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TMI Blog2016 (12) TMI 1629X X X X Extracts X X X X X X X X Extracts X X X X ..... ng was 62%. From the terms of preference shares issued it can be seen that the same was redeemable at premium of 20 per share and the premium was required to be refunded by the company on its redemption. As regards to the issue of demerger of infrastructure division into Reliance Capital Asset Management Company Ltd., we find that the scheme of an arrangement of demerger approved by Hon’ble High Court of Bombay and Hon’ble High Court of Gujarat, looked into all the aspects before approving the schemes of demerger and now the PCIT cannot raise any question on the judgment of Hon’ble High Courts. We are of the view that when the scheme and orders of Hon’ble High Courts are in public domain and the same are also filed with the Registrar of companies (ROC), the same cannot be questioned by the Revenue and moreover in the revision proceedings u/s 263 of the Act. For claim of deduction towards loss incurred on forward brokering trade settlement complete details in respect to this loss is filed before the AO during the course of assessment proceedings in lieu of query raised and it is presumed that the AO has applied his mind to the facts of the case and passed an appropriate order. Hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee on query from the AO. In term of the above factual position, we are of the view that the assessment order framed under 143(3) of the Act is neither erroneous nor prejudicial to the interest of the Revenue. On lease rent and improvement expenditure the AO enquired the issue by raising a query u/s 142(1) of the Act dated 30-05-2013, wherein vide question No.19 the AO has asked the details of merger expenses including breakup and nature. We find that complete expenses of rent rates and taxes and details of rent premises which are filed before the AO vide letter dated 17-01-2014, wherein, the assessee has debited the sum of 56,41,858/- as property tax under the head rates and taxes and the details were submitted before the AO. It is a fact that this premise was taken on leave and license basis from Uptown Properties And Leasing Properties Pvt. Ltd. vide agreement dated 12-10-2007 and the same was evicted on 04-06-2009 Section 263 is a section which enables the Commissioner to have a look at the orders or proceedings of the lower authorities and to effect a correction, if so needed, particularly if the order or proceeding is erroneous and prejudicial to the interest of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that the action of the Learned PCIT in invoking provisions of section 263 of the Act and directing the Assessing Officer to pass a fresh assessment order be held to be ab-initio and/or otherwise void and bad in law." 3. Briefly stated facts are that the assessee is Ltd. Company engaged in the business of marketing and distribution of insurance and mutual fund products, trading in bullion, real estate broking services, derivatives trading in commodity market, providing infrastructural facilities to its associate concerns etc. Original assessment for the relevant A.Y. 2011-12 was completed by the AO u/s 143(3) of the Act vide his order dated 30-01-2014. Subsequently, the PCIT issued show cause notice u/s 263 for revising of the assessment order passed u/s 143(3) of the Act vide show cause notice No.Pr.CIT-1/263/Show Cause Notice/2015-16 dated 07-07-2015 for the reason that the AO failed to carry out relevant and meaningful enquiries on the followings: - " It is observed that during F.Y.2010-1 1, the Assessee Company issued 200,000,000, 10% cumulative redeemable preference shares of ₹ 10/- each at a premium of ₹ 20/- to Reliance Money Mail Ltd. These preference sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intriguing. It is relevant to mention here that Reliance Money Mall Ltd. itself had not got sufficient funds to invest in preference shares of Assessee Company. It (Reliance Money Mall Ltd.) obtained funds from Reliance Capital Ltd. in the form of preference shares issued to Reliance Capital Ltd. at the premium of ₹ 999/- per share. The Reliance Money Mall Ltd. also was running into losses and had not started its business operations fully. The façade of preference shares by Reliance Money Mall Ltd. at huge premium was adopted to transfer funds from Reliance Capital Ltd. to Reliance Money Infrastructure Ltd, through the conduit/medium of Reliance Money Mall Ltd. No enquiries whatsoever were carried out in this regard. The A.O. failed to verify when the actual allotment of preference shares was made and how the funds obtained through preference shares were utilised by the Assessee Company. It is relevant to mention here that demerged Infrastructure division of the Assessee Company had 95.29% of total assets of the Assessee Company which got transferred on merger with Reliance Capital Asset Management Co.Ltd to the "amalgamated company". It can be inferred th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been examined B. It is also stated in Schedule-16 giving details of "Significant