2016 (7) TMI 913 - HC - Income Tax

Tribunal's Decision Upheld: Assessing Officer's Rulings Deemed Plausible under Income Tax Act

Principal Commissioner of Income Tax-I Versus Adani Port And Special Economic Zone Ltd.

The High Court upheld the Tribunal's decision, emphasizing the importance of a sustainable view by the Assessing Officer and dismissing the appeal by the ... Revision u/s 263 - claim of deduction amortized value of leasehold land under the provisions of section 35D and depreciation on office equipments - Held that:- As regards the claim for depreciation on office equipments at the rate of 15%, the Tribunal noted that such claims had been allowed in earlier years in the assessment orders passed under section 143(3) of the Act and such orders had attained finality. Insofar as the claim under section 35D of the Act is concerned, the Tribunal has found that the deduction under section 35D had been allowed in the earlier years also and has rightly observed that it is not the case of the revenue that on the issue of deduction under section 35D, the deduction for earlier years had been withdrawn, inasmuch as, without disturbing the earlier years, it cannot be said that the claim of deduction under section 35D was not allowable to the assessee. Thus, the Tribunal, on merits, has found that the view adopted by the Assessing Officer to be sustainable view. The revenue had not brought any material on record to demonstrate that the view adopted by the Assessing Officer was an impermissible view and was contrary to law so as to warrant exercise of revisionary powers under section 263 of the Act. Having regard to the findings recorded by the Tribunal on the merits of each claims of the assessee, it is evident that the view adopted by the Assessing Officer was a plausible view. It is settled legal position, as held by the Supreme Court in the case of Malabar Industrial Co. Ltd. v. Commissioner of Income Tax, (2000 (2) TMI 10 - SUPREME Court ) , that if on the same issue, two views are possible and the Assessing Officer has taken one such view, the same would not warrant exercise of powers under section 263 of the Act. - Decided in favour of assessee. Issues involved:1. Questioning the order passed by the Income Tax Appellate Tribunal under section 260A of the Income Tax Act, 1961.2. Validity of the order dated 29.10.2015 passed by the Income Tax Appellate Tribunal.3. Disallowance under section 14A, amortization value of leasehold land, depreciation on office equipment, and deduction under section 35D.4. Jurisdiction of the Commissioner of Income Tax under section 263 of the Act.5. Merits of the claims made by the assessee and the Assessing Officer's decisions.6. Interpretation of the term 'erroneous' under section 263 of the Income Tax Act.Detailed Analysis:1. The appellant, the revenue, challenged the order passed by the Income Tax Appellate Tribunal under section 260A of the Income Tax Act, questioning the setting aside of the order passed under section 263 by the Commissioner of Income Tax (CIT) in relation to various disallowances and deductions claimed by the assessee for the assessment year 2010-11.2. The Commissioner of Income Tax found discrepancies in the assessment, including inadequate disallowance under section 14A, incorrect amortization of leasehold land, depreciation claim on office equipment, and deduction under section 35D. The Commissioner issued a notice under section 263, setting aside the original assessment order and directing a fresh assessment.3. The assessee objected to the initiation of proceedings under section 263, arguing that the claims were legitimate. The Commissioner disagreed on three issues but agreed on the disallowance under section 14A. The Tribunal, however, found in favor of the assessee, stating that the Assessing Officer's decisions were sustainable in law.4. The High Court analyzed the Tribunal's decision and referred to the Supreme Court's ruling in Commissioner of Income Tax v. Max India Ltd., emphasizing that if two views are possible and the Assessing Officer's view is sustainable in law, it does not warrant revision under section 263. The Tribunal found that the Assessing Officer's decisions on the claims were plausible and did not warrant revisionary powers.5. The High Court concluded that the Tribunal's order was legally sound, as the Assessing Officer had taken a plausible view on the claims made by the assessee. Citing the precedent set by the Supreme Court in Malabar Industrial Co. Ltd. v. Commissioner of Income Tax, the High Court dismissed the appeal, stating that no substantial question of law arose from the Tribunal's decision.In summary, the High Court upheld the Tribunal's decision, emphasizing the importance of a sustainable view by the Assessing Officer and dismissing the appeal by the revenue.