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TMI Blog2017 (4) TMI 406X X X X Extracts X X X X X X X X Extracts X X X X ..... ing further enquiries; c. once the AO has taken one of the permissible view on the basis of the enquiry, order cannot be said to be erroneous merely because the CIT/DIT(E) entertains a different opinion in the matter; and d. where there is no difference on taxability of income, order cannot be treated as prejudicial to the interest of the revenue. e. where the issue was subject matter of appeal before the First Appellate Authority, the order cannot be revised u/s. 263 of the Act. 1.3 On the facts and in the circumstances of the case and in law, the Ld. DIT(E) ought to have held that the proviso to section 2(15) is not applicable on the facts of the present case. 1.4 The Appellant prays that order passed u/s. 263 of the Act to be struck down as null and void ab initio. The Appellant craves leave to add, amend, alter and / or delete any/all of the above grounds of appeal. 3. It was argued by learned Senior Counsel that the twin condition for invoking provisions u/s.263 were not satisfied in so far as no prejudice has been caused to the Revenue since AO in his order has declined the claim of exemption u/s.12A and brought to tax net entire income declared as per income an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is an undisputed fact that the entire exemption of claim u/s 11 was denied by the AO in the assessment order passed u/s 143(3) which is the subject matter of revision u/s 263 here in this appeal. As a result of such an order, the entire surplus amount revealed from income and expenditure account of Rs. 83.98 crores was assessed. The entire assessment order and the assessed income was subject matter of appeal before the CIT(A), wherein the entire exemption u/s 11 stood allowed. In the order giving effect to the appellate order, the income has been finally assessed at "nil". In the second appeal also the subject matter and the issue of exemption u/s 11 again got merged. Now, in the revisionary jurisdiction u/s 263, the Ld. DIT is trying to set aside the original assessment order u/s 143(3) dated 22.12.2011 on the ground that, AO has failed to consider the amended provisions of section 2(15), that is, the Proviso inserted by Finance Act, 2008 w.e.f. assessment year 2009-10 has not been considered and examined. If the proviso would be applied then there might be a situation where assessee's activity may not be held to be for "charitable purposes" and exemption u/s 11 may not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revision u/s 263 has been merged with the order of the Tribunal, therefore, Ld. DIT is precluded to revise or set aside such order as it is beyond the second of section 263; and secondly, such an order cannot be held to be 'prejudicial to the interest of the revenue', because the income which has been sought to be assessed in pursuance of order u/s 263, is the same which was originally assessed by the AO. Thus on both the counts, the impugned order passed u/s 263 is cancelled and the grounds raised by the assessee are thus allowed. Other arguments of ld. Sr. Counsel are not being adjudicated upon. 11. In the result, appeal of the assessee is allowed. 5. On the other hand, learned CIT DR contended that the order of the AO has now merged with the order of CIT(A) wherein exemption has been granted to the assessee as claimed u/s.11 which resulted in nil tax, accordingly there was fulfilment of both the condition of order being erroneous as well as prejudicial to the interest of the Revenue. 6. We have considered rival contentions and carefully gone through the orders of the authorities below. 7. From the record we found that the assessee filed its return of income on 30. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P. State Road Transport Corporation is not a Local Authority within the meaning of section 10(20) of the I.T. Act,1961 and its, income from house property, capital gains and business of supply of goods and services is not exempt to the extent provided in section 10(20) of the I.T. Act. While deciding the issue the decision in the case of Calcutta State Transport Corporation vs. CIT 1996 (219 ITR 515) (SC) and CIT vs. U.P. Forest corporation (1998)230 ITR 945 (SC) were followed. In the said case the assessee for the A.Y. 1977-78 had claimed exemption u/s 11 of the I.T. Act on the basis that the corporation had been formed for the advancement of an object of general public utility not involving the carrying on any activity for profit. 8. After the AO passed the order CIT(A) set aside the same u/s.263 by its order dated 28/03/2014 after observing as under: 4. I have examined the records and the assessment order passed by the Assessing Officer. In spite of proviso have been inserted to Section 2( 15) vide Finance Act, 2008 w.e.f. 2009, having application for assessment year 2009-10, the AO has not mentioned a single word about the same in the assessment order or in any of the corres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was aware as he had recommended to the DIT(E) cancellation of the registration granted to the assessee u/a 12AA(3), he did not cover the section in the assessment order and that certainly is an error and therefore the order is an erroneous order. 15. The order is prejudicial to the interest of revenue as the AO by only relying on the order of the earlier year has not applied his mind to the newly inserted proviso to section 2(15). Therefore, knowing fully well that the issue that he is mentioning is covered in favour of the assesse, he should have invoked the recently inserted proviso to section 2(15) which was not tested in appeal. By not doing so, he has caused prejudice to the interest of revenue. The AO by simply repeating the old order allowed the case to be lost in appeal which would have got strengthened by citing of the newly inserted proviso to section 2(15). Therefore, the order is also prejudicial to the interest of revenue. 16. The other contention of the assessee is that the issue which has been decided by CIT(A) and hence cannot be taken up in proceedings u/s 263. In the instant case, the issue of applicability of proviso to section 2(15) was not taken in appeal a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) (or AAC as in that case) has plenary powers in disposing of an appeal. The scope of his power is coterminous with that of the Assessing Officer. He can do what the Income-tax Officer can do and can also direct him to do what he has failed to do. 18.2 The ratio of the decision in the case of Nirbheram Daluram should prevail considering that it was pronounced in the context of S. 251 of the Act, while the earlier decision was in the context of the corresponding provision of 1922 Act. Since, the powers of the AO are coterminous with that of the CIT(A), the issue of application of proviso to section 2(15) in the instant case was capable of being considered and decided. 18.3 The issue of applicability of proviso to section 2( 15) is not debatable as the AO had not applied the same to the case at all. Had he applied and taken one view then it was correct to presume that the proceedings u/s 263 was merely a change of opinion. However, since the AO erred in not applying the said proviso at all in this case and hence the issue is not debatable. 18.4 The decisions of Lucknow Development Authority were relating to assessment years prior to the introduction of proviso to section 2( 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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