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TMI Blog2014 (12) TMI 1370X X X X Extracts X X X X X X X X Extracts X X X X ..... t application of mind by the CIT, because the section says Commissioner may call for and examine the records of any proceedings under the Act and if he considers , which means that the proposal for initiation of revision proceedings must be initiated by the CIT, because, it is the CIT who has to call for examine the record , as held by the Coordinate Bench in the case of Ashok Kumar Shivpuri [ 2014 (11) TMI 1176 - ITAT MUMBAI ] Looking at the issue from this angle also, the initiation of revision proceeding become infirm and illegal. - Decided in favour of assessee. - ITA No. 23/Mum/2012 - - - Dated:- 5-12-2014 - SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER For the Appellant : Shri Yogesh A Thar For the Respondent : Smt. Abhakala Chanda ORDER PER VIVEK VARMA, JM: Instant appeal is filed by the assessee against the order under section 263, passed by CIT-7, Mumbai, dated 14.11.2011, wherein, the following grounds have been raised: 1. On the facts and circumstances of the case and in law, the Learned Commissioner of Income tax-7, Mumbai [ the CIT ] erred in invoking the provisions of section 263 of the Income Tax A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6,39,10,000/- on Initial Public Officer ( IPO ) of equity shares made. The Issue closed on June 12, 2005. It has claimed a deduction under section 35D for ₹ 3,27,82,000/- being one-fifth of the total expenses incurred. This is the second year of claim for deduction. The assessee submits that section 35D grants a deduction/amortization in respect of expenses incurred by a company in connection with the issue, for public subscription, of shares or debentures of a company over a period of five years. Since the foregoing expenses on IPO are in connection with the issue of shares for public subscription, one-fifth of the total amount thereof is eligible for deduction under section 35D. The assessee further submits that it is an industrial undertaking for the purpose of section 35D based on the following cases: CIT vs Emirates Commercial Bank Ltd. (262 ITR 55) where the Bombay High Court, which is also the jurisdictional High Court, has held that Banks are industrial undertakings and eligible for deduction under section 32A of the Act HSBC Securities and Capital Markets (India) Pvt Ltd (1384/M/2000) where the Hon ble Mumbai ITAT has held that even a share brok ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , wherein the coordinate Bench at Mumbai were seized with an identical issue of allowance of expense under section 35D on increase in the authorized share capital. The coordinate Bench accepted the claim of the assessee following the ratio laid down in the case of Peerless Consultancy Service (supra) and CIT vs Emirates Commercial Bank Ltd, reported in 262 ITR 55 (Bom). 12. The AR submitted that the basis of invocation of section 263 is the enquiry done by the AO. He, therefore submitted that in so far as the basis of initiation only is seen, the notings in the order-sheet as recorded by the AO and the replies made and submitted is on record, which clearly shows that the AO made proper enquiry to come to a conclusion. Merely putting the result of the enquiry made by the AO is not of consequence, as laid down by the coordinate Bench at Mumbai, in the case of Reliance Communication Ltd. vs DCIT, ITA No. 2915/Mum/2012, wherein it has been held (at different places), 15.1. While finalizing assessment, it is the duty of the AO to examine each and every aspect of the return except tiny or inconsequential items. However, it is not necessary to incorporate all the aspects examined by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 263. Upon such enquiry, the assessee made submissions by placing all the relevant documents before the AO. Thus it can be seen that this case does not fall in the category discussed in para 15.1. above. The mere fact that the Assessing Officer did not make any reference to these three issues in the assessment order cannot make the assessment order erroneous when these issues were properly looked into by the Assessing Officer. Now let us see whether it can be brought within the ambit of para 15.2 above. From the details filed by the assessee it can be inferred that the AO not only enquired into these three issues but also got satisfied with the assessee s reply submitted from time to time in support of its stand. Resorting to the provisions of section 263 in such a situation could have been possible only on the ld. CIT showing that the assessment order was erroneous on such three aspects . 13. The AR also referred to the case of Malabar Industrial Co. Ltd. vs CIT reported in 243 ITR 82 (SC), wherein it has been held, There can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer; it is only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the circumstances of the case and in law, the Tribunal was right in not following the decision of the jurisdictional High Court in the case of Commissioner of Income Tax vs. Emirates Commercial Bank reported in 262 ITR 55? (b) Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in holding that the Appellant is not an industrial undertaking so as to be entitled to deduction under Section 35D of the Income Tax Act, 1961? (c) Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in holding that the omission of the word industrial by the Finance Act, 2008 is prospective and, therefore, would not apply for the Assessment Year 2006-2007? 2. The Respondent/Revenue waives service . 15. The AR, therefore, submitted that from all angles, the initiation of revision proceeding was infirm and therefore, should be cancelled. 16. The DR strongly supported the order of the CIT, impugned before us. 17. The DR submitted that the main reason for incorporating the provision is to scrutinize the orders of the lower revenue authorities. In the instant case, the DR submitted that, because the AO failed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lead to initiation of revision of order and also where the issue itself is debatable, in such a case, the Hon ble Supreme Court held that, it is not permissible for the CIT to initiate revision proceedings under section 263. 23. This view has been taken by the Hon ble Bombay High Court in the case of CIT vs Gabrial India Ltd., reported in 203 ITR 108 (Bom), wherein it has been held that in order to exercise jurisdiction under section 263, Commissioner must have material to prima facie come to a conclusion that the order of ITO is erroneous as also prejudicial to the interest of the revenue . 24. In the proceedings before us, the DR could neither elaborate nor assist us to convince us that the inference drawn by the AO, after conducting exhaustive enquiry was an erroneous view. 25. We also find that the CIT did not initiate the proceedings himself but initiated the proceedings on the proposal received from the AO. 26. This in our opinion, too is against the legislative spirit, because, the provision contemplates independent application of mind by the CIT, because the section says Commissioner may call for and examine the records of any proceedings under the Act and if ..... X X X X Extracts X X X X X X X X Extracts X X X X
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