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TMI Blog2015 (12) TMI 839X X X X Extracts X X X X X X X X Extracts X X X X ..... uction in terms of Section 80 IA(9) of the Act and, therefore, it cannot be said that the Assessing Officer had not applied its mind and had failed to make an enquiry. We are of the view that there was no material to indicate that the Assessing Officer had not applied its mind to the provisions of Section 80IB(13) of the Act and Section 80IA(9) of the Act nor we find that the Assessing Officer had passed the order without application of mind or the assessment order was based on incorrect application of law. The assessment order, on the other hand, was passed under Section 143(3) of the Act by the Assessing Officer on applying its mind and after due discussion and enquiry. From the aforesaid discussion, it is apparent that the expression "prejudicial to the interests of revenue" appearing in Section 263 of the Act has to be read in conjunction with "erroneous" and that every loss of revenue as a consequence of the assessment order could not be treated as prejudicial to the interest of the revenue. Where the Assessing Officer has adopted a view, which is permissible in law or where two views are possible and the Income Tax Officer has taken one view, we are of the view that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On going through all the documents submitted and produced, it is seen that assessee qualifies for deduction u/s 80IB as per proviso (I) of sub-section (3) of section 80IB of I.T.Act, 1961. In view of above discussion, the deduction u/s 80IB of I.T.Act, 1961 is therefore allowed and A.Y. 1992-93 is the initial assessment year. In view of above observations, total income is computed as under: Net Profit as Per Profit and Loss Account = 3,4135,688 Add dep for separate Consideration = 34,05,139 Total ₹ 3,75,40,827 Add 1. Donation 75,800 2. Disallowance out of foreign Tour as per para 2 above = 4,17,564 3. Disallowance out of vehicle Maintenance running expenses vide para 3 above = 1,57,935 4. Disallowance out of Car dep vide Para 4 above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dopted for the purpose of deduction under Section 80-IB of the Act. The Commissioner of Income Tax held that for the purpose of calculation of deduction under Section 80HHC and 80-IB of the Act income from business was taken to ₹ 3,49,13,594.00 and both the deductions were allowed after taking this amount without considering the provision of Section 80-IA (9) of the Act, which are applicable to Section 80-IB of the Act by virtue of Section 80-IB(13) of the Act. The Commissioner, accordingly, held that the approach of the Assessing Officer was incorrect and consequently, the deductions given was prejudicial to the interest of the revenue. The Commissioner of Income Tax, accordingly, cancelled the assessment order and directed the Assessing Officer to make a fresh assessment de-novo after providing a reasonable opportunity of hearing to the assessee. 5. The assessee, being aggrieved, filed an appeal before the Tribunal, which was allowed and the order of the Commissioner of Income Tax passed under Section 263 of the Act was set aside. The Tribunal held that the Commissioner of Income Tax was not justified in revising the order of the Assessing officer under Section 263 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the Commissioner of Income Tax passed under Section 263 of the Act. In the event the Court holds that the Commissioner committed an error in revising the order of the Assessing Authority under Section 263 of the Act, in that event answering question nos. 1 and 2 would only be an academic exercise in which case it is not necessary for the Court to answer those questions. 8. On the issue of exercise of powers under Section 263 of the Act there is a catena of decisions given by various Courts including this Court as well as by the Supreme Court and, it is not necessary to dwell in detail all those decisions. It is sufficient for this Court to consider one judgment given by the Supreme Court in Malabar Industrial Co. Ltd. Vs. Commissioner of Income Tax, (2000) 243 ITR 83 (SC), wherein the Supreme Court explained the provision of Section 263 of the Act as under: To consider the first contention, it will be apt to quote Section 263(1) which is relevant for our purpose. 263. Revision of orders prejudicial to revenue - (1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany Vs. Commissioner of Income-tax (1987) 163 ITR 129 interpreting prejudicial to the interests of the revenue. The High Court held (page 138): In this context, it must be regarded as involving a conception of acts or orders which are subversive of the administration of revenue. There must be some grievous error in the Order passed by the Income-tax Officer, which might set a bad trend or pattern for similar assessments, which on a broad reckoning, the Commissioner might think to be prejudicial to the interests of Revenue Administration. In our view this interpretation is too narrow to merit acceptance. The scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the Revenue. If due to an erroneous order of the Income-tax Officer, the revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the revenue. 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 Assessing Officer cannot be treated as prejudicial to the interests of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the light of the aforesaid pronouncement, Sri Shubham Agrawal, Advocate urged that the Assessing Officer did not consider nor mentioned the provision of Section 80-IB (13) read with Section 80-IA(9) of the Act and the assessment order was, therefore, passed in complete ignorance of the provisions and, therefore, the assessment order granting deductions was passed on incorrect application of law. The learned counsel urged that consequently, the Commissioner of Income Tax was justified in holding that the order of the Assessing Officer was erroneous and prejudicial to the interest of the revenue. 11. On the other hand, Sri R.R.Agrawal, the learned Senior Counsel for the assessee submitted that the Assessing Officer considered all the provisions and, after detailed discussions, made the assessment order under Section 143(3) of the Act granting maximum deduction permissible as provided under Section 80-IA (9) of the Act. It was urged that mere fact that Sections 80 IA (9) and 80-IB (13) were not indicated in the assessment order does not make the assessment order erroneous or prejudicial to the interest of the revenue. 12. Having heard the learned counsel for the parties, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he contention that the order of the Assessing Officer was erroneous as there was incorrect application of law, namely, that the deduction under Section 80HHC of the Act was computed after reducing the amount of deduction under Section 80 IB of the Act from the profits and gains is a legal consideration and does not mean that there has been an incorrect application of law. The mere absence of the discussion of the provision of Section 80 IB (13) of the Act read with Section 80 IA(9) would not mean that the Assessing Officer had not applied its mind to these provisions or that the assessment order has been passed on incorrect application of law. From a perusal of the assessment order it is clear that the deduction has not exceeded beyond 100%, as contemplated under Section 80 IA(9) of the Act. Consequently, even if the Section 80 IA(9) has not been mentioned in the impugned order, nonetheless, the impact of this section has been given effect to in the assessment order. This view of ours is also supported by the decision of Delhi High Court in Commissioner of Income-Tax Vs. Honda Siel Power Products, (2011) 33 ITR 547 (Del). 16. The Assessing Officer granted deduction under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cussion and enquiry. 20. From the aforesaid discussion, it is apparent that the expression prejudicial to the interests of revenue appearing in Section 263 of the Act has to be read in conjunction with erroneous and that every loss of revenue as a consequence of the assessment order could not be treated as prejudicial to the interest of the revenue. Where the Assessing Officer has adopted a view, which is permissible in law or where two views are possible and the Income Tax Officer has taken one view, we are of the view that the Commissioner of Income Tax could not exercise its power under Section 263 of the Act to differ from the view of the Assessing Officer even if there was a loss of revenue. There is no doubt that the provision cannot be invoked on each and every type of error committed by the Assessing Officer. It is only when an order is erroneous then Section 263 of the Act could be invoked. 21. In the light of the aforesaid, we are of the opinion that the Tribunal was justified in setting aside the order of the Commissioner of Income Tax passed under Section 263 of the Act. The appeal fails and is dismissed. The question of law as modified above is answered in fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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