under Section 263: The Commissioner exercised jurisdiction under Section 263, finding the Assessing Officer's order erroneous and prejudicial to the interests of Revenue. The Tribunal agreed, noting that the Assessing Officer did not verify or discuss the deductions claimed under Section 80-IB. The Tribunal upheld the Commissioner's direction to re-examine the deductions, emphasizing that the Assessing Officer must independently assess the claims and record reasons for his conclusions. The Tribunal instructed the Assessing Officer to consider the Tribunal's previous decision for the assessment year 2010-11 and any other relevant judgments during the re-examination. Conclusion: The Tribunal dismissed the appeal of the assessee, affirming the Commissioner's order under Section 263. The Tribunal highlighted the necessity for the Assessing Officer to record reasons in the assessment order and independently verify the claims under Section 80-IB. The Assessing Officer was directed to re-examine the issue afresh, considering previous Tribunal decisions and other relevant judgments, and to provide a reasonable opportunity to the assessee. Order Pronouncement: The order was pronounced on 18th December 2015 at Chennai.
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