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TMI Blog2015 (8) TMI 1207X X X X Extracts X X X X X X X X Extracts X X X X ..... ders by them, agreements entered into with them etc. and applicability of provisions of section 40(a)(i) read with section 9(1)(vii) of the Act while completing the assessment. The order passed by the Assessing Officer under section 143(3) read with section 147 allowing the claim of the assessee without examining the payments made to non-resident agents towards sales commission and applicability of provisions of section 40(a)(i) read with section 9(1)(vii) of the Act is certainly an order passed erroneously and prejudicial to the interests of the Revenue. Therefore, we hold that the Commissioner of Income Tax rightly invoked the provisions under section 263 of the Act directing the Assessing Officer to complete the assessment afresh afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 115JB of the Act. Subsequently, Commissioner of Income Tax passed order under section 263 of the Act on 28.12.2012 holding that assessment order passed by the Assessing Officer under section 143(3) read with section 144C is erroneous and prejudicial to the interests of the Revenue for the reason that the Assessing Officer failed to examine the payments made to non-resident agents towards sales commission and applicability of provisions of section 40(a)(i) read with section 9(1)(vii) of the Act. Commissioner of Income Tax on examining the records held that Assessing Officer failed to examine the correct facts relating to payments made to Saint Gobain Glass Exprover particularly with reference to liability of deduction of tax under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come Tax therefore held that Assessing Officer in the present case failed to examine correct facts relating to export agency commission paid to the non-residents which were actually paid for various market services partaking the character of technical services. In the circumstances, Commissioner of Income Tax held that assessment order passed is erroneous and prejudicial to the interests of the Revenue and thus this is a fit case for assuming jurisdiction under section 263 of the Act. Accordingly, Commissioner of Income Tax set aside the assessment order dated 30.12.2010 with a direction to Assessing Officer to complete the assessment afresh after giving adequate opportunity to the assessee to place all relevant facts and submissions. 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 263 and setting aside the assessment for fresh assessment. 5. Heard both sides. Perused orders of lower authorities and the decision relied on. In the course of assessment proceedings, it appears that assessee submitted that export commission of ₹ 10,78,21,791/- was paid for the income earned outside India and therefore the income does not accrue or arise in India, hence no TDS is applicable. The Assessing Officer accepted the submissions of the assessee and no disallowance was made in respect of sales commission paid by the assessee. The Commissioner of Income Tax passed order under section 263 of the Act holding as under:- 3.2. So far as the commission paid to various other agencies were concerned the assessee had only me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s follows: There can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer, it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind . The AO in the present case failed to examine the correct facts relating to the Export Agency Commission paid to the non-residents which were actually paid for various market service partaking the character of technical services . In the above context, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income Tax Officer had not made necessary enquiries before allowing the deduction of interest to Mannulal Matadeen on the credit balance and therefore, the order passed was erroneous and prejudicial to the interests of the Revenue. 8. The Hon ble jurisdictional High Court in the case of CIT Vs. Seshasayee Paper and Boards Ltd. (242 ITR 490) while examining the powers of Commissioner of Income Tax under section 263 observed as under:- That the Commissioner found that the Incometax Officer was not correct in granting relief with respect to some of the items considered in the original assessment proceedings and from the instances or specimens of some of the cases examined by him, he came to the conclusion that the Income-tax Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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