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TMI Blog2015 (10) TMI 2027X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2004-05 to 2006-07. Once the revenue accepted the deduction in earlier years, it cannot be questioned in subsequent years unless there is a change of facts in the subsequent years. Admittedly, in the present case, there is no change in the facts which are existed in the A.Y. 2004-05 to A.Y. 2006-07. A.O. has rightly allowed deduction u/s 80-IB of the Act after proper enquiry and his order does not warrant any interference by the CIT. The CIT assumes jurisdiction and revised the assessment order u/s 263 of the Act without pointing out any mistakes in the A.O’s order with a different opinion, which itself is not a ground for assuming jurisdiction u/s 263 of the Act. Therefore, we quash the CIT’s order u/s 263 and restore the assessment order passed by the assessing officer. - Decided in favour of assessee. - ITA No.140/Vizag/2012 - - - Dated:- 11-9-2015 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER For The Assessee by: Shri G.V.N. Hari, Advocate For The Revenue : Shri Th. Lucas Peter, CIT(DR) ORDER Per Shri G. Manjunatha, Accountant Member:- This appeal filed by the assessee is directed against the order of CIT, Rajah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that on verification of the financial statement filed by the assessee for the assessment year 2004-05, it appears that there are no job work charges earned by the assessee for the relevant assessment year and assessee only done some trading activity which is evidenced from the profit loss account filed along with return of income. He further, observed that clause (IV) of sub-section 2 of section 80-IB of the Act specifies that in case where the Industrial undertaking manufacturing or producing articles or things, the undertaking employs 10 or more workers in the manufacturing process carried on with the aid of power or employs 20 or more workers in a manufacturing process carried on without the aid of the power. However, on verification of the records furnished by the assessee, it is noticed that though the assessee furnished list of 10 employees, the corresponding salary expenditure debited to the profit loss account, it appears that there was no manufacturing activity carried on during the relevant period as salary expenditure debited to profit loss account was meager. Therefore, the CIT was of the view that the assessment order passed u/s 143(3) dated 30.12.2009 is erroneo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requested the bench to restore the order passed by the assessing officer and dismiss the order passed by the Ld. CIT. 5. On the other hand, the Departmental Representative strongly supports the order of the CIT. He further, argued that if you go through the profit loss account filed by the assesse, there was no manufacturing expenditure incurred by the assesse during the financial year and also it is only involved in trading of goods which is evidenced from the financial statement filed by the assessee. He further, submits that mere production of a certificate from the Directorate of Industry Commerce would not sufficient evidence to prove that the assessee has carried out manufacturing activity for the relevant period under consideration. The DR, placed his reliance on the judgment of Hon ble High Court of Gujarat, in the case of CIT vs Jolly Polymers (2012) 342 ITR 87 (Guj). For the reasons stated above, he urged to confirm the order of CIT. 6. We have heard both the parties and perused the materials available on record. We also considered the case laws cited by either of the parties. The basic issue involved in this appeal is whether the assessee qualifies for deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. We do not agree with the CIT for the reason that there is a distinction between lack of enquiry and inadequate enquiry. If there is an inadequate enquiry that would not by itself give occasion to the CIT to assume jurisdiction u/s 263 of the Act, merely because he has a different opinion in the matter. The CIT can do this only, when there is a lack of enquiry by the assessing officer. In the present case, the assessment order is not detailed one but, the A.O. has passed a remark in the assessment order before allowing deduction u/s 80-IB of the Act, which clearly shows that he has made an enquiry before allowing deduction u/s 80- IB of the Act. The A.O. is not required to give detailed reason for each and every item of deduction in the assessment order. A.O. had called for explanation and the assessee has furnished its explanation. This fact had not been disputed by the revenue. Thus, it cannot be said that it is a case of lack of enquiry. 9. Now, it is relevant to consider the case laws relied on by the assessee. The Hon ble Bombay High Court in the case of CIT Vs. Western Outdoor Interactive P. Ltd. (supra) has considered the similar issue and held as under: We have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. (c) To invoke the suo motu revisional powers to reopen a concluded assessment under section 263, the Commissioner must give reasons; that a bare reiteration by him that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, will not suffice; that the reasons must be such as to show that the enhancement or modification of the assessment or cancellation of the assessment or directions issued for a fresh assessment were called for, and must irresistibly lead to the conclusion that the order of the Income-tax Officer was not only erroneous but was prejudicial to the interests of the Revenue. Thus, while the Income-tax Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. A similar issue has came before the Hon ble High Court of Delhi in the case of CIT Vs. Sunbeam Auto Ltd. reported in (2011) 332 ITR 167, wherein the Hon ble High Court held as follows: The submission of the counsel for the revenue was that while passing the assessment order, the AO did not consider the aspect specifically whether the expenditure in question was revenue or capital expenditure. This argument predicates on the assessment order, which apparently does not give any reasons while allowing the entire expenditure as revenue expenditure. However, that by itself 'would not be indicative of the fact that the AD had not applied his mind on the issue. The AD in the assessing order is not required to give detailed reason in respect of each and every item of deduction, etc. Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. The counsel for the assessee is right in his submission that one has to keep in mind the distinction between lack of inquiry and inadequate inquiry . If there was any inquiry, even inadequate that would not by itself give occasion to the CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve to work on complete accuracy at high speed for a longer period, replacement of these parts at short intervals becomes imperative to retain accuracy. Because of these reasons, these tools and dyes have a very short span of life and it could produce maximum one lakh permissible shorts. Thereafter, they have to be replaced. With the replacement of such tools and 'dyes, which are the components of a machine, no new asset comes into existence, nor is there benefit of enduring nature. It does not even enhance the life of existing machine of which these tools and dyes are only parts. No production capacity of the existing machines is increased either. It is clear that view taken by the AD was one of the possible views and therefore, the assessment order passed by the AD could not be held to be prejudicial to the Revenue. Thus, from whatever angle the matter is to be looked into, the conclusion would be that the order of the Tribunal does not call for any interference as the question of law has rightly been decided,-Sunbeam Auto Ltd. vs. CIT (2006) 100 TT3 (Del) 209 affirmed; CIT vs. Saravana Spinning Mills (P) Ltd. (2007) 211 CTR (SC) 281 : (2007) 293 ITR 201 (SC) distinguished. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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