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TMI Blog2009 (3) TMI 1002X X X X Extracts X X X X X X X X Extracts X X X X ..... view that the order passed by the Assessing Officer was erroneous and prejudicial to the interest of the Revenue on the following grounds:- i) The provision of ₹ 8 crores representing management incentive/variable performance being in the nature of bonus or commission covered under section 43B of the Income Tax Act, 1961 was not considered for disallowance under that section. ii) There is a mistake in the computation of deduction admissible under section 10A of the Income Tax Act, 1961. The mistake has occurred, on account of the Assessing Officer computing the deduction taking into account the total turnover that excluded:- (a) Expenses incurred for telecom munication charges; and (b) Expenses incurred for for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... motu under it, is that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied of twin conditions, namely,- (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent - if the order of the Income-tax Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue - recourse cannot be had to section 263(1) of the Act. 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. In the present case, as pointed out earlier, the CIT has pointed out three alleged mistakes in the order of assessment made by the AO under section 143(3). These three mistakes have been indicated in Para No. 2 of this order. The learned counsel has supported the view taken by the AO in the assessment order in regard to issue No. (ii) by various decisions, which have been referred to in Para No. 4 above. Similarly, in regard to issue No. (iii), the view taken by the AO is supported by the decision of the Tribunal in the case of Enercon Wind Farms (Krishna) Ltd. (supra). 10. In our view, in respect of No. (ii) and (iii), the order of the AO cannot be said to be erroneous. The Hon'ble Supreme Court in the case of Malabar Industri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... copy of the assessment order passed under section 143(3) and do not find any discussion in respect of the issue. The assessee has also nor furnished any evidence to establish whether the Assessing Officer has considered the issue during the course of the original assessment proceedings. The Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT, (2000) 243 ITR 83 (SC) has laid down the following principle of law in respect of section 263 of the Act:- A bare reading of section 263 of the Income-tax Act, 1961, makes it clear that the prerequisite for the exercise of jurisdiction by the Commissioner suo motu under it, is that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Income-tax Officer is unsustainable in law . 9. As is evident from the above decision, if one facts it is shown that the Assessing Officer has not applied his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hartered Accountant. Though we need not examine the correctness of the claim of the assessee, in our view, the claim having been made before the CIT and he having failed to consider the same, his order cannot be justified. The assessee had made the claim in the proceedings under section 263 and the CIT and the CIT did not examine the same. He simply asked the Assessing Officer to verify the same. Directing the Assessing Officer to verify the claim could be given in exercise of power under section 263, but if the very jurisdiction of the CIT did not exist for the reason that there was no loss to the Revenue by the reason of non-application of mind of the Assessing Officer, then there is lack of jurisdiction. Therefore the direction of the CI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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