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TMI Blog2006 (2) TMI 497X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in India to earn such eligible income. However, the Assessing Officer allowed the deduction under section 80-O on the net income computed after taking into consideration all the expenses incurred in order to earn such income. The view of the Assessing Officer was upheld by the CIT(A) and also by the Tribunal. 4. Thereafter an order under section 263 was passed by the CIT holding that w.e.f. 1-4-1998 the deduction under section 80-O was available on the income received in consideration of use outside India of any patent, invention, design or registered trade mark and the assessee had received amount for professional services, as such, the order of the Assessing Officer for both the assessment years allowing deduction under section 80-O was considered erroneous and, therefore, prejudicial to the interest of the Revenue. 5. Admittedly, the assessee is in the business of rendering the moving services in India and in foreign countries. The nature of services rendered by the Company relate to a composite package of specialized door to door services involving handling, packing and moving of personal and household effects of foreign clients like multinational companies, diplomat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A. Shankar has submitted various arguments before us in order to show that the order passed under section 263 is not a valid order. The gist of the detailed arguments raised by the ld. Counsel for the assessee is as under : ( i )the partial deduction under section 80-O was allowed by the Assessing Officer on the ground that it is available on net receipt and not on the gross receipt as claimed by the assessee. The order passed by the Assessing Officer was upheld by the CIT(A) and as such Assessing Officer s order has merged with the order of the CIT(A). Since the issue of deduction under section 80-O has already been considered and decided in appeal before CIT(A), as such in view of section 263(1)( c ), the CIT had no power to pass the order under section 263 in the case of the assessee. For this proposition he relied on the following case law : ( i ) CIT v. P. Muncherji Co. [1987] 167 ITR 671 (Bom.). ( ii ) CIT v. Smt. A.S. Narendrakumari Basaheba of Rajkot [1989] 176 ITR 515 (Bom.). ( iii ) Ritz Ltd. v. Union of India [1990] 184 ITR 599 (Bom.). ( iv ) CIT v. Godavari Sugar Mills Ltd. [1992] 198 ITR 196 (Bom.). ( v ) CIT v. Shri Arbuda Mills Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he questionnaire issued during the course of assessment was only with regard to allowability of deduction under section 80-O on gross receipts or net receipts. Simple reading of the assessment order makes it clear that there was no application of mind. The real debate before the Assessing Officer was with regard to the quantum of deduction under section 80-O on the basis of gross receipts or net receipts. The change in the section 80-O w.e.f. 1-4-1998 was ignored by the Assessing Officer. She stated that there was no change in the nature of services rendered by the assessee from assessment year 1992-93 and in the case of the assessee for assessment year 1992-93 the Tribunal has held that the services rendered by the assessee were based on manual skill. 9. Ms. Ruby Srivastava, learned DR also stated that the assessee is incurring expenditure for the use of trade mark of various associations and the income earned by the assessee is not for the use of its own trade mark. The bills raised by the assessee are for the services rendered by it. 10. During rebuttal Mr. A. Shankar stated that the assessee-company came into existence from assessment year 1993-94 and as such the case f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is an error committed by the Assessing Officer which is pre-judicial to the interest of the Revenue. We are of the view that the CIT need not be satisfied with regard to the said error prior to issuance of notice under section 263. However, he is required to be satisfied in this regard prior to the passing the order under section 263. A notice under section 263 can be issued if he considers that the orders passed by the Assessing Officer is erroneous so far it is prejudicial to the interest of the Revenue, which does not mean that he must be satisfied with regard to the said error prior to the issuance of notice under section 263. In this case the CIT has mentioned in his notice under section 263 that the Assessing Officer appears to have ignored the amended provisions of section 80-O. We are of the considered view that such a notice cannot be treated as invalid notice and as such we do not agree with the contention of the counsel for the assessee raised in this regard. 13. The plea of counsel for the assessee that combined order passed under section 263 for both the assessment years is illegal as a separate order required to be passed under section 263, is hyper technical ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Revenue. The provisions of section 263 cannot be invoked on the basis of change of opinion. The decisions of P H High Court in the case of CIT v. Max India Ltd. [2004] 268 ITR 128 and Calcutta High Court in the case of CIT v. Smt. Joytsna Poddar [1998] 232 ITR 759, are to the same effect. The Calcutta High Court in the case of CIT v. Subhas Projects Marketing Ltd. [IT Appeal No. 448 of 2000, dated 19-10-2001], as referred in ITA No. 3778/Mum./2005 Mumbai D Bench in the case of Zyma Laboratories, has held that in exercise of power under section 263, the order of the Assessing Officer can be said to be erroneous only when an impossible view is taken. 17. On query raised by the Bench as to how it is possible that the entire income earned in convertible foreign exchange can be attributable towards the use of registered trade mark. The Counsel for the assessee stated that the CIT has not passed order under section 263 on this ground. There was no error committed by the Assessing Officer with regard to the issue, which was made the basis of order under section 263. It cannot be held that the entire income earned in the foreign exchange was in consideration for u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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