AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2011 (7) TMI 530
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....e to it and it has also been reported that the latter company has agreed for the same in the Board meeting held on 27-1-2004. The Assessing Officer has not ascertained the effective date from which the interest was not charged and whether the interest charged in the accounts for the earlier years had also been written off. (ii) The assessee has claimed payment of Rs. 5,58,23,719 which was claimed to be services charges to United Breweries Limited and Inertia limited which are group companies of the assessee. The Assessing Officer has allowed the same without examining the agreements and the arms length nature of the transactions. Assessing Officer ought to have noted that the Inertia limited has been referred to BIFR for complete erosion of its net worth. (iii) The Assessing Officer has added depreciation claimed on intangible assets being trade marks and licences merely stating 'I am of the view that assessee's explanation is not acceptable' without examining the agreements, dates of acquisition of the intangible assets, actual payments, if any, made for the same, method of valuation of these trade mark and licences etc. He failed to conduct full fledged enquir....
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....rder needs to be quashed. 6. Without prejudice to the above and in the alternative, the Appellant Company submits that the directions which are contained in the Order are of such a routine nature which could not be said to have been overlooked by the Assessing Officer at the time of completion of regular assessment and in the circumstances of the to asking the Assessing Officer to redo an assessment only to gain a practice of completing an assessment and not to redo an assessment in line with the provisions of section 263 which could arise only in exceptional cases. 7. The Learned Commissioner of Income-tax erred in observing "with regard to the interest charged in the profit and loss account", the "Copy of the Accounts showing the transactions with the Holding Company have not been filed" and as such he is entitled to set aside an order of assessment under section 263 of the Income-tax Act with the following direction:- "I therefore, set aside the issue to the Assessing Officer who shall call for the assessee's account copy.... And if confirmed that interest has been charged as claimed in the assessee's return, he shall accept the claim of ....
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.... only limitation on his powers is that he must have some material(s) which would enable him to form a prima facie opinion that the order passed by the Officer is erroneous insofar as it is prejudicial to the interest of the Revenue. Once he comes to the above conclusions on the basis of the 'material' that the order of the Assessing Officer is erroneous and also prejudicial to the interests of the Revenue, the CIT is empowered to pass an order as the circumstances of the case may warrant. He may pass an order enhancing the assessment or he may modify the assessment. He is also empowered to cancel the assessment and direct to frame a fresh assessment. He is empowered to take recourse to any of the three courses indicated in section 263. So, it is clear that the CIT does not have unfettered and unchequred discretion to revise an order. The CIT is required to exercise revisional power within the bounds of the law and has to satisfy the need of fairness in administrative action and fair play with due respect to the principle of audi alteram partem as envisaged in the Constitution of India as well in section 263. As order can be treated as 'erroneous' if it was passed in utter ignorance....
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..... (ix) If the Assessing Officer has made enquiries during the course of assessment proceedings on the relevant issues and the assessee has given detailed explanation be a letter in writing and the Assessing Officer allowed the claim on being satisfied with the explanation of the assessee, the decision of the Assessing Officer cannot be held to be erroneous simply because in his order he does not make an elaborate discussion in that regard. 5. With regard to the first issue relating to interest charged to Profit & Loss Account, the case of the assessee is that it has borrowed funds from McDowell Alcobev Pvt. Ltd. (Formerly McDowell Alcobev Ltd.) on which interest was paid in the earlier years. But during the financial year 2003-04, no interest was debited/paid or claimed as expenditure in the accounts as the same was waived by M/s. McDowell Alcobev Pvt. Ltd. on the request of the assessee-company. The assessee had appended a note to the accounts on this issue stating therein that in view of the weakened financial conditions and the impending merger of the company with its holding company, McDowell Alcobev Private Ltd., the Board of Directors of the company reques....
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....n direction to the Assessing Officer to carry out further investigation regarding the claim of the assessee-company. Again, keeping in view the explanation of the assessee, incorporated hereinabove, which could not be found to be false either by the Assessing Officer or by the ld. CIT, the reasoning given by the ld. CIT in his revisional order cannot satisfy the test laid down under section 263 as discussed in the above portion of this order. Hence, this issue cannot be a ground to revise the assessment order as there is no error in it. 10. The third issue which has been made the basis for revising the order is regarding claim of depreciation on intangible rights. The assessee-company has claimed depreciation on Trade marks and Licences amounting to Rs. 4,15,13,720 being depreciation at the rate of 25 per cent on opening WDV of Rs. 16,60,54,881 as on 1-4-2003 on the ground that Trade Marks and Licences are intangible assets. The assessee has claimed this depreciation as per Part B (intangible assets) of Appendix 1 of the Income-tax Rules read with rule 5 and section 32 of the Income-tax Act. The Assessing Officer has not allowed the claim made and disallowed the depreciation....