9911796707
TMI Blog2007 (6) TMI 185X X X X Extracts X X X X X X X X Extracts X X X X ..... eed 25 per cent of the total turnover. As per the second proviso to section 10B applicable for the assessment year, the profits and gains derived from such domestic sales of computer software which did not exceed 25 per cent of total sales shall be deemed to be the profits and gains from the export of computer software. The statement of computation in accordance with the proviso which would result in entire income being eligible for deduction u/s 10B was placed before the Tribunal and on this basis the Tribunal held that the assessment was neither erroneous nor prejudicial to the interests of the Revenue. It is clear that two views are possible in the matter. The Assessing Officer preferred one view against the another view. The Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is capable of one interpretation, the order of the assessing officer cannot be said to be erroneous? 2. The facts leading to the above substantial questions of law are as under: The assessee is a company incorporated under the Companies Act. The assessee-company is registered with Software Technology Park of India and carries on business in export of computer software. The relevant assessment year is 2001-2002 and the corresponding accounting year ended on 31.03.2001. The assessee filed Return of income admitting nil income after claiming exemption on the entire profit of Rs. 34,91,520/- under Section 10B of the Income-tax Act ( Act in short). The Return was processed under Section 143(1) of the Act on 20.08.2002. Later, the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the deduction available under Section 10B of the Act. Hence the order passed by the Assessing Officer is erroneous and prejudicial to the interests of the Revenue. Hence the Commissioner of Income-tax is right in setting aside the order of assessment under Section 263 of the Act. 4. Heard the counsel. Section 263 of the Act can be invoked only if the order of the Assessing Officer is erroneous and prejudicial to the interests of the Revenue. The said two conditions must be satisfied before assuming jurisdiction under Section 263 of the Act. It is seen from the records that the domestic sales of Rs. 78,01,754/- did not exceed 25% of the total turnover of Rs. 3,48,84,904/-. As per second proviso to Section 10B applicable for the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of CIT v. Max (India) Ltd. (268 ITR 128) (P H). In this case Hon'ble High Court has held that the view expressed by the AO was a possible view and since the AO had taken a possible view, CIT had no jurisdiction to interfere by exercising his power under section 263 of the Act. In deciding this issue, the ratio of the decision laid down by the Hon'ble Supreme Court in the case of Malabar Industrial Co. v. CIT (243 ITR 83) (S.C.) was followed wherein at page 130 Hon'ble Supreme Court has held as under: The phrase 'prejudicial to the interests of the Revenue' has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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