Accounting Policies and Notes to Accounts" under the captioned 'Scheme of Arrangement'. Scheme of Arrangement: Pursuant to the Scheme of Arrangement u/s.391 to 394 of the Companies Act, 1956 sanctioned by the Hon'ble High Court of Judicature at Bombay vide its order dtd. 15th October, 2010 and, filled with the Registrar of Companies (RoC), Maharashtra on 4th February, 2011 and by the Hon'ble High Court of Gujarat at Ahmedabad vide its order dtd. 13th January, 2011 and filed with the RoC, Gujarat on 171h 2011, the Infrastructure Services division of the Company has been demerged and transferred to Reliance Capital Asset Management Ltd. (RCAM) with effect from the appointed date ( Effective Date) i.e., 17th February, 2011. Consequently, the following assets and liabilities have been transferred to RCAM. Assets and Liabilities Transferred Amount in Rs. Fixed assets 45,381,530 Current assets 704,618,470 Liabilities (unsecured loan) 750,000,000 Consideration for arrangement In respect of every 100 equity shares of ₹ 10 each fully paid up held by share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee not made in the return filed. However, this power is available (As per the judicial pronouncement) only with the appellate authorities and A.O. still has no power to allow claim of the assessee made during the assessment proceedings which has not been made in the Return of Income filed and /or in the revised return. D. The assessee has claimed deduction for refund of referral fee of ₹ 9,60,44,600/- pursuant to Note received from Insurance Regulatory Development Authority. No details have been called for by the A,O. in respect of this Note. No enquiry as to why the payment has been made to the Assessee Company for alleged referral fee? Whether any services were rendered by the Assessee Company and if yes,, the nature thereof was not examined by the A.O. The A.O. also failed to examine whether it was only an attempt to reduce the profit of 'Associate Company' which has paid alleged referral fee. E. The assessee has claimed the deduction for expense under the head 'Forward Brokerage Trade Settlement' to the tune of ₹ 62,509,31 1/-. No details have been gathered by the A.O. whether this expense was related to the business of the assessee and wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mprovements" and, at various stations. What were the assets sold to whom these were sold have not been examined. Sale of leasehold improvements for ₹ 27,172,549/- has been accepted without carrying out any meaningfully enquiries. There is one more issue related to leased premises and that is "payment of property taxes" to the extent of ₹ 56,41,858/- Whether it was liability of lessee or not ought to have been examined after seeing the lease contract & whether there was reimbursement from the lessor was also not examined by the A.O. 3. It is settled proposition of Law that failure of the A.O to carry out relevant and meaningful enquiries as warranted by the facts and circumstances of the case renders the assessment order erroneous and prejudicial to the interest of the revenue. This also emerges from the ratio of the decisions such as Malabar Industrial Co. Ltd. vs CIT 243 ITR 83(SC), CIT vs Max India Ltd. 295 ITR 282 (SC), CIT vs Mangal Castings 303 ITR 23 (P&H), CIT Vs. Kohinoor Tobacco Products (P) Ltd. [1998] 234 ITR 557, CIT(A) v. Mahavar Traders [1996] 220 ITR 167 (MP), Duggal & Co. V. CIT(A)[1996] 220 ITR 456, CIT vs MEPCO Industries Ltd. 294 IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent proceedings by the assessee on the questionnaires and replies given. The brief facts relating to the first issue are that the PCIT while deciding the issue on revision u/s 263 of the Act noted that the assessee was asked to explain the source of credit introduced in the books of accounts by way of issue of 20 lakh preferential shares, each having face value of ₹ 10 at the premium of ₹ 20 each to its holding company RMML Ltd. According to PCIT no proper enquiry to verify the source of funds / credits introduced as well as genuineness of the transaction was verified while passing of the assessment order u/s 143(3) of the Act by the AO. The PCIT was of the view that no details regarding source, capacity and genuineness of such credits or share capital introduced was enquired by the AO. The PCIT was of the view that due to demerger of the infrastructure and real-estate broking business of the assessee company i.e. Reliance Money Infrastructure Ltd (RMML) resulted into the erosion of the value of investment of ₹ 600 crores into ₹ 2 crores only. According to PCIT the entire aspects of sale and demerger of its infrastructural division as a going concern whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 014 wherein complete detail of parties to whom new preferential shares were issue and preferential shares are redeemed and enclosed as Annexure-15 & 16. The relevant Annexure are enclosed at assessee's paper book page 47 and the relevant reads as under: - "Annexure-15 Sr. No Name of Party PAN Address Amount 1. Emerging Money Mall Ltd. AAECR3099M 570, Rectifier House, Naigum Cross