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TMI Blog2017 (10) TMI 1395X X X X Extracts X X X X X X X X Extracts X X X X ..... e of revisionary power by the Commissioner under section 263 of the Act does not survive. Commissioner has also erred in not looking at the claim of assessee that it had fulfilled all the conditions and merely because the land was in the name of the Director and construction was so completed in the name of Director and completion certificate was in the name of the Director, but note regarding the same was also filed along with the Balance Sheet, which was verified by the Assessing Officer. Hence, it could not be said that there was erroneous assumption of facts by the Assessing Officer. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... g that the order of the AO is erroneous for the reason of not verifying the fulfillment or otherwise of the conditions u/s. 80 IB (1) & (2) which reasons are different than the reasons stated in the notice issued under section 263. 8. The learned PCIT erred in not appreciating that the view taken by the learned A.O. was certainly a possible view and therefore, the asst. completed u/s 143(3) could not be said to be erroneous and prejudicial to the interest of revenue. 9. The order of the PCIT passed u/s 263 of the Act is not in accordance with Law, is bad in Law and hence be quashed. 3. Though the assessee has raised several grounds of appeal, but the issue raised in the present appeal is against invoking of jurisdiction by the Commissioner under section 263 of the Act. 4. Briefly, in the facts of the case, the assessee was engaged in running a hospital and for the year under consideration, the assessee had filed the return of income declaring total income at Nil. The case of the assessee was selected for scrutiny and the Assessing Officer noted that the assessee had claimed deduction under section 80IB(11C) of the Act, in respect of which Auditor Certificate in Form No.10CCBD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of assessee. Further, the Commissioner also noted that there was no documentary evidence regarding purchase of beds. He was of the view that the Assessing Officer should have called for the details during the course of assessment proceedings to ascertain the genuineness and fulfillment of eligibility conditions before allowing the claim of deduction under section 80IB(11C) of the Act. Since the Assessing Officer had failed to do necessary verification before computing the income under section 115JB of the Act and tax thereon, the Commissioner was of the view that the order passed by the Assessing Officer seems to be erroneous and prejudicial to the interest of Revenue and hence, notice was issued to the assessee. In response thereto, the assessee pointed out that the Assessing Officer had made specific enquiries regarding the fulfillment of conditions prescribed in section 80IB(11C) of the Act but the Commissioner was of the view that the Assessing Officer did not perform the basic pre-requisite investigation before applying the provisions of section 80IB(11C) of the Act. He further observed that the Assessing Officer was required to examine sub-section (1) of section 80IB and al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examination of facts and law. 6. The assessee is in appeal against the order of Commissioner. 7. The learned Authorized Representative for the assessee referred to the assessment order and also referred to the letter filed before the Commissioner clarifying the fulfillment of conditions laid down in section 80IB(11C) of the Act. He further referred to show cause notice issued by the Commissioner which was only on non-fulfillment of conditions under section 80IB(11C) of the Act. He further referred to para 6 of the order of Commissioner and pointed out that it talks of non-fulfillment of conditions of section 80IB(1) and (2) of the Act and the Commissioner points out that no proper verification was carried out by the Assessing Officer. The learned Authorized Representative for the assessee stressed that the Commissioner had not dealt with the issue which was raised in the show cause notice issued but has incorrectly invoked sub-sections (1) and (2) of section 80IB of the Act. Our attention was drawn to the said sub-sections and it was pointed out that sub-section (1) does not specify any conditions to be fulfilled and sub-section (2) talks of industrial undertaking. He further ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be taken. 10. We have heard the rival contentions and perused the record. The issue which arises in the present appeal is against invoking of jurisdiction by the Commissioner under section 263 of the Act. The Commissioner is empowered to invoke revisionary jurisdiction under section 263 of the Act where the order passed by the Assessing Officer is erroneous and also prejudicial to the interest of Revenue. Both the limbs of said section need to be fulfilled before exercise of provisions under section 263 of the Act. The assessee during the year under consideration had claimed deduction under section 80IB(11C) of the Act. The assessee claims that it had submitted the supporting evidence regarding fulfillment of eligibility conditions under section 80IB(11C) of the Act, which had been verified by the Assessing Officer during the course of assessment proceedings and thereafter, the assessment order was passed. The said verification exercise by the Assessing Officer, as per the assessee, was complete in all respects and since the assessee had fulfilled the conditions laid down in the said section, the assessee was eligible to claim the aforesaid deduction under section 80IB(11C) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refers to any industrial undertaking which has to fulfill certain conditions provided therein. Sub-sections (3), (4) and (5) talks about different cases of industrial undertakings. If we refer to sub-section (6), it talks of business of ship which is not an industrial undertaking. Sub-section (7) talks of a business of any hotel, (7a) of multiplex theatre, (8) of scientific research and development and thereafter. Similarly section (11C) talks about the undertaking which is operating and maintaining hospital. The Commissioner while passing the order under section 263 of the Act has observed that where the Assessing Officer has failed to look into the fulfillment of conditions of sub-sections (1) and (2) before allowing deduction under section 80IB(11C) of the Act, has held that the Assessing Officer has not verified the claim of assessee in this regard properly and hence, order passed by the Assessing Officer is erroneous and prejudicial to the interest of Revenue. Reference to sub-section (1) and (2) of section 80IB of the Act while making deduction under section 80IB(11C) of the Act is misplaced. The assessee admittedly, is not an industrial undertaking and the provisions of sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Gandhinagar; and (xiii) City of Secunderabad; (d) the area comprising an urban agglomeration shall be the area included in such urban agglomeration on the basis of the 2001 census.'. 12. In order to look into the claim of assessee, the Assessing Officer had to verify the above said conditions that the construction was within time frame and the completion certificate in that regard has been received or not. Further, whether the construction of hospital was in accordance with the Regulations or Byelaws of the local authority and hospital should have atleast 100 beds for the patients. Another requirement was for the assessee to furnish the report of audit in the prescribed form along with return of income. Once all these conditions have been verified by the Assessing Officer and the assessee has been found to have fulfilled the same, then the order of Assessing Officer having taken a view of allowing the deduction under section 80IB(11C) of the Act to the assessee cannot be said to be an erroneous order. Since the Assessing Officer has verified the claim of assessee and had found that all the conditions have been satisfied by the assessee, then allowing the deduction claimed by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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