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TMI Blog2012 (8) TMI 336X X X X Extracts X X X X X X X X Extracts X X X X ..... a consequential order on 13.3.2009. The administrative commission proceeded to revise the original assessment order passed on 27.12.2007 and also the consequential order passed on 13.3.2009 in the impugned revision proceeding. 3. The Administrative Commissioner initiated revision proceedings u/s. 263 of the Act in respect of the following issues:- (a) Income from sale of old rubber trees (b) Indexation allowed in the case of sale proceeds of Grevillea trees. (c) Proportionate interest relatable to the investment made in subsidiary companies to be disallowed u/s 14A of the Act. (d) Disallowance of expenses claimed under the head "Share transfer expenses" After considering the submissions made by the assessee, the Ld. CIT held that the original assessment order passed u/s. 143(3) on 27-12-2007 as well as the consequential order dated 13-03-2009 passed to give effect to the appellate order of the Ld CIT(A), are erroneous in so far as they are prejudicial to the interests of the Revenue. The Ld. CIT set aside the orders with the direction to the Assessing Officer to re-do the same afresh. Though the Ld CIT has given a general direction, apparently, the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer. Every loss of revenue as a consequence of an order of the Assessing Officer, cannot be treated as prejudicial to the interests of the Revenue, for example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the Income-tax Officer is unsustainable in law." The principle which has been laid down in Malabar Industrial Co. Ltd. [2000] 243 ITR 83 (SC) has been followed and explained in a subsequent judgment of the Supreme Court in CIT v. Max India Ltd. [2007] 295 ITR 282." 5. The Hon'ble Delhi High Court in the case of CIT v. Sunbeam Auto Ltd. [2011] 332 ITR 167/[2010] 189 Taxman 436 has discussed the judicial precedents in this regard. The relevant observations of the Hon'ble Delhi High Court are extracted below:- "We have considered the rival submissions of the counsel on the other side and have gone through the records. The first issue that arises for our consideration is about the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conclusion, the very initiation of proceedings by him will be illegal and without jurisdiction. The Commissioner cannot initiate proceedings with a view to starting fishing and roving enquiries in matters or orders which are already concluded. Such action will be against the well-accepted policy of law that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity. (See Parashuram Pottery Works Co. Ltd. v. ITO [1977] 106 ITR 1 (SC) at page 10) . . . 6. The principles laid down by the courts are that the Learned CIT cannot invoke his powers of revision under section 263 if the Assessing Officer has applied his mind while passing the assessment order on the issues sought to be revised by the Ld CIT. If there was any enquiry, even inadequate would not by itself give occasion to the Commissioner to pass orders under section 263 of the Act, merely because he has a different opinion in the matter. The consideration of the Commissioner as to whether an order is erroneous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the claim of the assessee that the income from sale of old rubber trees is not liable for Capital gain tax, apparently by following the decision of Hon'ble Supreme Court in the case of Kalpetta Estates Ltd., supra. Now, the Ld CIT(A) has taken the view that the said income becomes taxable after the introduction of Rule 7A to the income tax rules. In Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83/109 Taxman 66 (SC), the Supreme Court has held that the provision of sec. 263 cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer and it is only when an order is erroneous that the section will be attracted. The Supreme Court held that an incorrect assumption of fact or an incorrect application of law will satisfy the requirement of the order being erroneous. Now the question that arises is whether the view of the AO that the sale of old rubber trees cannot be considered as Capital gain would fit in the category of "incorrect application of law" after the introduction of Rule 7A as presumed by Ld CIT(A). 10. We have gone through Rule 7A of Income Tax Rules and for the sake of convenience, we extract the same below:- "Income from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... press the same. Hence the said ground was dismissed by the Ld. CIT(A). The Ld. CIT(A) took the view that the AO had converted the capital loss claimed in respect of Grevillea trees into long term capital gain of equivalent amount. Accordingly, the held that the AO is not justified in treating the above said amount as capital gain. The Revenue challenged the said decision of the Ld. CIT(A) before the ITAT and the Tribunal vide its order dated 12-05-2009 dismissed the ground raised by the Revenue. All these discussions show that the issue of the taxability of income on sale of Grevillea trees has been considered and decided by the Ld. CIT(A) as well as the Tribunal. Hence, in view of the specific provisions in Clause (c) of Explanation to sec. 263(1), the said issue falls outside the scope of revisionary proceedings u/s. 263. Accordingly, the Ld CIT was not legally correct in assuming jurisdiction over this issue. 12. The next issue relates to the disallowance of proportionate interest relatable to investments made in subsidiary companies. The Ld. CIT noticed that the assessee invested in shares of other companies and since the dividend income is not taxable, the interest payment r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be held that the AO has taken one of the possible views in not making any disallowance of interest expenditure u/s 14A of the Act. It is a well settled proposition of law that if the Assessing officer has taken one plausible view, with which the Ld. CIT does not agree; revisionary proceedings u/s. 263 shall not lie in respect of the same. The Kolkata Bench of the ITAT in the case of Bengal Ambuja Housing Development Ltd. v. Asstt. CIT [I.T. Appeal No. 1001/Kol of 2004 dated 20-12-2004] has taken the view that the Ld. CIT having failed to point out a single item of expenditure as having direct nexus with the dividend income, it cannot be said that the view taken by the AO is unsustainable in law. In view of the foregoing discussions, we are of the view that the issue of disallowance of interest relatable to dividend income also falls outside the scope of revisionary proceedings u/s. 263 of the Act. 14. The last issue relates to the issue of disallowance of share transfer expenses. The Ld. CIT has taken the view that the assessee has incurred a sum of Rs. 1,24,664/-in connection with the "transfer of shares" where as the fact remains that the said expenses have been incurred in conn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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