TaxTMI 
TaxTMI 
2013 (8) TMI 817
X X X X Extracts X X X X
X X X X Extracts X X X X
....in respect of profit and gain from undertaking or enterprise engaged in infrastructure development is to be allowed under thissection only to those industrial undertakings or enterprises which developed or operated and maintaining infrastructure facility by their own funds. Assessee has not fulfilled the condition as prescribed in the Section. As per explanation below sub-section (13) of Section 80IA inserted by Finance Act 2009 with retrospect effect from 01.04.2000 the assessee cannot claim exemption under Section 80IA because it is clearly mentioned in the aforesaid explanation. The CIT also found that the A.O. did not verify the unsecured loan of Rs. 4,85,35,831/-. The CIT rejected the assessee's submission observing that as per Section 80IA and in view of sub-section 13 it is clear that assessee is not entitled to deduction because the company employee executed the work contract allowed by M.P. Rural Road Development Authority. The CIT held as under :- (CIT Page No.8 & 9) "9. It is clear from the above amendment that an assessee can claim a deduction under Section 80IA(4) only if, it makes the investment in the eligible project and itself executes the development work....
X X X X Extracts X X X X
X X X X Extracts X X X X
....effect from 1st April, 2000, provides that "for the removal of doubts, it is hereby declared that nothing contained in this Section (i.e. 80IA) shall apply in relation to a business referred to sub-section (4) which.........................(not readable)" 4. Ld. Authorized Representative submitted that the A.O. made assessment under Section 143(3) of the Act and examined the claim of the assessee. The relevant abstract pointed out by the ld. Authorized Representative from A.O's. order dated 29.12.2010 is reproduced as below:- (Paper Book Page No.26 & 27) "The assessee was engages in the road construction work during the year under consideration. The assessee has shown contract receipt of Rs. 515.41 lacs during the year whereas contract receipt was of Rs. 495.65 lacs during thelast year. The assessee has declared gross profit @ 15.70% during the year whereas the gross profit was @ 13.57% during the last year. Hence the assessee has declared better gross profit in comparison of last year. The assessee has claimed deduction u/s 80IA of the Income Tax act. The reply of the assessee placed on record. It was submitted that since assessee is fulfilling all the cond....
X X X X Extracts X X X X
X X X X Extracts X X X X
..../O Rs.8,23,640/-" 5. Ld. Authorized Representative further submitted that order of the A.O. has been challenged by the assessee before CIT(A) and CIT(A) decided the appeal in favour of the assessee allowing deduction under Section 80IA vide order dated 04.07.2011. The finding of the CIT(A) is reproduced as below :- (CIT Page No.45) "In the result and after perusal of appellant's submissions, AO is not found justified in treating the interest income from FDRs as income from other sources for the purpose of deduction u/s 80IA. However, amount of refund from income tax department and interest earned therefrom is to be treated as income from other sources for purposes of deduction u/s 80IA. 6. Ld. Authorized Representative submitted that the CIT is not empowered to exercise the power under Section 263 of the I.T. Act. The Ld. Authorized Representative submitted that order of the A.O. was not erroneous and prejudicial to the interest of the revenue. He has submitted that when the A.O. has taken deduction under Section 80IA of the Act as Nil then there is no question of prejudice to the revenue as on Nil tax effect is Nil. As regards the sundry deposit, the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....303 ITR 23 (12). Hon'ble Madras High Court in the case of CIT Vs. SAK Soft Ltd. (2008) 298 ITR 63 (Mad.) (13). Hon'ble Gujrat High Court in the case of CIT Vs. Pankaj Dhirajlal Dhruve( 2008) 305 ITR 332 (14). Hon'ble Bombay High Court in the case of Grasim Industries Ltd. Vs. CIT (2010) 321 ITR 92 7. On the other hand, ld. D.R. relied upon the order of the CIT and submitted that the A.O. did not make any discussion in his order regarding eligibility of the deduction under Section 80IA of the Act. As regards the contention of the ld. A.R. regarding merger of the Assessment Order with CIT's order, the ld. D.R. submitted that the order of the A.O. has been merged with order of the CIT for limited issue whether interest income is eligible under Section 80IA or not. The Ld. D.R. submitted that entire eligibility deduction under Section 80IA neither has been decided by the A.O. nor has been decided by the CIT as before the CIT, there is no such question in issue. The ld. D.R. submitted that the A.O. did not take the deduction under Section 80IA at nil only on account that there was a loss. Ld. A.R. submitted that CIT never discussed about the eligibility of the assessee for d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ned in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, [National Tax Tribunal,] the High Court or the Supreme Court. Explanation.-In computing the period of limitation for the purposes of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded." 9. From a reading 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 fulfillment of the requirements laid down in sub-section (1). The consideration of the Commissioner as to whether an orde....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pinion of the Income-tax Officer. That would not vest the Commissioner with power to re-examine the accounts and express different opinion. It is because the Income-tax Officer has exercised the quasi-judicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. It may be said in such a case that in the opinion of the Commissioner the order in question is prejudicial to the interests of the Revenue. But that by itself will not be enough to vest the Commissioner with the power of suo motu revision because the first requirement, viz., that the order is erroneous, is absent. 11. To know the scope and scheme of the revision under section 263 of the Act by Commissioner we would like to refer one judgment of Hon'ble Bombay High Court in the case of Grasim Industries Ltd. vs. CIT[2010] 321 ITR 92 (Bomb) wherein the Court has held as under:- (Page 99 to 101) "11. Section 263 of the Income-tax Act, 1961 empowers the Commissioner to call for and examine the record of any proceedings under the Act and, if he considers that any ord....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the provisions of section 80HHC(3), the Supreme Court noted that the statutory provision had been amended eleven times and different views existed on the day when the Commissioner passed his order under section 263. The Court observed that "the mechanics of the section have become so complicated over the years that two views were inherently possible". Consequently, the subsequent amendment to the statutory provision, even though it was retrospective, would not attract the provisions of section 263 particularly when the provision of law, as it stood, on the date when the Commissioner passed the order under section 263, would have to be taken into account. 12. In CIT v. Gabriel India Ltd. [1993] 203 ITR 1081 a Division Bench of this Court observed that section 263 does not confer an arbitrary or uncharted power on the Commissioner. In considering as to whether an order is erroneous insofar as it is prejudicial to the interests of the revenue, the Commissioner must be guided by the material on the record. The power of suo motu revision under section 263(1), is in the nature of supervisory jurisdiction. Two circumstances must exist in order to enable the Commissioner to exerc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 80IA of the Act. The assessee furnished the reply to the letter the A.O. in original assessment noted the contention which has been reproduced above in ld. A.R. submission the A.O. noted that the assessee has engaged in road construction work during the year under consideration. The assessee has claimed under Section 80IA of the Act. The reply of the assessee placed on record. The A.O. found the assessee has fulfilled all conditions as per prescribed under Section 80IA(4) of the Act for which the assessee is eligible for the deduction of its profit earned from the construction activities. The assessee received total contract receipt of Rs. 5,15,41,796/- during the year. He further noted that these receipts includes a sum of Rs. 21,54,000/- received from M/s Deep Vijay Builders on which deduction u/s 80IA of the Act was not allowable. Thus, A.O. further noted that the assessee did not furnish separate calculation of profit from this activity hence the A.O. estimated the amount of profit applying 5% and calculated Rs. 1,07,250/- and treated as income from the contract with M/s. Deep Jai Builders and deduction under Section 80IA was not allowed. Further, the A.O. while calculating i....