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TMI Blog2016 (4) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 The Gujarat Pollution Control Board has given consent and authorization treating the assessee an Industrial Undertaking - Decided in favour of assessee No disallowance has been made by the A.O u/s. 14A - Held that:- This observation of the Commissioner is also against the true facts of the case, the following observations/findings of the A.O would explain the position. "The submission of the assessee has been considered. Regarding investments, the assessee has put on records from its accounts evidence to demonstrate that the source of investment is out of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neous and prejudicial to the interest of the revenue on the following grounds:- 1. The assessee had claimed capital expenses (IPO expense) of ₹ 1,17,14,943/- being 1/5th of ₹ 5,85,74,716/- as preliminary expenses u/s. 35D after commencement of business. As per the applicable provisions of section 35D(1)(ii) for A.Y. 2009-10 the assessee was not eligible to claim the same as the assessee is not an Industrial Undertaking. 2. The assessee had earned exempt dividend income of ₹ 1,15,10,060/-. The A.O had invoked the provisions of section 14A but did not disallow proportionate interest expenses under Rule 8D(2)(ii) of I.T. Rules 1962. 4. The ld. counsel continued to state that for the aforesaid reasons, the Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 hut 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 the section will be attracted. An incorrect assumption o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er that the A.O has not enquired into this is incorrect. We find that the A.O has thoroughly examined this issue at length which is evident from the observations/findings given at para 3 of the assessment order. 10. Since the claim of the assessee is backed by judicial pronouncement in favour of the assessee. It cannot be said that there was a wrong assumption of law. 11. The second observation of the Commissioner is that no disallowance has been made by the A.O u/s. 14A of the Act. The Commissioner further observed that the A.O has proceeded on a wrong assumption of facts that the investments made by the assessee are out of non interest bearing funds whereas the correct facts are that the investments have been made out of interest be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... every loss of revenue as a consequence of an order of the AO cannot be treated as prejudicial to the interest of the Revenue, for e.g. 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 Ld. Commissioner does not agree, it cannot be treated as an order which is erroneous or prejudicial to the interest of Revenue unless the view taken by the Income Tax Officer is unsustainable in law. 16. The Bombay High Court in CIT Vs Gabrial India Ltd., (1993) 203 ITR 108 has held that the decision of the Income Tax Officer could not be held to be erroneous simply because in his order, he did not mak ..... X X X X Extracts X X X X X X X X Extracts X X X X
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