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TMI Blog2017 (8) TMI 530X X X X Extracts X X X X X X X X Extracts X X X X ..... owers under Section 263 of the Act on 31.03.1995, the decision of the Tribunal in Mysore Exports Ltd. (1995 (5) TMI 45 - ITAT BANGALORE) was not available before him as it was rendered on 19.05.1995. Therefore, we are of the view that the Assessing Officer cannot abdicate his responsibility of examining the claim for deduction before allowing it. Absence of examination of the claim made by the assessee while passing an assessment order and allowing the claim made, would render the order of the Assessing Officer erroneous and coupled with the fact that in this case it is admitting prejudicial to the interest of the revenue, exercise of the revisional jurisdiction under Section 263 of the Act by the Commissioner of Income Tax proper and valid. Decided in favour of the appellant-revenue and against the respondent-assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... icer allowed the claim under section 80 HHC without applying his mind to the "turnover" on which 80 HHC deduction needs to be determined. (d) So also the Commissioner of Income Tax noticed that the assessee received interest in Malaysia. The Assessing Officer included and taxed interest income as declared by the assessee as net interest, whereas as per section 5(1)(c) of the Act, the gross income of interest should have been taken as the amount of interest received by the assessee. (e) Thus, for the reasons mentioned in the above paragraphs, the Commissioner of Income tax opined that the order passed by the Assessing Officer was prima facie erroneous in so far as it was prejudicial to the interests of the revenue. In view of the above, the Commissioner of Income Tax set aside the order of the Assessing Officer and directed to modify the total income of the assessee accordingly. (f) Aggrieved with the order of the CIT passed u/s. 263 the assessee preferred appeal to the Tribunal, relying on the decision of the ITAT, Banglore Bench, Banglore in the case of DCIT vs. Mysore Exports Ltd., reported in 55 ITD 263 and the decision of the jurisdictional High Court in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Double Taxation Avoidance Agreement between the Government of India and Malaysia which is reported in 107 ITR 49(St.)., then stipulates the procedure to be adopted." The amount of Malaysian tax payable under the laws agreement, whether directly or by deduction, by a resident of India, in respect of income from sources within Malaysia which has been subjected to tax both in India and Malaysia, shall be allowed as a credit against the Indian tax payable in respect of such income but in an amount not exceeding that proportion of Indian tax which such income bears to the entire income chargeable to Indian Tax." Article 22 (Clause2) thus stipulates for credit of tax charged by Malaysia Government on income earned in Malaysia which is brought to tax in India on the global income concept. According to the revenue, since the assessee gets credit for the tax charged by Malaysia Government, the income to be considered for tax in India would be the gross income." 3. From the reading of the above, it is evident that applicantRevenue's grievance with the order of the Tribunal in setting aside the order of the CIT passed in exercise of Section 263 of the Act is on two counts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact that the claim for deduction made under Section 80 HHC of the Act was higher then that granted. In support he invites our attention to the order dated 30.06.1997 of the Tribunal recording the above submission on the part of the respondent-assessee. (b) In the present facts, the Commissioner of Income Tax could not have exercised his powers under Section 263 of the Act as the view taken by the Assessing Officer in his order dated 29.03.1993 passed under Section 143(3) of the Act was a possible view as is evident from the decision of the Tribunal in ACIT .vs. Mysore Exports Ltd. 55 ITD 263. Thus there was no reason to exercise jurisdiction under Section 263 of the Act. (c) In any event the issue of deduction under Section 80 HHC of the Act at the relevant time i.e. when the Assessing Officer passed the order dated 29.03.1993 was a debatable issue. Consequently jurisdiction under Section 263 of the Act could not have been exercised by the Commissioner of Income Tax. 7. At the very out set it may be pointed out that Mr. Dewani, learned counsel appearing for the respondentassessee in support of his contention that the Assessing Officer had applied his mind and examined the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. The law on exercise of jurisdiction under Section 263 of the Act is settled by the decision of the Apex Court in the case of Malabar Industrial Co. Ltd. .vs. CIT - 243 ITR 83 wherein it has recorded that power of revision under Section 263 of the Act can be exercised only on satisfaction of twin conditions namely the order of the Assessing Officer must be erroneous, and also prejudicial to the interest of the revenue. The Court further observed that where a claim made by the assessee is allowed by the Assessing Officer without having made any enquiry , then the order of the Assessing Officer to the extent it allowed such a claim is erroneous in law. The Apex Court also recorded the fact that where two views are possible, and the Assessing Officer hs taken one possible view, then even if the CIT does not agree with the view, it would not give him the jurisdiction to exercise jurisdiction under Section 263 of the Act. 11. In the above view, Mr. Bhattad, learned counsel for the applicant Revenue submits that it is very clear that the claim of the respondent assessee for deduction under Section 80 HHC of the Act was allowed without any discussion and/or consideration of the eligi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing deduction under Section 90 HHC of the Act. The words "due verification" would include within its ambit not only inadequate inquiry/verification but also no enquiry/verification. However, in case the respondent-assessee was of the view that the claim has been examined by the Assessing Officer before allowing it, then respondentassessee ought to have the statement of case modified/amended so as to bring the aforesaid facts on record, as held by the Apex Court in the case of Calcutta Agency Ltd. (supra). This not being done and now to draw far fetched inference cannot be accepted. It is now settled in view of Malabar Industries (supra) that nonenquiry before allowing the claim would make the order of the Assessing Officer amenable to jurisdiction under Section 263 of the Act. The nonenquiry by the Assessing Officer gives jurisdiction under Section 263 of the Act. Merely because the issue is debatable, it does not absolve the Assessing Officer from examining the issue and taking a view on the claim after examination. Similarly because the two views are possible and or that there are contrary view of higher forums, does not permit nonexamination of the claim and taking ..... X X X X Extracts X X X X X X X X Extracts X X X X
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