TaxTMI Login
Just a moment...
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
Join Channel
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) Whether the Commissioner was justified in revising the assessment under section 263 on the ground that the Assessing Officer had allowed excessive deduction and had not properly applied his mind; (ii) whether the assessment could be sustained on the basis of consistency and a possible view taken in earlier years.
Issue (i): Whether the Commissioner was justified in revising the assessment under section 263 on the ground that the Assessing Officer had allowed excessive deduction and had not properly applied his mind.
Analysis: The assessment order merely accepted the assessee's computation without any real inquiry into the basis for estimating income at 10 per cent of net receipts. The treaty provisions required deduction of actual expenses incurred for the permanent establishment, while the method adopted effectively allowed a large deduction without supporting material. The Commissioner recorded that the deduction appeared excessive and that the assessment suffered from lack of proper application of mind, thereby satisfying both the error and prejudice requirements for revision.
Conclusion: The revision under section 263 was valid and the objection was rejected.
Issue (ii): Whether the assessment could be sustained on the basis of consistency and a possible view taken in earlier years.
Analysis: The method followed by the assessee and accepted in earlier years was found to be contrary to the applicable legal framework. Consistency cannot justify continuation of a method that is not in accordance with law, and the view taken by the Assessing Officer was not held to be a permissible one on the facts.
Conclusion: The plea based on consistency and possible view failed.
Final Conclusion: The assessment order was rightly treated as erroneous and prejudicial to the interests of the Revenue, and the Commissioner's direction for fresh computation was sustained.
Ratio Decidendi: An assessment made without proper inquiry or application of mind, and contrary to the applicable legal method of computation, is revisable under section 263 when it causes prejudice to the Revenue.
TaxTMI 
