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TMI Blog2014 (2) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... ssible or sustainable. In our opinion, under the law there cannot be even two views possible that the assessee can adopt different system of accounting for bringing to tax the interest subsidy under the head "Income from business or profession". Doctrine of Merger - merger of the issues - Revision u/s 263 of the Act – Held that:- if we look into Explanation (c) of section 263 of the Act, it is apparent that Explanation (c) empowers the CIT to execute power u/s. 263 of the Act on such matter as has not been considered and decided in appeal. The issue relating to whether the interest subsidy is chargeable on receipt basis or on accrual basis has not been decided by the CIT(A). - the submission made by the Ld. AR does not have any legs to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld. AR, we are of the opinion that on merit, this Tribunal does not have any jurisdiction to examine the issue in an appeal filed against the order passed u/s. 263 of the Act. Accordingly, we dismiss the ground taken by the assessee on merit against the order passed u/s. 263 of the Act. 3. Now, coming to the issue about the challenge of the order passed u/s. 263 of the Act is a valid order or not. Before deciding the issue, it is necessary to go through the facts of the case. The brief facts are that the assessment in this case was passed u/s. 143(3) of the Act on 29.10.2010 determining the total income at Rs.31,59,840/-. Subsequently, the CIT invoking the jurisdiction u/s. 263 of the Act issued notice to the assessee dated 05.10.2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attention was also drawn towards the Audit Report appearing at pages 5 and 13 for the year ended 31.03.2006 and 31.03.2007 respectively. Particularly at page 5 and 13 of the paper book in which under item 13 it was specifically mentioned that the interest subsidy and the capital subsidy from WBIDC will be considered in the year of the receipt. For the impugned assessment year, attention was drawn towards page 22 of the paper book and it was pointed out that under Item No. 13(d), it was specifically mentioned that the interest subsidy of Rs.6.86 lacs from WBIDC will be considered in the year of the receipt. Thus, it was contended that the assessee was consistently following the receipt method in respect of interest subsidy. The revenue has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s erroneous and prejudicial to the interest of the revenue. Both the conditions that there is an error in the order and the order passed is prejudicial to the interest of revenue must be satisfied. We have perused the provision of section 145 of the Act. We noted that u/s. 145 of the Act, income chargeable under the head 'profit and gains of business or profession' has to be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. No doubt the assessee has regularly accounted for the interest subsidy on receipt basis i.e. on cash basis but the provision of section 145 of the Act does not talk of any particular income or source of income under the head 'profit and gains of business or pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oneous order prejudicial to the interest of the revenue unless the view taken by the ITO is unsustainable in law." The Hon'ble Supreme Court in this case in a clear term has laid down that if the view taken by the ITO is unsustainable in law then it can be said that there is an error in the order and the order passed is prejudicial to the interest of the revenue. It is not a case where there can be two views are possible. The provision of section 145 is explicitly clear. It permits only either cash system of accounting or mercantile system of accounting for computation of income under the head 'Income from Business or Profession'. Both the methods i.e. cash or mercantile system of accounting cannot be partly adopted for computing the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of accounting. Therefore, if we look into Explanation (c) of section 263 of the Act, it is apparent that Explanation (c) empowers the CIT to execute power u/s. 263 of the Act on such matter as has not been considered and decided in appeal. The issue relating to whether the interest subsidy is chargeable on receipt basis or on accrual basis has not been decided by the CIT(A). Therefore, in our opinion, the submission made by the Ld. AR does not have any legs to stand. In view of this, we confirm the order of CIT as, in our opinion, the CIT has rightly exercised his jurisdiction u/s. 263 of the Act. We, therefore, confirm the order of CIT. 7. In the result, appeal of assessee is dismissed. 8. Order is pronounced in the open court on 31.01 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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