Road, Next to Royal Industrial Estate, Wadala, Mumbai-31 2,000,000,000 Annexure-16 Sr. No Name of Party PAN Address Amount 1. Reliance Capital AAACR5054J „H‟ Block, 1st Floor, Dhirubhai Ambani Knowledge 1,000,000,000 2. Reliance Securities Ltd. AADCR0260P 11th Floor, Rtech IT Park, Western Express Highway, Goregaon (E), Mumbai-63 1,000,000,000 " It was contended by the learned Counsel that during the course of assessment proceedings the AO issued notice u/s 142(1) of the Act and in the said notice vide question No.25, the AO has asked the assessee as to whether the company has issued any fresh shares during the year. The assessee submitted the details regarding the issue of shares and redemption of shares before the AO vide letter dated 17-01-2014. Further, a query ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal and amounts have been paid on a going concern basis on the understanding that finance will be available with the company for work-in-capital requirement from its promoters. In view of the above, the observation of PCIT that huge investment is made in loss making company by paying a premium of ₹ 20 per share does not make commercial sense and investment ought to have looked into closely by the assessee. The learned Counsel for the assessee argued that the promoter has brought in the funds by way of preference shares as their holding was 62%. From the terms of preference shares issued it can be seen that the same was redeemable at premium of ₹ 20 per share and the premium was required to be refunded by the company on its redemption. Hence, funds were brought in by the promoters and on the terms which cannot be said to be prejudicial to the interest of the Revenue. In view of the above, huge investment in quantity and that also preferential share was a commercial decision by a businessman and the Revenue has no authority to question the same. Another observation of the PCIT that the investment by RMML in the shares of assessee's company by borrowing funds from its asso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n issued of preference shares. He referred to the utilization as under: - Name Amount in Crs Purpose Reliance Securities Ltd. 100 Redemption of preference shares Reliance capital Ltd. 100 Redemption of preference shares Reliance Capital Ltd 285 Repayment of loan Reliance Securities Ltd 112.38 Repayment of loan Name Amount in Crs Purpose - 2.62 Internal purposes Total 600 7. Another allegation of the Revenue that the RCL was holding the control indirectly over the assessee being the fund provider to RMML, which has been invested by the assessee. The fund position was explained by the leaned counsel for the assessee by filing the details which are as under: - " Sl No. Name of the Company As on 31.03.2010 As on 31.03.2011 1. Reliance Securities Ltd. 19% 19% 2. Reliance Composite Insurance Broking Ltd. 19% - 3. Reliance Spot exchange Infrastructure Ltd. 19% - 4. Reliance CWT India Ltd. 19% 5. Emerging Money Mall Ltd 24% 62% Equity Shareholders of EMML as on 31.03.2010 and 31.03.2011 were as under: - Sl No. Name of the Company As on 31.03.2010 As on 31.03.2011 1. Reliance CWT India Ltd. 40% 2. Reliance Spot exchange Infrastructure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observation of the PCIT that exercise of investment was made with a view to book loss in the RCL is prima facie incorrect as the event of amalgamation between RMML and RCL took place almost after 33 months from the issue of shares by the assessee as well as RMML. In such circumstances, the learned Counsel for the assessee submitted the details that the value of the preferential share have eroded due to huge loss incurred by the assessee and he furnished unaudited divisional balance sheet of the assessee company as on the date of merger i.e. 15-02-2011, which has been reproduced in the order of PCIT and we need not to reproduce the same again for the sake of brevity. 9. As regards to the another issue, the demerger of infrastructure division in to Reliance Capital Assessment Management Company Ltd. (RCAMCL). It was explained by the learned Counsel for the assessee that the fact regarding demerger of infrastructure division of the assessee company was explained by filing a separate note in the notes on accounts which was submitted along with return of income and also during the course of the assessment proceedings same was explained. The relevant scheme of demerger has been approved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of infrastructure undertaking from the assessee company because Hon'ble High Courts have approved the same. The learned Counsel for the assessee argued that as an effect of demerger scheme the loss of the company which were brought forward will be carry forward by the assessee company and thus available loss of the assessee's company to have been reduced for carry forward purpose and this cannot be considered as prejudicial to the interest of the Revenue or even no error has caused to the Revenue. Hon'ble High Courts have approved this scheme. 