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TMI Blog2013 (8) TMI 817X X X X Extracts X X X X X X X X Extracts X X X X ..... 2013 - G. D. Agrawal And A. D. Jain, JJ. For the Appellant: Shri Rajendra Sharma Shri Manuj Sharma, Advocates For the Respondent: Shri Anirudh Kumar, CIT., D.R. ORDER Per A. L. Gehlot, Accountant Member: This appeal has been filed by the assessee against the order dated 18.03.2013 passed by the learned CIT, Gwalior for A.Y. 2008-09. 2. The grounds raised by the assessee in the appeal is against the passing of order under Section 263 of the I.T. Act by the CIT. 3. The brief facts of the case are that the CIT on examination of assessment order, it was observed that in this case assessee filed return of income declaring total income at Nil, after claiming deduction under Section 80IA(4)(i) of the Act. The A.O. completed assessment under Section 143(3) of the Act allowing deduction under Section 80IA except on interest income. The CIT on examination found that deduction claim of the assessee is not allowable since deduction in respect of profit and gain from undertaking or enterprise engaged in infrastructure development is to be allowed under thissection only to those industrial undertakings or enterprises which developed or operated and maintainin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the judgements in cases of ACIT Vs. Bharat Udyog Ltd. (2008) 24 SOT 412 (Mum) and CIT Vs. Laxmi Civil Engineering P. Ltd. (2011) 2011 TPI 654 (ITAT-Pune) does not come to the assistance of the assessee because the issue at hand in those cases was whether merely a developer, who had not operated and maintained an infrastructure facility, was entitled to deduction u/s 80IA whereas in the case of the assessee, the agreements entered into by the assessee with the M.P. Rural Road Development Authority reveal that the assessee was not in any way a developer but was only a contractor. Thus, these case laws are not applicable to the facts of the assessee s case. 11. It is found that there is no dispute about the fact that as the law stands now in the light of retrospective insertion of explanation below to Section 80IA(13), the assessee is not eligible for deduction u/s 80IA(4).This Explanation, introduced by Finance Act, 2009 with retrospective effect from 1st April, 2000, provides that for the removal of doubts, it is hereby declared that nothing contained in this Section (i.e. 80IA) shall apply in relation to a business referred to sub-section (4) which .(not readable) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The details of the above defective vouchers have been prepared as per annexure separately. The total amount will be added to the income of the assessee. In view of above, the total income of the assessee is computed as under:- Income from business head as Declared by the assessee Rs.6,96,050/- Add- 1. Addition on account of expenses disallowed as discussed above Rs.1,27,589/- Less Interest income considered Separately Rs.10,67,923/- Loss From Contract Business Rs.2,44,283/- Profit from the Business which is not eligible deduction U/s 80IA (Computed as per para supra) Rs.1,07,250/- Loss from the business which is Eligible deduction U/s 80IA Rs.3,51,533/- Net Loss Rs.2,44,283/- Income from other sources Interest income as declared by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to a conclusion such order cannot be stated to be erroneous order. The ld. A.R. submitted that when the order of the A.O. is not erroneous or prejudice to the interest of the revenue these two basic conditions has not been satisfied, therefore, the action of the CIT in exercise of power under Section 263 is not in accordance with law. The ld. A.R. relied upon the following orders :- (1). Hon ble Madhya Pradesh High Court (Full Bench) in the case of CIT Vs. K.L. Rajput 164 ITR 197 (M.P.). (2). Hon ble Madhya Pradesh High Court (Full Bench) in the case of CIT Vs. Mandsaur Electric Supply Co. Ltd., 140 ITR 677 (M.P.) (3). Hon ble Madhya Pradesh High Court (Full Bench) in the case of CIT Vs. Simplex Metalica 164 ITR 202 (M.P.) (4). Hon ble Madhya Pradesh High Court in the case of CIT Vs. Narpat Singh Malkhan Singh 128 ITR 77 (M.P.) (5). Hon ble Madhya Pradesh High Court in the case of Kanhiram Ramgopal Vs. CIT, 170 ITR 41 (M.P.) (6). Hon ble Madhya Pradesh High Court in the case of CIT Vs. Bhimraj Sunderlal 219 ITR 36 (M.P.) (7). Hon ble Andhra Pradesh High Court in the case of CIT Vs. Srinivasa Construction Co. 236 ITR 503 (A.P.) (8). Hon ble Kerla High Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is hereby declared that, for the purposes of this sub-section,- (a) an order passed [on or before or after the 1st day of June, 1988] by the Assessing Officer shall include- (i) an order of assessment made by the Assistant Commissioner [or Deputy Commissioner] or the Income-tax