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TMI Blog2018 (6) TMI 1389X X X X Extracts X X X X X X X X Extracts X X X X ..... lsewhere the assessee is in existence since the year 2000 and has been paying royalty since past 11 years. Considering the facts of the case in hand, vis a vis the decisions considered by the ld. PCIT for assuming jurisdiction u/s 263 of the Act, we are of the considered opinion that the PCIT has erred in assuming jurisdiction in as much as he has considered the facts of the case of the sister concern without appreciating the facts of the case in hand in true perspective. We are of the considered opinion that the assessment order framed u/s 143(3) of the Act is neither erroneous nor prejudicial to the interest of the Revenue. - Decided in favour of assessee. - ITA No. 2330/DEL/2018 - - - Dated:- 26-6-2018 - SHRI N.K. BILLAIYA, ACCOUNTANT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found that on identical set of facts in the subsequent A.Y, i.e. 2012-13, the AO had made an addition of ₹ 70.83 crores. The ld. PCIT further found that in its sister concern s case, i.e. Honda SIEL, disallowance was made on account of technical know-how, as well as running royalty and the matter travelled upto the Hon'ble Allahabad High Court and Hon'ble High Court answered the question in favour of the Revenue and against the assessee. The decision of the Hon'ble Allahabad High Court was challenged before the Hon'ble Apex Court and the Hon'ble Supreme Court dismissed the appeals. 5. With this background, the ld. PCIT was of the firm belief that the issue of royalty has been decided by the Hon'ble Allahaba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide. 8. Per contra, the ld. DR strongly supported the findings of the PCIT. 9. We have given thoughtful consideration to the orders of the authorities below. It is a settled position of law that powers u/s 263 of the Act can be exercised by the Commissioner on satisfaction of twin conditions, i.e., the assessment order should be erroneous and prejudicial to the interest of the Revenue. By 'erroneous' is meant contrary to law. Thus, this power cannot be exercised unless the Commissioner is able to establish that the order of the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. Thus, where there are two possible views and the Assessing Officer has taken one of the possible views, no action to exerci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act. Learned counsel for the Revenue however submitted that these inquiries were confined to the claim of deduction under section 54F of the Act in the context of fulfilling conditions contained therein and may possibly have no relevance to the question whether the sale of land gave rise to a long term capital gain. Looking to the tenor of queries by the Assessing Office and details . A.Y. 2009-10 supplied by the assessee, we are unable to accept such a condition. In that view of the matter, the observation of the Tribunal that the Assessing Officer having made inquiries and when two views are possible, revisional powers could not be exercised, called for no interference. Since with respect to computation and assertions of other aspects ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se in hand. There is no dispute that the assessee is paying royalty since the year 2000. The A.Y under consideration is A.Y 2011-12 which means that since the last 10 years Revenue has been accepting the payment of royalty as legitimate revenue expenditure. No new facts have come into existence nor the law has changed. Therefore, the ratio laid down by the Hon'ble Supreme Court in the case of Radhaswami Satsang 193 ITR 321 squarely applies. Further, the PCIT s decision is solely based upon the decision in the case of sister concern Honda SIEL. 13. We have carefully perused the judgment of the Hon'ble Supreme Court in that case. The Hon'ble Supreme Court has categorically held as under: When we apply the aforesaid paramet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntrary, in present case, the TCA was for setting up of new plant for the first time to manufacture cars. The Delhi High Court specifically noted this fact in para 14 of the judgment. While analysing the agreement in that case which was for providing technical know-how in relation to the product i.e. two wheelers and three wheelers and the purpose was to introduce new models of the said product developed by the Japanese Company, the High Court noted that the agreement specifically recorded that the respondent assessee was already engaged in the business of manufacturing, assembling, selling and otherwise dealing with two/three wheelers and their parts as a joint venture. It referred to the earlier collaboration agreement dated January 24, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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