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TMI Blog2011 (11) TMI 390X X X X Extracts X X X X X X X X Extracts X X X X ..... Dated:- 29-11-2011 - SANJIV KHANNA AND R.V. EASWAR, JJ. N.P. Sahni and Ruchesh Sinha for the Appellant. Ajay Vohra, Ms. Kavita Jha and Somnath Shukla for the Respondent. ORDER Sanjiv Khanna, J With the consent of the parties the matter is taken up for hearing and for final disposal on the following substantial question of law :- "Whether the Income Tax Appellate Tribunal (tribunal, for short) was correct in law in quashing the order passed by the Commissioner of Income Tax under Section 263 of the Act dated 31.12.2009?" 2. For the assessment year 2005-06, the respondent-assessee filed a return declaring loss of Rs. 47,83,774/- on 29.10.2005. Vide assessment order dated 26.12.2007, the Assessing Officer calculate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computing deduction under Section 80IA. With regard to the second aspect, it was stated that only Rs. 10.95 lakhs relates to power generation unit and the balance amount relates to energy system unit. 5. The CIT considered the said contentions and in the final directions has held as under : "I have heard the authorized representative, gone through the submission as also the facts of records. Prima facie the assessee submission has gone (sic. same) strength and needs appropriate consideration as per law. At the same time it is also a matter of record that there is a lack of enquiry/investigation on the part of the Assessing Officer. To that extent it can certainly be held that the order of the AO is both erroneous as well as prejudicial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is contrary to law; upon mistaken view of law or upon erroneous application of legal principle. This decision can be rectified by exercise of revisionary power under Section 263. In the case of Gee Vee Enterprises v. Addl. CIT [1975] 99 ITR 375 (Delhi), it has been held that the word "erroneous" include cases where the Assessing Officer has remained passive and has failed to ascertain true facts by making necessary enquiry. Failure to deal and make necessary enquiry makes an order erroneous. [Duggal Co. v. CIT [1994] 77 Taxman 331/[1996] 220 ITR 456 (Delhi)]. 9. The term "prejudicial to the interest of the Revenue" are of wide import and if the Assessing Officer fails to apply his mind to the case in the right perspective, there is pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a case of this nature the Revenue is not without remedy. Section 263 of the Act empowers the Commissioner to review an order which is prejudicial to the Revenue." 11. In the present case, the tribunal has disagreed with the CIT and felt that the Assessing Officer had examined the question and formed an opinion. The finding of the CIT that there was lack of enquiry was incorrect. Thereafter, the tribunal went into the bifurcation of interest income submitted by the assessee and examined it on merits and decided whether or not a particular income qualifies for deduction under Section 80IA. In the said exercise, the tribunal has relied upon submissions made by the assessee and accepted, the bifurcation and nature and character of interest i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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