Officer on the basis of the directions issued by the [Joint] Commissioner under Section 144A; (ii) an order made by the [Joint] Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Chief Commissioner or Director General or Commissioner authorised by the Board in this behalf under Section 120; (b) record [shall include and shall be deemed always to have included] all records relating to any proceeding under this Act available at the time of examination by the Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal [filed on or before or after the 1st day of June, 1988], the powers of the Commissioner under this sub-section shall extend [and shall be deem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be said to be erroneous. We find that the expressions erroneous , erroneous assessment and erroneous judgment have been defined in Black's Law Dictionary. According to the definition, erroneous means involving error; deviating from the law . Erroneous assessment refers to an assessment that deviates from the law and is, therefore, invalid, and is defect that is jurisdictional in its nature, similarly, erroneous judgment means one rendered according to course and practice of court, but contrary to law, upon mistaken view of law, or upon erroneous application of legal principles. 10. An order cannot be termed as erroneous unless it is not in accordance with law. If an Income tax Officer acting in accordance with law makes an assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the A.O. should make thorough enquiry and order should have been written more elaborately. This section does not visualise a case of substitution of the judgment of the Commissioner for that of the Income-tax Officer, who passed the order, unless the decision is held to be erroneous. Cases may be visualised where the Income-tax Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court held that an incorrect assumption of fact or an incorrect application of law, will satisfy the requirement of the order being erroneous. An order passed in violation of the principles of natural justice or without application of mind, would be an order falling in that category. The expression prejudicial to the interests of the revenue , the Supreme Court held, it is of wide import and is not confined to a loss of tax. What is prejudicial to the interest of the revenue is explained in the judgment of the Supreme Court :- . . . The phrase prejudicial to the interests of the revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer. 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 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not visualise a case of substitution of the judgment of the Commissioner for that of the Income-tax Officer, who passed the order, unless the decision is held to be erroneous. Cases may be visualized where the Income-tax Officer while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some changes. The Commissioner, on perusal of the records, may be of the different opinion than the opinion of the Income-tax Officer. That would not vest the Commissioner with power to re-examine the accounts and express different opinion. It is because the Income-tax Officer has exercised the quasi-judicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. It may be said in such a case that in the opinion of the Commissioner the order in question is prejudicial to the interests of the Revenue. But that by itself will not be enough to vest the Commissioner with the power of suo motu revision because the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT does not amount to hold that the order of the A.O. is erroneous. In original assessment the A.O. has examined the issue by raising query letter and after recording clear facts in the order partly allowed the issue under Section 80IA. The A.O. disallowed and after applying mind found that the assessee was not eligible for deduction under Section 80IA in respect of income from the contract with M/s Deep Jai Builders and interest income. Conscious decision of the A.O. is a judicial decision. The action of the A.O. is in accordance with law while making the assessment and such action of the A.O. as in accordance with law cannot be provided as erroneous by the CIT simply because according to him the A.O. should made adequate inquiry and orders should have been written more legibly. The order of the A.O. has been challenged before the CIT though only on the issue of whether interest income is allowable for deduction u/s 80IA or not. The CIT allowed the grounds of the assessee for other words. The CIT hence confirmed the order of the A.O. that the assessee was eligible for deduction u/s 80IA of the Act except on interest income and which has also been decided in favour of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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