9911796707
TMI Blog1998 (12) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. He set aside the assessment for this specific purpose. 2. During the course of hearing of the appeal before us, the Id. counsel for the assessee assailed the impugned order of the CIT from various angles. Firstly, he strongly contended that the CIT did not have any jurisdiction to assume power under section 263 inasmuch as neither in the notice issued by him nor in the order passed by him under section 263, did he mention that the order of the Assessing Officer, sought to be revised by him, was erroneous in so far as it was prejudicial to the interests of the revenue. In support of this contention, he has placed reliance on the following judgments: 1. Sandvik A. B. Sweden vs Inspecting Assistant Commissioner [1996] 56 ITD 330, 341 (Pune) In this case, the Tribunal held that for assumption of jurisdiction under section 263, it is necessary that the Commissioner, before revising any order, should record a final finding about the order being erroneous and prejudicial to the interests of the revenue and that in the absence of such a finding, the revisionary order is liable to be quashed due to intrinsic infirmity and weakness. 2. Commissioner of Income-tax vs Gabriel India L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to the methodology followed by the Assessing Officer over the years and it was, therefore, established that the said methodology was correct and hence the CIT did not have any case to revise the order of the AO. 5. We are not in a position to agree with the contention of the Id. counsel for the assessee on this issue also. It may be that the Assessing Officer followed a particular method regarding computation of deduction under section 80HHC and the department did not object to it in other years. That fact by itself, does not make the method correct. It is quite possible that on account of various factors like smallness of revenue, limitation or sheer in advertance, the departmental authorities could not take any step to correct the methodology being adopted by the Assessing Officer. If, however, the department wakes up in one of those years and tries to correct a wrong methodology followed by the Assessing Officer, the higher authorities cannot be faulted. The crux of the problem is to ascertain whether the methodology followed by the Assessing Officer can be considered to be erroneous and prejudicial to the interests of the revenue. 6. Thereafter, the Id. counsel for the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is strongly contended by the Id. counsel for the assessee that there is nothing wrong in the order passed by the Assessing Officer and hence the said order can be considered to be neither erroneous nor prejudicial to the interests of the revenue. It is thus argued that on merits also, the order of the CIT seeking to revise the assessment order is bad in law. Reliance is placed in this connection firstly on an order of the Tribunal, Mumbai Bench, in the case of Patel Cotton Co. Ltd. vs Asstt. Commissioner of Income-tax reported in 1998 Tax L.R. 168. It was held in that particular case that where both the views are possible, the order of the Assessing Officer taking one view would not be rendered erroneous even if prejudicial to the interests of the revenue. The other judgment relied upon by the Id. counsel for the assessee is that of ITAT, C-Bench, Calcutta, in the case of Chloride India Ltd. vs Dy. Commissioner of Income-tax [1995] 53 ITD 180. In that particular case, with regard to the issue in the matter of computation of deduction under section 80HHC in accordance with the provision of clause (b) of sub-section (3) of the said section, it was held that while computing the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the total sales in gunny to the figure of net profit in the Gunny business as computed by him. 11. In the first appeal, however, the Id. CIT (Appeals) intervened. He stated that under identical circumstances it had been held in regard to the assessment year 1989-90 that the assessee is entitled to deduction on the amount of the entire business income. He directed the Assessing Officer to compute the deduction under section 80HHC accordingly. It would, therefore, be evident that the result of his sketchy order is that whereas the percentage of export turnover is calculated with regard to the turnover of the jute goods business alone, the said percentage is, however, applied to the total income of the assessee even including the profit of share transactions. The calculation of export profit in jute goods alone on this basis seems to be clearly wrong. There may be two ways of estimating the export profit in the business of jute goods. Either an attempt may be made to isolate the business of jute goods from that in share transactions, as was done by the Assessing Officer in the assessment order; otherwise, if it be considered that the operations of the two businesses are in separ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Rs. 116,72,69,408, as directed by the CIT in his impugned order under section 263. Only after the directions given by the CIT (Appeals) to take into consideration the overall business income, such replacement of figure would be required. However, the CIT is not entitled to direct such a revision over the order of the CIT (Appeals). On merits, therefore, we perfectly agree with the learned counsel for the assessee that inasmuch as the assessment order does not suffer from any defect, it was not open to the CIT to revise the same by passing an order under section 263. 13. So far as the merger issue is concerned, the Id. DR has tried to strongly argue that the computation of deduction under section 80HHC has various points and the use of the denominator is only one of such points. He argued that the use of the denominator at the lower figure of Rs. 112,82,22,902 relating to turnover in jute goods business was surely wrong and that as the CIT (Appeals) had not touched upon this issue it cannot be held that the order of the Assessing Officer got merged in the order of the CIT (Appeals) on this particular issue. We are, however, unable to agree with the contention of the Id. DR. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