10. The next issue on which revision order is passed is as regards to the claim of deduction on refund of referral fee allowed by the AO while framing assessment u/s 143(3) of the Act without proper enquiry and without application of mind. The PCIT was of the view that the claim of assessee in this regard that assessee being a Reliance ADA Group Company, provided infrastructure and other support services to various Reliance ADA Group Companies including Reliance Composite Insurance Progress Ltd. decided to utilize the services of the assessee company for optimization and furtherance of its business. RCBIL entered into an arrangement that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to utilize the services of RML for optimization for the cost and furtherance of its business. RCIBL entered into an arrangement with RMIL to avail the infrastructure support services and data base of RMIL. The leads generated were offered to select insurers depending on the requirement of the clients and the suitability for the offerings of the respective insurers to conclude the deals. On instructions of Insurance Regulatory Development Authority, referral charges received by RMIL ₹ 96044600/- were refunded to RCIBL on 2nd July 2010. RCIBL for recovering referral charges paid to RMIL raised debit note of ₹ 6,51,50,000 for F.Y. 2008-09 and ₹ 3,08,94,600/- 11. It was explained that on the instructions of IRDA who is the controlling authority for Insurance business, and this amount was refunded and during the year under consideration no referral fee has been received, which is part of this refunded amount. Thus there is no rendering of service during the year and services were rendered in the earlier years. Therefore, the learned Counsel for the assessee argued that if any enquiry is to be made qua this income or assessment of the income in the hands of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Sale Proceeds Profit / (Loss) Reliance Spot Exchange India Ltd 25-02-09 245,000 582 299.304 23.07.10 245,000 (54,304) Bombay Stock exchange Ltd 24.03-09 15,000,000 582 18,324,742 24-06-10 15,000,000 (3,24,742) National Multi Commodity Exchange 20-12-08 108,333,365 582 132,345,387 20-09-10 108,333,355 (24,012,032) Reliance Money Hong Kong Ltd 23-03-09 161,783 582 197,642 24-02-11 12,480 (185,162) " In view of the above fact is it clear that the transaction statement enclosed in assessee's paper book to support his case was field before the AO during the course of assessment proceedings. The assessee explained before the AO that the company is in distribution of gold coins to retail customers and to cover the risk of price fluctuation of gold price, it hedged the gold position with exchange on mark to market position, which is accounted for under the head of forward brokering trade settlement. After going through these details, the AO framed the assessment. But PCIT was of the view that no enquiry or investigation was made by the AO in this regard while allowing entire loss and the relevant of PCIT in para 11 reads as under: - "11. ….Majo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime of every purchase of gold coins an equal quantity (weight) of gold coins‟ futures was sold on multi-Commodity Exchange (MCX) to hedge. Daily a report used to get generated of the quantity (weight) of gold coins sold and an equal quantity of gold futures are bought back in order to unwind the hedge. In order to execute these, services MCX registered broker is required as per the exchange stipulation. Reliance Commodities Limited (RCL) is a MCX registered commodity broker and accordingly, the services of it was used by the company to execute the gold future traders. In order to execute these trades, the company has to place a margin amount with RCL, as per the stipulation by the MCX, the margin requirement vary based on the outstanding number of contracts. The margin amount place with RCL at the year-end was for the outstanding contracts of gold futures open at MCX." The assessee has filed the complete details of forward brokerage trade settlement of ₹ 6,025,9,311/-and the assessee realized loss of ₹ 6,58,66,270/-and there is unrealized profit of ₹ 33,56,959 and the net loss is at ₹ 6,025,9,311/-. The learned Counsel for the assessee also sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nies are still held by RCL and Reliance Exchange Next Ltd. as evident from the schedule of investments appearing in the financial statement of Reliance Capital Ltd and Reliance Exchange Next Ltd. as on 31-03-2015. The learned Counsel for the assessee referred to the details of the assessee's paper book at page 132-137, which were filed before the AO also during the course of assessment proceedings. The learned Counsel for the assessee also drew our attention to the fact that the shares of the above companies were sold at cost on which the same were purchased and therefore, there was no profit or loss but the loss has arising only on account of the provisions of the Act requiring the assessee to adopt the indexed cost because these shares are held for long term purposes, i.e. beyond one year. The learned Counsel also explained that the assessee has recovered the entire investment and there is