2009 (6) TMI 570

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....rcising revisional power vested in him under section 263 of the Income-tax Act, 1961 whereby respondent No. 2 set aside the assessment order passed by the Assessing Officer ? 2. Whether on the facts and in the circumstances of the case and in law, the Income-tax Appellate Tribunal was justified in its view that the payment made by the assessee to M/s. Nehru Centre entitled 'goodwill' was capital in nature ?" 2. The first question raised in this appeal relates to the question of invocation of the power under section 263 of the Income-tax Act, 1961. In order to answer this question, it is not necessary to go in to the factual aspects of the matter. We are reproducing the order passed by the revisional authority, the relevant portion is ....

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....ficer is erroneous in so far as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied the following conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous, and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent the order of the Income-tax Officer is erroneous but it is not prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue recourse cannot be had to section 263(1) of the Income-tax Act. 4. In the case of CIT v. Max India Ltd. [2007] 295 ITR 282 the apex court had an occasion to explain the earlier decision in the case of Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83 wherein the apex court has hel....

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....it is not in dispute that when the order of the Commissioner was passed there were two views on the word 'profits' in that section. The problem with section 80HHC is that it has been amended eleven times. Different views existed on the day when the Commissioner passed the above order. Moreover, the mechanics of the section have become so complicated over the years that two views were inherently possible. Therefore, subsequent amendment in 2005 even though retrospective will not attract the provision of section 263 particularly when as stated above we have to take into account the position of law as it stood on the date when the Commissioner passed the order dated March 5, 1997, in purported exercise of his powers under section 263 of the In....