TaxTMI 
TaxTMI 
TaxTMI 
1991 (2) TMI 199
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....ee also filed a further letter on 8th July 1986 which clarified that the reason for change was to synchronize the accounting year of the assessee with the accounting year of a sister company South Asian Financial Exchange Ltd. (Hereinafter referred to as SAFE) which had been promoted by the assessee. By order dt. 10th July 1986 the Assessing Officer permitted the assessee to change the previous year to 30th September and thus a 15 month previous year was fixed ending on 30th Sept., 1986 relevant to the asst. yr. 1987-88. The CIT found that the order passed by the Assessing Officer dt. 10th July 1986 permitting the change in the previous year was erroneous and prejudicial to the interests of Revenue. The CIT has pointed out in his order that; (a) The assessee had made huge capital gains in May, 1986, which fact was kept from the Department. (b) The assessee managed to make paper losses in the nature of depreciation through a purchase and lease-back transaction during the quarter ending 30th Sept., 1986 (c) This depreciation was utilised to set off the capital gains made (d) The intention of the assessee in asking for a change in the previous year was only to facilitate such a se....
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....documents and information submitted by the assessee, acceded to the request of the assessee for change in the previous year. In the letter dt. 3rd June, 1986, the assessee had stated that administrative reasons had prompted the request for change in the previous year On 25th June, 1986 the Assessing officer rejected the request On 1st July 1986 the assesses gave the administrative reasons as under; As explained to you, the accounting years of some major shareholders of the company end on 30th June and some of them on 31st Dec. It is therefore considered convenient to have the accounting year to end on 30th September Moreover, the dividends paid on certain of the major investments of the company are received between July and September which would fall within the accounting year of the company and can be taken credit for immediately on their receipt, if the company's accounting year ends on 30th Sept. The above are the main administrative reasons which weighed in the minds of the company to consider change of the accounting year to 30th September. The CIT points out that in this letter the assessee has not mentioned the promotion of SAFE or synchronization of the accounting year wi....
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....hat the assessee had any negotiation with Madras Oxygen and Acetylene Co. Ltd and West Coast paper Mills Ltd. for entering into the purchase of Oxygen cylinders and chlorine tank respectively before asking for the change of the previous year or before the passing of the Board Resolution. 7. In fine, the arguments of the learned representative for the assessee can be summed up as under. (a) There is no error in the order of the Assessing Officer granting change in the previous year. No attempt was ever made to mislead the assessing authority in any way and the statement dt. 26th June 1986 filed on 1st July, 1986 with the Assessing Officer referred to only to the business income for advance we tax purposes. (b) The transaction for sale and lease back was entered in to at arms' length and is a legitimate exercise in tax planning. (c) It is only after the permission for change in the previous year was received by the assessee that this exercise in tax planning was attempted as a method of mitigating tax liability on capital gains. (d) Any action that may be taken now to withdraw the permission granted to the assessee permitting change in the previous year would cause prejudice to ....
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....invoked not as a jurisdictional corrective or as a review of a subordinate's order in exercise of the supervisory power but it is to be invoked and employed only for the purpose of setting right distortions and prejudices to the Revenue which is a unique conception which has to be understood in the context of and in the interest of Revenue administration Such a power cannot in any manner be equated to or regarded as approaching in any way the appellate jurisdiction or even the ordinary revisional jurisdiction conferred on the Commissioner under s.264. In the circumstances, it was argued that unless there is an error in the order sought to be revised, jurisdiction under s. 263 would not lie The learned representative for the assessee pointed out that the summarised profit and loss account for the year ending 30th June, 1986 filed before the Assessing officer related to the projected estimate made on 26th June, 1986 based on the working for the first 9 months business income for advance tax purposes, It is seen from a copy of this statement filed before us that this explanation has been incorporated in the statement. The contention of the assessee is that what has been furnished rep....
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.... company should not show a loss for the last six months of the previous year of 18 months, which might be set off against the profits of the first 12 months. This appeared to be an impossible condition No assessee could be asked to ensure that he would not suffer a loss during a particular period. In a previous year, a loss arising profits arising from other activities It is only then that we can arrive at the net profits It was, therefore, not open to the ITO to stipulate that there it shall be no loss in a part of the previous year or that if there was a loss, it shall not be allowed to be set off against the profits arising in the same previous year. 11. The High Court also held that the condition that the said change should not result in the reduction of tax liability including surtax is an ambiguous condition and wholly superfluous This was not a condition to be imposed on an assessee but a consideration which had to be kept in mind by the ITO while permitting the change of the previous year. 12. We have considered the arguments of both the learned departmental Representative and the learned Representative for the assessee. What is to be determined is whether the submissions....