no impairment in respect to thereof. The learned Counsel for the assessee relied on the decision of the Hon'ble Supreme Court in the case of CIT Vs. Gillander Arbuthnot and Co. 87 ITR 407 (SC) for the proposition. The learned counsel for the assessee also drew our attention to page 48 of assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but no details, on the effect and accounting treatment given as a result of demerger, has been filed or called or verified by the AO. On this, the learned Counsel for the assessee drew our attention to the scheme of demerger of infrastructure undertaking between the assessee and Reliance Capital Asset Management Ltd. as per which various assets and liabilities were demerged and demerger was approved by Hon'ble Bombay High Court and Hon'ble Gujarat High Court. It was explained that vide note No. 14 of Schedule 16 gives broad headwise transfer of assets of such demerger and fixed asset of ₹ 4,53,81,530/- were transferred. The assessee has filed a complete detail, which are reflected in Schedule 4 of the fixed assets and the details reads as under: - " Asset Gross Block Accumulate depreciation Net asset Leasehold Improvements 6,13,49,097 2,71,72,549 3,41,76,548 Furniture & Fixrures 3,01,805 38,250 2,63,555 1,26,63,777 49,49365 77,14,412 36,91,189 4,64,174 32,27,015 Total 7,80,05,868 3,26,24,338 4,53,81,530 " The learned Counsel for the assessee argued that the PCIT could not appreciate the fact that the sale of lease hold premises and improvement thereo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the hand of the assessee as to how the AO will write the assessment order or what he incorporates in the assessment order and that does not tantamount to non-application of mind. For this proposition, he relied on the decision of the Hon'ble Bombay High Court in the case of CIT VS. Gabriel India Ltd. (1993) 203 ITR 108 (Bom). He further relied on the decision of the CIT Vs Reliance Communication Ltd (2016) 240 taxman 655 (Bom), wherein the similar issue of cash credit of FCCB's was before the Hon'ble Bombay High Court and the CIT while revising the assessment by holding that the AO has not enquired into or investigated into the credit worthiness of actual subscribers or genuineness of the transaction. He stated that the Hon'ble High Court has quashed the revision order passed by CIT u/s 263 of the Act. Similarly, the learned Counsel also relied on the Hon'ble Bombay High Court decision in the case of CIT Vs. Gera developments Pvt. Ltd. (2016) 240 taxman 467 (Bom). In view of the above the learned Counsel for the assessee asked the bench to quash the revision proceedings as there is no lack of enquiry or there is no lack of evidence which were submitted before the AO during the cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng funds from its associate companies that's why a huge loss making company was made as subsidiary by RMML is also without any basis for the reason that RMML has brought funds from its associate company is not at all correct as RMML had issued preferential shares and utilized the same proceeds to make investment in the capital. We find that the RMML obtain the funds from RCL in the form of preferential shares and RMML acquiring stake in a holding company does or does not make any commercial sense, it is a businessman decision and same cannot be questioned now by PCIT or Revenue. It is also a fact that RMML is a promoter of the company and they have infused funds into the company from their survival or revival and it is a common knowledge that the promoters have to invest huge funds for managing the affairs of the company and more particularly when the investee company is making loss. The assessee proved this fact that this business was growing and therefore funds were required and turnover in subsequent years went up to ₹ 785 crore in 2012 and ₹ 1356 crore in 2013. It is also a fact that this transaction of issue of preferential shares of RMML and transfer of funds from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered as prejudicial to the interest of the Revenue or even no error has caused to the Revenue. Accordingly also the order AO cannot be held to be erroneous or prejudicial to the interest of the Revenue. 21. As regards to the issue of claim of deduction towards return of referral fee, we find that on the instructions of IRDA who is the controlling authority for Insurance business, this amount was refunded and during the year under consideration no referral fee has been received, which is part of this refunded amount. Thus there is no rendering of service during the year and services were rendered in the earlier years. Therefore, we agree with the assessee that if any enquiry is to be made qua this income or assessment of the income in the hands of the assessee that can only be made in A.Y. 2008-09 and 2009-10 and not in the relevant A.Y. 2011-12. We are of the view that the transaction of debit of referral charges during the year in the profit and loss account is nothing but writing off of income which was previously received and offered to tax. We find from the facts of the case that