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TMI Blog2019 (8) TMI 1536X X X X Extracts X X X X X X X X Extracts X X X X ..... articular issue and the AO adopts either of two such views then jurisdiction u/s 263 cannot be invoked by the Learned CIT is also acceptable. We take inspiration from the judgment passed in the matter of Malabar Industrial Co. Ltd. as been relied upon in this respect.Hence, we find that order impugned u/s 263 cannot satisfy any of the conditions envisaged in the provision of law as discussed above. Fulfillment of twin conditions so as to the claim of the order being erroneous or prejudicial to the interest of Revenue also fails as already been discussed by us hereinabove. Thus the order impugned does not justify/fulfill any of the conditions within the four corners of law and hence liable to be quashed. Resultantly, the impugned addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 2,18,43,574/- (ii) Disallowance as per PARA 9 ₹ 22,74,380/- Total Assessed Loss ₹ 1,58,00,947/- * Disallowance of ₹ 48,78,986/- of Royalty payment has not taken for computation and in the way for taxation to avoid the double taxation being the upward adjustment of ₹ 2,18,43,575/- includes the same. However, the Learned PCIT found such assessment order erroneous and prejudicial to the interest of the Revenue for the following reasons: (1) Scrutiny of the assessment records revealed that the assessee had claimed tax deducted at source (TDS) of ₹ 3,00,08,514/- on professional service income for the F. Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g and administrative expenses which includes profession fees of ₹ 14,52,503/- which was paid to non-residents without deducting TDS u/s 195 of the Act. Failure to deduct TDS on the amount of ₹ 14,52,503/- attracts the provisions of section 40(a)(1) under which any sum payable to a foreign company on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted was required to be disallowed. In view of the above, professional fees of ₹ 14,52,503/- was required to be disallowed. However, no such disallowance was made in assessment order. This has resulted in under assessment of income of ₹ 14,52,503/-. Accordingly, show-cause dated 08.03.2016 was served upon the assessee as to why approp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee and thus is not reflected in the Profit and Loss account. Apart from that the difference on account of timing difference was of ₹ 2,32,16,538/-. More so the reconciliation statement of difference between service income as per Profit and Loss account and as worked out based on TDS was also furnished by the assessee before the Learned PCIT. However, such submission rendered by the assessee was not found acceptable by the Learned PCIT. He, therefore, held the assessment order passed u/s 143(3) of the Act dated 25.03.2014 was erroneous and prejudicial to the interest of Revenue. The Learned AO has also been directed by the Learned PCIT to make fresh assessment of the total income respect of the issues as mentioned hereinab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction of tax at source u/s 195 on payments of ₹ 14,52,503/- by the assessee as made by the Ld. PCITis not correct since the assessee has already deducted tax at source on such payments the details whereof was furnished before the Learned PCIT which is also available on record at Page 92-103 of the paper book submitted before us. Further that the same was also examined at original assessment stage which is evident from point no.16 of questionnaire to notice dated 12.08.2013 issued u/s 142(1) of the Act available at page 34 to 39 of the paper book. When an issue has been examined at the original assessment stage but the same has not been reflected in the final assessment order, then that, by itself, would not lead to a conclusion tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce income as per P L Account and as worked out based on TDS the assessment order cannot be said to be erroneous and prejudicial to the interest of the Revenue. Further that while framing assessment u/s 143(3) by an order dated 25.03.2014 the Learned AO specifically mentioned in para 11 that the credit for prepaid tax (i.e. TDS) has been given after verification and its calculation as per ITNS 150. Thus the issue was already examined by the Learned AO. Apart from that, the legal point being fulfillment of twin conditions that the order of the AO be erroneous and also prejudicial to the interest of Revenue has not been satisfied before invoking jurisdiction u/s 263 of the Act. In this regard we have gone through the judgment passed by the H ..... X X X X Extracts X X X X X X X X Extracts X X X X
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