TaxTMI 
TaxTMI 
2009 (1) TMI 535
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..... 1.1 is to the effect that the ld. CIT erred on facts and in law in holding that the order passed by the Assessing Officer under section 143(3) of the Act was erroneous and prejudicial to the interests of the Revenue in allowing - (i) deduction of project expenses amounting to Rs. 19,39,452 and - (ii) deduction under section 10B of the Act amounting to Rs. 38,83,45,866, claimed by the assessee, which resulted in under assessment of income to the aforesaid extent. ITA No. 2070/Delhi/2008 2. On consideration of the order of ld. CIT, it is seen that on perusal of the records of the assessee, she found that the assessee-company had claimed project expenses of Rs. 19,39,452, which should have been capitalized. She also found that the assessee had claimed deduction under section 10B to the extent of Rs. 38,83,45,866, which was wrongly allowed. Thus, prima facie, there was an under assessment of income to the extent of the aforesaid amounts. It appears that she was also prima facie of the view that deduction of Rs. 42,31,279 out of total claim of deduction amounting to Rs. 1,84,57,709, in respect of foreign exchange, was also wrongly allowed. However, this point was not taken up....
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.... in which deduction was allowed under section 10B at Rs. 38,83,45,866. Thereafter, he referred to the findings of the ld. CIT in para 3.3 in respect of deduction under section 10B and project expenses. These findings have already been summarized by us while narrating the order of the ld. CIT. Our attention was drawn towards pages 56-59 of the paper book, being a letter dated 16-1-2005 filed before the Assessing Officer in the course of assessment proceedings. In regard to project expenses, it was mentioned in para 1 that the assessee was carrying on inter alia the activities of development of packaged software. In regard to the deduction under section 10B, the assessee had listed 7 units in para 2 as STP units. The annexure to this letter consisted of the details of the activities carried out in five units and it is seen that all these five units were carrying on the business of development of packaged software and providing of software consultancy services to telecommunication industry. The computation of deduction under section 10B in respect of these five units was also enclosed as Annexure 5. The assessee had also written a letter dated 10-3-2006 to the Assessing Officer enclos....
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....action. The ld. CIT may not agree with the action of the Assessing Officer but that by itself does not render the order prejudicial to the interests of the revenue. He referred to the decision of Hon'ble Bombay High Court in the case of CIT v. Gabriel India Ltd. [1993] 203 ITR 108, in which the aforesaid conditions were reiterated. Thus, it was pointed out that the section is not meant to substitute the judgment of the Assessing Officer with the judgment of the Commissioner provided that the issue has been examined by the Assessing Officer and thereafter he determines the income either by accepting the accounts or by making some adjustments according to his judgment. It was further pointed out that where a claim has been examined, the order made thereafter cannot be held to be erroneous simply because the elaborate discussion is not made in the order. On the basis of these decisions, it was his case that both the matters had been examined by the Assessing Officer and the deductions were allowed after application of mind by him. Therefore, the order could not have been revised under section 263 of the Act. 3.3 He also relied on the decision of Hon'ble Gujarat High Court in the ca....
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....ent Commissioner. The Hon'ble Court upheld the order of the Tribunal. It was pointed out that the assessment was being monitored by the Commissioner and the order was passed with the approval of Commissioner. In such a situation, the Commissioner could not possibly say that the matter had been decided without application of mind by the Assessing Officer. The Hon'ble Court also pointed out that not only the issue was examined in detail but the Assessing Officer also appended a note to the assessment order stating as to why the addition for alleged discrepancy in stock was not being made. In the absence of any suggestion by the Commissioner as to how the enquiry was not proper, the Court was unable to uphold the action taken by him under section 263. He also relied on the decision of Hon'ble Delhi High Court in the case of CIT v. Eicher Ltd. [2007] 294 ITR 310, in which it was held that mere failure to record a finding in the assessment order does not mean that the income had escaped assessment. In this case, the decision of Hon'ble Punjab & Haryana High Court in the case of Hari Iron Trading Co. (supra) was followed. It was held that the assessee had placed all the material before t....
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.... and not industrial property, and two different rates were prescribed by the DDA in respect of these two categories of lands. The rates of commercial land and industrial land were not necessarily the same and in any case rates prescribed by the DDA were at great variance with each other. Therefore, the order of the WTO, in which he adopted the value of one valuer rather than that given by the second valuer, could not be said to be prejudicial to the interests of the revenue. 4. In reply, the ld. DR pointed that both the issues taken up by the ld. CIT for revision of the order involved interpretation of the law. Therefore, the real question is whether the Assessing Officer applied the proper law? It was pointed out by him that sub-section (5) of section 80HHE specifically mentioned that where a deduction under this section is claimed and allowed in respect of profits of the business for any assessment year, no deduction shall be allowed in relation to such profits under any provision of this Act for the same or any other assessment year. Section 10B is an exemption and, therefore, the assessee must strictly satisfy the pre- conditions for claiming the exemption. In this case the ....
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....ourt in the case of Patil Vijay Kumar v. Union of India [1985] 151 ITR 48 . 5.2 On the basis of aforesaid decisions, it was argued that since the Assessing Officer had not conducted any enquiry into project expenses and had not properly interpreted the provisions contained in sub-section (5) of section 80HHE, ld. CIT was right in invoking her jurisdiction under section 263, setting aside the order for making further enquiry and deciding the issues on merits as per law. It was also his case that the project expenses were in respect of on-going projects, which represented the work-in-progress. 6. We have considered the facts of the case and rival submissions. The principles of law emerging from various decisions cited by the rival parties can be summarized as under :- (i)two pre-conditions have been prescribed for invoking jurisdiction under section 263, namely, (a) the order passed by the Assessing Officer should be erroneous; and (b) it should be prejudicial to the interests of the revenue; (ii)where proper enquiries have been conducted by the Assessing Officer and he has followed the principles of natural justice, the order passed by him cannot be said to be erroneous ....