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TMI Blog2015 (8) TMI 1497X X X X Extracts X X X X X X X X Extracts X X X X ..... he net method or the gross method the gross profit remains the same. Assessment order is not erroneous. Moreover, it is undisputed fact that the Assessing Officer raised a specific query and reached to a conclusion that method adopted by the assessee has not caused any prejudicial to the Revenue since there is no understatement of closing stock. This conclusion of AO is not absurd or erroneous. Therefore, the exercise of Jurisdiction u/s.263 of the Act by ld.Pr.CIT fails. In the case of Malabar Industrial Co.Ltd. vs. CIT [ 2000 (2) TMI 10 - SUPREME COURT] has held that the CIT has to be satisfied of twin conditions, namely, (i) the order of the AO sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent, if the order of the ITO is erroneous but is not prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue, recourse cannot be had to s.263(1). It is not pointed out by the ld.Pr.CIT as to what prejudice has caused to the Revenue. In the absence of specific finding by the ld.Pr.CIT, we cannot confirm his order revising the assessment order. Therefore, in our considered view twin con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be dropped. Your appellant reserves the right to add, alter, modify, amend or delete, any of the above ground/(s), either before or during the appeal proceedings. 2. Briefly stated facts are that the assessment u/s.143(3) of the Income Tax Act,1961 (hereinafter referred to as the Act ) was framed vide order dated 21/03/2013; thereby the Assessing Officer (AO in short) computed book profit at ₹ 29,59,90,386/- against the book profit as per return of income of ₹ 27,73,65,400/-. The ld.Pr.CIT by invoking the provisions of section 263 of the Act revised this order vide order dated 31/03/2015; thereby the ld.Pr.CIT cancelled the assessment for the AY 2009-10 and directed the AO to make fresh assessment. The assessee feeling aggrieved by this order is now in appeal before us. 3. All the grounds are inter-connected and, therefore, the same are disposed of together for the sake of convenience. The ld.counsel for the assessee vehemently argued at length that the order of the ld.Pr.CIT is unjustified and deserves to be quashed. He submitted that as per ld.Pr.CIT, the reasons for invoking the provisions of section 263 of the Act are that the assessee had included the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing stock because the appellant has not debited the value of excise duty to Profit Loss Account at the time of accounting purchases and the excise duty component has been accounted and recognized separately in the financial statements as current assets for the year under consideration. However, the ld.Pr.CIT ignored the facts as submitted by the assessee and has passed the erroneous order. He submitted that no prejudice has caused to the Revenue. 3.1. On the contrary, ld.CIT-DR vehemently argued that there is no infirmity in the order of the ld.Pr.CIT. She submitted that the AO has not considered the factual aspects. Therefore, the ld.Pr.CIT within his jurisdiction to invoke the provisions of section 263 of the Act. She further submitted that it is not necessary that there should be only loss of Revenue that would cause prejudice to the Revenue an erroneous approach for framing the assessment would also cause prejudice to the Revenue. Therefore, the assessment order is erroneous and prejudicial to the interests of the Revenue. She submitted that the AO failed to examine the application of section 145A of the Act on the facts of the present case. She submitted that failure to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch intention is contrary to the settled principle of law as the Hon ble Gujarat High Court in the case of CIT vs.Unique Industries reported at (2008) 307 ITR 350 (Guj.) has ruled that MODVAT credit available to the assessee in terms of provisions of Central Excise Act is not liable to be taxed. Before the ld.Pr.CIT a reliance was placed on the judgement(s) of the Hon ble Supreme Court in the case of CIT vs. Indo Nippon Chemicals Co.Ltd. reported at (2003) 261 ITR 275(SC) and of CIT vs. Shri Ram Honda Power Equipment Ltd. reported at (2013) 258 CTR 329(SC). The reliance was also placed on the judgment of Hon ble Gujarat High Court in the case of CIT vs. Unique Industries reported at (2008) 307 ITR 350(Guj) and also the decision of the Coordinate Bench of this Tribunal in the case of Bemco Sleepers Ltd. Aurangabad vs. Department of Income Tax in ITA No.715/PN/2011 dated 20/06/2012 In support of the contention that it would not affect the taxable income if the assessee adopts inclusive or exclusive method of accounting. Further, the ld.Pr.CIT did not accept the contention of the assessee on the ground that after amendment in the provisions of section 145A of the Act, it is mandatory f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich is liable to be taxed under the Act. 4.1. In the light of aforementioned judicial pronouncement, it can be inferred that the assessment order is not erroneous. Moreover, it is undisputed fact that the Assessing Officer raised a specific query and reached to a conclusion that method adopted by the assessee has not caused any prejudicial to the Revenue since there is no understatement of closing stock. This conclusion of AO is not absurd or erroneous. Therefore, the exercise of Jurisdiction u/s.263 of the Act by ld.Pr.CIT fails. The Hon ble Supreme Court in the case of Malabar Industrial Co.Ltd. vs. CIT reported at (2000) 243 ITR 83 (SC) has held that the CIT has to be satisfied of twin conditions, namely, (i) the order of the AO sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent, if the order of the ITO is erroneous but is not prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue, recourse cannot be had to s.263(1). 4.2. It is not pointed out by the ld.Pr.CIT as to what prejudice has caused to the Revenue. In the absence of specific finding by the ld.Pr.CIT, we cannot c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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