TaxTMI 
TaxTMI 
2012 (3) TMI 332
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....ction 35 DDA. With regard to the third aspect i.e. non-recurring items, the Tribunal has upheld the order passed by the CIT. In this appeal, we are therefore concerned only with the first two aspects. 2. On the question of warranty claim, it is noticeable that this issue was raised by the Assessing Officer during the course of original assessment proceedings and the assessee had written a letter dated 21.11.2006 giving complete details of the provision for warranty and had relied upon decision of Delhi High Court in the case of Commissioner of Income Tax v. Vinitec Corporation. Pvt. Ltd., (2005) 278 ITR 337. The CIT in the order dated 24.3.2009 has not disputed the aforesaid factual position and has stated as under: "i) The assessee‟s claim that warranty issue is covered by Jurisdictional High Court decision in the case of CUT Vs Vinitec Corporation is not fully correct. The Hon‟ble High Court had held that if the provisions is made on scientific basis then only it is an allowable expenditure." 3. Thereafter, he has referred to the second claim of the respondent-assessee and has observed that there was lack of enquiry and this vitiated the assessment order. Ref....
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.... law on this aspect was discussed in the following manner (page 113) : " . . . From a rending of sub-section (1) of section 263, it is clear that the power of suo motu revision can be exercised by the Commissioner only if, on examination of the records of any proceedings under this Act, he considers that any order passed therein by the Income-tax Officer is " erroneous in so far as it is prejudicial to the interests of the Revenue‟ . It is not an arbitrary or unchartered power, it can be exercised only on fulfilment of the requirements laid down in sub-section (1). The consideration of the Commissioner as to whether an order is erroneous in so far as it is prejudicial to the interests of the Revenue, must be based on materials on the record of the proceedings called for by him. If there are no materials on record on the basis of which it can be said that the Commissioner acting in a reasonable manner could have come to such a conclusion, the very initiation of proceedings by him will be illegal and without jurisdiction. The Commissioner cannot initiate proceedings with a view to starting fishing and roving enquiries in matters or orders which are already concluded. Such ac....
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....ture incurred by the assessee. The assessee had given detailed explanation in that regard by a letter in writing. All these are part of the record of the case. Evidently, the claim was allowed by the Income-tax Officer on being satisfied with the explanation of the assessee. Such decision of the Income-tax Officer cannot be held to be "erroneous‟ simply because in his order he did not make an elaborate discussion in that regard." After referring to the said, in the case of Income Tax Officer Vs. DG Housing Projects Ltd. decided on 1st March, 2012 we have recently observed and held as under : "16. Thus, in cases of wrong opinion or finding on merits, the CIT has to come to the conclusion and himself decide that the order is erroneous, by conducting necessary enquiry, if required and necessary, before the order under Section 263 is passed. In such cases, the order of the Assessing Officer will be erroneous because the order passed is not sustainable in law and the said finding must be recorded. CIT cannot remand the matter to the Assessing Officer to decide whether the findings recorded are erroneous. In cases where there is inadequate enquiry but not lack of enquiry, again ....
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....in law. We may notice that the material which the CIT can rely includes not only the record as it stands at the time when the order in question was passed by the Assessing Officer but also the record as it stands at the time of examination by the CIT [see CIT vs. Shree Manjunathesware Packing Products, 231 ITR 53 (SC)]. Nothing bars/prohibits the CIT from collecting and relying upon new/additional material/evidence to show and state that the order of the Assessing Officer is erroneous." 4. We may also observe that the question of warranty claim was reopened in the assessment year 1999-2000 after an order u/s 263 of the Act. The order passed under Section 263 of the Act, in the assessment year 1999-2000, was struck down by the Tribunal and this decision has been upheld by this Court in ITA No.536/2007 decided on 21st November, 2007. 5. On the second aspect, it is noticed that the claim for deduction under Section 35DDA was made by the assessee for the first time in assessment year 2002-03. 1/5th of the amount payable under the voluntary retirement was allowed as a deduction. In this year, the Assessing Officer has followed the earlier assessment order. The CIT in the order dat....