2023 (3) TMI 201 - AT - Income Tax

Tribunal quashes revision order, finds Assessing Officer's actions appropriate

The Tribunal quashed the revision order passed by the Principal Commissioner of Income Tax (PCIT), holding that the Assessing Officer (AO) had conducted ... Revision u/s 263 - As per CIT assessment order passed by AO is erroneous and prejudicial to the interest of Revenue in allowing the claim of deduction u/s 80IA - HELD THAT:- In this case, in the assessment order, the Assessing Officer has specifically noted the issue, wherein at para 1 Sl.No. (iii) deduction claimed for industrial undertaking u/s 80IA/ 80IAB/80IAC/IB/IC/IBA/80ID/80IE/10A/10AA. AO has issued notice under section 142(1) in respect of deduction claimed under section 80IA of the Act and also computation in respect of 80IA - Again, AO has issued notice u/s 142(1) of the Act and specifically asked about the claim of the assessee in respect of HTSC No. 1313 for which the assessee claimed deduction under section 80IA of the Act and he also asked that why there is a mismatch in name of the undertaking i.e., M/s. Graha Inds. Pvt. Ltd. In response to that the assessee filed a reply wherein, it has specifically explained that M/s. Graha Industries got merged with the assessee company and the Hon’ble Madras High Court has approved the amalgamation and filed copy of the judgement before the AO. Thereafter, after examining the details produced by the assessee, AO has completed the assessment under section 143(3) of the Act dated 09.03.2021. Under these facts and circumstances of the case, we are of the opinion that it cannot be said that the Assessing officer has not examined the issue AO, after making enquiry about allowability of deduction claimed by the assessee and after receiving the information relating to that, the Assessing Officer has completed the assessment order. PCIT was of the opinion that the Assessing officer has not discussed anything in respect of the issue in the assessment order and therefore, the assessment order is erroneous. In our opinion, the Assessing Officer, examining all the details, came to a conclusion that the assessee is eligible for claiming deduction and no discussion is required. Therefore, the order passed by the Assessing Officer cannot be said that it is an erroneous order. So far as merits of the case is concerned, the Mumbai Benches of the Tribunal in the case of UltraTech Cement Ltd [2022 (1) TMI 923 - ITAT MUMBAI] has considered similar issue and also considered the Circular No. 3 of 2008 dated 12.03.2008 issued by the CBDT, thus the order passed by the Assessing Officer cannot be said that it is erroneous and prejudicial to the interest of Revenue. PCIT was not able to establish that the assessment order passed under section 143(3)by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. Thus, the revision order passed by the ld. PCIT is quashed. Decided in favour of assessee. Issues Involved:1. Legality of the Principal Commissioner of Income Tax (PCIT) assuming jurisdiction under section 263 of the Income Tax Act, 1961.2. Whether the Assessing Officer (AO) conducted necessary verification regarding the deduction claimed under section 80IA of the Act.3. Interpretation and applicability of section 80IA(12A) of the Act in the context of amalgamation.Detailed Analysis:1. Legality of the Principal Commissioner of Income Tax (PCIT) assuming jurisdiction under section 263 of the Income Tax Act, 1961:The PCIT issued a show-cause notice stating the assessment order was erroneous and prejudicial to the interest of the Revenue due to the allowance of a deduction under section 80IA of Rs. 26,58,959/- for a windmill previously owned by M/s. Graha Industries Pvt. Ltd. The PCIT argued that the AO did not discuss the eligibility of the successor company for the deduction, thus invoking section 263 to direct a re-assessment. The assessee countered that the AO had indeed scrutinized and verified the claim, and the assessment order was neither erroneous nor prejudicial to the Revenue. The Tribunal found that the AO had examined the details and completed the assessment after due verification, making the PCIT's invocation of section 263 unjustified.2. Whether the Assessing Officer (AO) conducted necessary verification regarding the deduction claimed under section 80IA of the Act:The AO had issued multiple notices under section 142(1) specifically querying the deduction claimed under section 80IA, including the mismatch in the name of the undertaking. The assessee provided detailed responses, including a High Court order approving the amalgamation of M/s. Graha Industries with the assessee company. The Tribunal noted that the AO had examined these responses and concluded the assessment accordingly. Therefore, it was determined that the AO had indeed conducted the necessary verification, and the assessment order was not erroneous.3. Interpretation and applicability of section 80IA(12A) of the Act in the context of amalgamation:The PCIT argued that under section 80IA(12A), deductions are not applicable to amalgamations occurring on or after 01.04.2007. The Tribunal referred to the decision of the Mumbai ITAT in UltraTech Cement Ltd. v. DCIT, which clarified that section 80IA(12A) simply neutralizes sub-section (12) and does not disallow the deduction to successor entities. The Tribunal also highlighted that the CBDT Circular No. 3 of 2008, which aimed to clarify the legislative intent, could not override the plain language of the statute. It was concluded that the assessee was eligible for the deduction under section 80IA, and the AO's order was neither erroneous nor prejudicial to the Revenue.Conclusion:The Tribunal quashed the revision order passed by the PCIT, holding that the AO had conducted the necessary verification and the assessment order was not erroneous or prejudicial to the interest of the Revenue. The appeal filed by the assessee was allowed.Order Pronounced:The judgment was pronounced on 28th February 2023 at Chennai.