2013 (10) TMI 428 - HC - Income Tax

High Court affirms Tribunal's decision on Income Tax Act Section 263.

COMMISSIONER OF INCOME TAX, DELHI-V Versus NEW DELHI TELEVISION LTD

The High Court upheld the Tribunal's decision to set aside the Commissioner's order under Section 263 of the Income Tax Act. The Court found that the ... Revision u/s 263 - deduction u/s 80HHF - an order erroneous and prejudicial to revenue - power of CIT(A) - Held that:- Jurisdictional pre-conditions stipulated in Section 263 of the Act are not satisfied - The Assessing Officer did conduct investigation and accepted the claim under Section 80HHF on being satisfied that the conditions stipulated in the said Section are satisfied. It is not the case of 'no investigation'. It is also not a case where per-se further investigation was required - Power of review under Section 263 of the Act can be invoked only if the order is erroneous and for this the Commissioner must record the reason that the order was erroneous and the claim under Section 80HHF was wrongly allowed. Once the said claim was considered and examined by the Assessing Officer, Commissioner cannot set aside the order without recording contrary finding. This will be contrary to Section 263 of the Act - Order under Section 263 must be clear and must set out logical ground and reason as to why the assessment is erroneous and prejudicial to the interest of the Revenue - Decided against the Revenue. Issues Involved:1. Whether the Income Tax Appellate Tribunal was right in setting aside the order dated 29th March, 2007 passed by the Commissioner of Income Tax under Section 263 of the Income Tax Act, 1961Rs.2. Whether the assessing officer during the course of the original assessment proceedings had examined and considered that the assessee was the owner of the copyright or the software in the form of television programs which were sent/transmitted to Hong KongRs.Issue 1: Setting Aside the Order under Section 263:The High Court examined whether the Tribunal was correct in setting aside the Commissioner's order under Section 263. The Commissioner had issued a show-cause notice under Section 263, claiming that the Assessing Officer (AO) had not properly verified the eligibility of the deduction under Section 80HHF during the original assessment. The Commissioner argued that the AO's failure to conduct the necessary inquiry rendered the assessment order erroneous and prejudicial to the interest of the Revenue.However, the Tribunal found that the AO had indeed examined the eligibility and justification of the claim under Section 80HHF. The AO had sought and received detailed replies, documents, and oral submissions from the assessee, which were duly considered before allowing the deduction. The Tribunal noted that the AO had accepted the deduction after detailed verification, and this claim had been consistently allowed in previous assessment years.The High Court upheld the Tribunal's decision, stating that the Commissioner had not provided clear reasons or evidence to show that the AO's order was erroneous. The Court emphasized that an order is not erroneous merely because the Commissioner has a different opinion. The Commissioner must establish that the order is unsustainable in law, which was not done in this case.Issue 2: Examination of Ownership and Export of Software:The High Court also addressed whether the AO had examined and considered the ownership and export of the software during the original assessment proceedings. The Commissioner had argued that there was no evidence to show that the eligible items were actually exported or transferred outside India, as required under Section 80HHF. The Commissioner also questioned the ownership of the copyright, which remained with the assessee.The Tribunal found that the AO had thoroughly examined the export of the software and the receipt of foreign exchange. The assessee had provided extensive documentation, including export invoices, bank certificates, and agreements with STAR TV, Hong Kong. The AO had accepted these documents as proof of export and allowed the deduction under Section 80HHF.The High Court agreed with the Tribunal's findings, noting that the AO had conducted a detailed inquiry and was satisfied with the evidence provided. The Court emphasized that the Commissioner's order under Section 263 was based on mere suspicion and did not provide concrete reasons to show that the AO's findings were erroneous.Conclusion:The High Court concluded that the Tribunal was right in setting aside the Commissioner's order under Section 263. The AO had conducted a thorough inquiry and had validly accepted the deduction under Section 80HHF. The Commissioner's order lacked clear reasons and evidence to establish that the AO's order was erroneous and prejudicial to the interest of the Revenue. Therefore, the appeal was disposed of in favor of the respondent assessee, with no order as to costs.