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TMI Blog2006 (9) TMI 604X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO had based his decision on the law as interpreted by this Court in CIT v. Assam Asbestos Ltd (1995) 215 ITR 847 holding that transport subsidy is not a taxable item. The Special Leave Petition filed by the Department against the decision in Assam Asbestos Ltd.'s case (supra) was dismissed by the apex Court on 29th Nov., 1996. No statutory appeal was preferred by the Department thereafter. Subsequently, the apex Court in Sahney Steel Press Works Ltd. v. CIT 1997ECR787(SC) was called upon to decide as to, among others whether a subsidy received by an assessee on the power consumed for production in the accounting year relevant to a particular assessment year was taxable as revenue receipt or not. The apex Court held that to determine this question, it was necessary to ascertain the purpose for the subsidy and if the subsidy was in the nature of operational subsidy, it would be taxable. Since subsidy in question was not given as in aid of setting up of the industry of the assessee held the apex Court, it was an operational subsidy and, therefore, exigible to tax. 4. Apparently taking cue from the aforesaid decision in Sahney Steel Press Works Ltd.'s case (supra), th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd.'s case (supra) is applicable to this case, such a judicial decision is merely an information and is not a record within the meaning of Section 263 of the Act. It is, therefore, submitted by the learned senior counsel that the impugned order is untenable in law and without jurisdiction and is liable to be quashed. On the other hand, Mrs. P.D.B. Baruah, the learned Counsel for the respondents supports the impugned order and submits that the word record appearing in Section 263 of the Act cannot be given a narrow interpretation and must be given liberal interpretation bearing in mind the interest of Revenue. So construed, according to the learned Counsel, the word record is not restricted to the record as it stood at the time of passing of the order in question by the AO but covers the record including subsequent decision of Courts as it stands at the time of examination by the CIT. She, thus, contends that the decision in Sahney Steel Press Works Ltd.'s case (supra) constitutes a part of the record and the CIT did not commit any illegality or jurisdictional error in setting aside the assessment orders in question and in directing the AO to take a fresh decision i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outset, it may be instructive to refer to the decision of the Division Bench of this Court in Victor Cane Industries v. Commr. of Taxes Though this Court was dealing with a case under the Assam Sales-tax Act, the provisions of law under consideration therein were in pari materia with the provisions of Section 263 of the Act. The relevant portions of the judgment are at paras 7 and 12, which read thus: 7. The point urged by the learned Counsel for the appellant is that under Section 31 of the Assam Sales-tax Act the power of revision by the CIT can only be invoked if the CIT is of the opinion that the order of the assessing authority is erroneous and prejudicial to the interest of the Revenue. In the present case, the order of assessment was in conformity with law on the day when the Asstt. Commr. of Taxes passed the order on 31st July, 1992. The order of the Commr. was rather against the dicta of the apex Court in Pine Chemicals case 1993(67)ELT25(SC) which judgment was rendered on 16th Jan., 1992, what is to be seen is as to what is the law prevalent on the date when the assessment order is passed. Even if subsequently the law is changed or reversed, the assessment already com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the record of any proceeding under the IT Act only on the basis of his being satisfied (1) that the AO was erroneous in passing the assessment orders, and (2) that the decision of the AO was prejudicial to the interest of the Revenue. Needless to say the satisfaction must be one which is objectively justifiable and cannot be the mere ipse dixit of the CIT. 6. In this particular case, the CIT has not recorded any reason whatsoever for coming to the conclusion that the AO was erroneous in deciding that the power subsidy was capital receipt. Given the fact that the decision of the jurisdictional High Court was operative at the material time, the AO could not be said to have erred in law. The fact that this Court had subsequently reversed the decision of the High Court would not justify the CIT in treating the AO's decision as erroneous. The power of the CIT under Section 263 of the IT Act must be exercised on the basis of the material that was available to him when he exercised the power. At that time, there was no dispute that the issue whether the power subsidy should be treated as capital receipt had been concluded against the Revenue. The satisfaction of the CIT, therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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