the AO has examined this issue by making a query and the same was replied by the assessee and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw relied on by the assessee on the decision of Hon'ble Supreme Court in the case of Woodward Governors India P. Ltd. (supra), wherein the issue as regards to foreign exchange speculation loss provision is allowed on the basis of mark to market loss. We find that in the present case there is no unrealized loss and the question of applying instruction No.3 as applied by the PCIT does not arise and hence this issue is covered by the decision of the Hon'ble Supreme Court in the case of Woodward Governors India P Ltd (Supra). Even otherwise the complete details in respect to this loss is filed before the AO during the course of assessment proceedings in lieu of query raised and it is presumed that the AO has applied his mind to the facts of the case and passed an appropriate order. Hence, the assessment order cannot be said to be erroneous so as to prejudicial to the interest of Revenue on this issue. 23. As regards to the issue of claim on long term capital loss on sale of shares, we find that the shares of the above companies are still held by RCL and Reliance Exchange Next Ltd. as evident from the schedule of investments appearing in the financial statement of RC Land Reliance Exch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anies. Even otherwise the complete details were available before the AO during the course of assessment proceedings, which were filed by the assessee on query from the AO. In term of the above factual position, we are of the view that the assessment order framed under 143(3) of the Act is neither erroneous nor prejudicial to the interest of the Revenue. 25. As regards to the next issue on lease rent and improvement expenditure the AO enquired the issue by raising a query u/s 142(1) of the Act dated 30-05-2013, wherein vide question No.19 the AO has asked the details of merger expenses including breakup and nature. We find that complete expenses of rent rates and taxes and details of rent premises which are filed before the AO vide letter dated 17-01-2014, wherein, the assessee has debited the sum of ₹ 56,41,858/- as property tax under the head rates and taxes and the details were submitted before the AO. It is a fact that this premise was taken on leave and license basis from Uptown Properties And Leasing Properties Pvt. Ltd. vide agreement dated 12-10-2007 and the same was evicted on 04-06-2009. We find that the assessee has incurred the expenditure as per agreement and rei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the assessee filed return of income ofRs.66 1 .1 5 crore and claimed deduction in the sum of ₹ 11 .41 crore under section 80-1, ₹ 21=8.62 crore under section 80-IA and ₹ 20.20 crore under section 80-HH. The Assessing Officer assessed the income under section 43(3) at ₹ 8 14.66 crore and restricted the deduction claimed to the sum or figure quoted in paragraph 3 of the order. The Commissioner noticed on verification of the records that the expenditure having a bearing on the profits of the units had not been considered for allocation. The Commissioner found that in the exercise carried out by the Assessing Officer there was indeed an error and the order of the Assessing Officer, therefore, is erroneous insofar as it is prejudicial to the interest of the Revenue. The rival contentions have been noted and in dealing with them, the Division Bench found that the Tribunal has interfered with a finding by proceeding on the basis that during the course of assessment, the Assessing Officer made a specific query. This query was with reference to the deduction under the three sections, that assessee gave reply for each and every item qua this deduction which was enq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were indeed looked into. The entire details were filed and the order itself indicates that it can be inferred that the Assessing Officer not only made enquiries, but satisfied himself with the assessee's replies furnished from time to time in support of its stand. When the Tribunal concludes in this manner and finally in paragraph 16 holds that the Assessing Officer took a perfectly correct or a possible view, then, the order passed by him cannot be termed as erroneous insofar as it is prejudicial to the interest of the Revenue. The Commissioner of Income Tax was not, therefore, justified in invoking section 263 of the Act. 11. We are of the view that the Tribunal's order and conclusions are essentially on facts. They cannot be termed as perverse and after it adverted to the rival contentions and all the materials on record. The Tribunal's order cannot thus be held to be vitiated by an error of law apparent on the face of record so as to call for interference in our further appellate jurisdiction. The appeal, therefore, does not raise any substantial questions of law, but the attempt of the Revenue is to have a re-appreciation and reappraisal of the same factual mat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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