TaxTMI Login
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →Just a moment...
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) Whether revision under section 263 of the Income-tax Act, 1961 was justified where the alleged error in depreciation, if corrected, would only enhance the assessee's eligible deduction under sections 80IA/80IC and thus not prejudice the Revenue; (ii) Whether the assessment order could be revised when the assessee contended that the issue had merged in appellate proceedings concerning deduction under sections 80IA/80IC; (iii) Whether the revision was invalid merely because the issue originated from an audit objection.
Issue (i): Whether revision under section 263 of the Income-tax Act, 1961 was justified where the alleged error in depreciation, if corrected, would only enhance the assessee's eligible deduction under sections 80IA/80IC and thus not prejudice the Revenue.
Analysis: The jurisdiction under section 263 requires the order of the Assessing Officer to be both erroneous and prejudicial to the interests of the Revenue. The assessee showed that any disallowance of depreciation would increase the eligible profit and correspondingly increase deduction under sections 80IA/80IC, making the exercise revenue neutral. The Commissioner did not meet this objection with a reasoned finding. In such circumstances, the statutory condition of prejudice to the Revenue was not satisfied.
Conclusion: The revision was not sustainable on this issue and the assessee succeeded.
Issue (ii): Whether the assessment order could be revised when the assessee contended that the issue had merged in appellate proceedings concerning deduction under sections 80IA/80IC.
Analysis: The controversy regarding depreciation and the controversy regarding computation of eligible profit for deduction under sections 80IA/80IC were held to be distinct. Proceedings before the appellate authority on computation of deduction did not absorb the separate question whether depreciation had been correctly allowed. The merger argument therefore did not defeat the revisional jurisdiction.
Conclusion: The merger plea was rejected.
Issue (iii): Whether the revision was invalid merely because the issue originated from an audit objection.
Analysis: The notice under section 263 reflected independent examination of the record by the Commissioner. An audit party may furnish information, but the jurisdiction is not vitiated where the competent authority applies its own mind and acts on the record independently.
Conclusion: The audit objection contention was rejected.
Final Conclusion: Since the essential requirement of prejudice to the Revenue was absent, the revisional order under section 263 could not stand and the assessee obtained relief.
Ratio Decidendi: Revisional jurisdiction under section 263 can be exercised only when the assessment order is both erroneous and prejudicial to the interests of the Revenue; if the proposed correction is revenue neutral, the condition of prejudice is not met.
TaxTMI 
TaxTMI 
