9911796707
TMI Blog1998 (9) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... lment without making any enquiry whatsoever. (iii) That the joint ventures are altogether different entities and are liable to be taxed in the status of AOP. The profit and loss of AOP are not taxable in the hands of the members, as the assessee is having taxable income. Further in view of amendment w.e.f. 1-4-1989, the AOP is to be charged to tax at maximum marginal rate, as the member (assessee) had taxable income and accordingly, the assessee's share from AOP was not to be included in loss. As such, the Members' share loss from AOP was also not to be included in the assessment. (iv) That the assessee had paid the self-assessment tax short by Rs. 49,58,099 - (Rs. 54,58,099 - Rs. 5,00,000). The penalty under section 221 was to be initiated. This was not done. (v) That the Assessing Officer erroneously allowed deduction under section 32AB on the amount of Rs. 1,85,88,564 which included the profit of Rs. 18,97,929 on sale of fixed assets, it being not the profit and gains of business. 4. Aggrieved thereby, the assessee is before us. 5. Shri M. C. Mehta, the ld. counsel for the assessee invited our attention to the reply dated 10-3-1994 submitted before the Commissioner i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the cost of asset and depreciation/investment allowance be allowed. Joint Venture loss of Rs. 43,42,232 (a) It was submitted that the Assessing Officer had made query (see para 1 of his letter dated 31-1-1990, copy at page 7 of the paper book and para 1 of Assessing Officer's letter dated 23-11-1990 at page 15 of the paper book). These were replied by the assessee, vide para 1 of letter dated 7-1-1991 (copy at pp. 20-21 of paper book), along with which photocopies of minutes of Board of Directors meeting dated 17-5-1988 and agreement of joint venture dated 1-7-1988 were enclosed, explaining the rationale and furnishing the opinion of an advocate that share of loss in joint venture is allowable as deduction in the case of the assessee. (b) Vide order sheet entry dated 4-1-1991 (copy at page 31 of the paper book), the Assessing Officer made further query, which was replied to by the assessee vide letter dated 6-5-1991 explaining therein the indirect benefits derived by it through the joint ventures and reasons for loss e.g. increase in market competition, paucity of funds, non-availability of bank finance etc. (c) These joint ventures are assessed to tax at Bombay (copi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Only the amount of depreciation has to be adjusted for this purpose. Reference was made to decision of the apex-court in Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84. 7. Shri Brijesh Gupta, the ld. D.R., submitted as follows : (i) The Commissioner has not set aside the assessment order in toto. He has partially set aside the assessment. (ii) Mere application of mind by the Assessing Officer is not enough. If the assessment is erroneous as also prejudicial to the interests of revenue on certain issues. Commissioner may exercise his powers under section 263 despite there being application of mind by the Assessing Officer. (iii) Para 3 of assessee's letter dated 3-3-1992 (pp. 55-56 of the paper book) does not refer to sales tax penalty and para 4 thereof speaks of expenses mentioned in para 3. The surrender of Rs. 55 lacs does not include sales tax penalty of Rs. 6,83,304, whereas the surrender of Rs. 12.5 lacs in the next year vide letter dated 3-3-1992 (copy at pp. 40-41 of the paper book) makes specific mention of sales tax penalties in para 3 thereof. (iv) The expression 'being interest' in the copy of account of M/s. Dalamal Sons at page 42 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in accordance with the requirements of Part II III of Sixth Schedule to the Companies Act, 1956. The said provisions do not require that profit on sale of fixed assets has to be included in profit and loss account as business income. (viii) The Commissioner can exercise his revisionary powers for non-initiation of penalty proceedings. 8. We have considered the submissions of the parties carefully. Sub-section (1) of section 263 empowers the Commissioner to call for and examine the record of any proceeding and if he considers that the order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of revenue, he may pass an order enhancing or modifying the assessment or cancelling the same with a direction to make it afresh. The term 'record' includes all records relating to any proceeding under the Act at the time of examination by the Commissioner. Further, he is competent to revise an order of assessment on all matters except those that have been considered and decided in appeal. In the instant case, the Commissioner has set aside the assessment on the issues enumerated by him in para 3 of his order and directed the Assessing Officer to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve and other expenses aggregating Rs. 1,62,81,019 which included the amount of Rs. 3,67,723 being net loss on remittance of foreign loan instalments but there is no inkling at all in the assessment order that the Assessing Officer had made any query with regard to this claim nor it is a case of the assessee that the nature of this claim was explained to the Assessing Officer during assessment proceedings. The communication dated 24-5-1988 of Dalamal Sons (London) Ltd. was not placed by the assessee before the Assessing Officer. Had it been done, the Assessing Officer would have known that the assessee had to pay an increased liability on account of exchange rate fluctuations necessitating adjustment in the actual cost of the asset acquired from abroad. Since it was not done, the assessment suffered an error inasmuch as the impugned amount was erroneously allowed as deduction instead of its treatment being accorded as per the provisions of section 43A of the Act. The error was undoubtedly prejudicial to the interests of revenue. The Commissioner was, therefore, within his powers to exercise his revisionary jurisdiction on the ground that the claim of impugned deduction was allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orities assessing the joint venture(s) which are admittedly not assessed under the jurisdiction of the Commissioner, Bhopal. So far long as the assessment of joint ventures are not disturbed, the share of assessee's profit/loss as a member thereof has to be assessed in the hands of the assessee. This is what has been done by the Assessing Officer. Erroneous assessment refers to an assessment that deviates from the law or that which is not, in other words, in accordance with law. Nothing convincing has been demonstrated by the revenue before us to enable us to take a view that adoption of share(s) of assessee's losses in joint ventures in the assessment is contrary to law. On the other hand, the assessment order would go to reveal that the Assessing Officer was alive to the relevant facts and provisions of law with regard to this issue. It has been held in CIT v. Gabriel India Ltd. [1993] 203 ITR 108 (Bom.) that section 263 does not visualise a case of substitution of the judgment of the Commissioner for that of the Assessing Officer who passed the order unless the decision is held to be erroneous. As stated earlier, the assessment is not erroneous on this issue. As such, revision o ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
