TaxTMI 
TaxTMI 
TaxTMI 
2015 (3) TMI 611
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.... has exercised his powers when the Assessing Authority has given effect to the orders passed by the Income Tax Appellate Tribunal. It is submitted that therefore, invoking provisions of Section 263 is bad in law. 3. It is submitted that to invoke Section 263, two conditions are to be satisfied viz. that the order passed by the Assessing Authority is erroneous and that the same is prejudicial to interest of revenue. It is further submitted that both these conditions must exist simultaneously. In the present case, the Officer has given effect to the order passed by the Income Tax Appellate Tribunal which has been following its earlier orders. It is submitted that the subject orders of ITAT have become final as there is no appeal filed against the said order and therefore, the impugned order is bad in law. 4. It is further submitted that for the previous years the officer has given effect to the orders passed by the Tribunal and the same has become final and therefore, there is no reason for invoking Section 263." 2. Besides this, the assessee has also raised following as additional grounds challenging the validity of the order u/s 263, on the ground of limitation :- "1.1 The Comm....
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.... by the assessee, the Tribunal vide order dated 25.11.2004 allowed most of the points specifically, relating to disallowance of various expenditure and exclusion of OCC receipts. The AO vide order dated 28.02.2005 gave effect to the ITAT order dated 25.11.2004, whereby the total income was determined at Rs. 11,33,87,900 after allowing the deduction u/s 80-I and 80- IA. The working of the AO for arriving at the total income and deductions under Chapter VI-A was as under:- Business income as per order Dated 8-6-2001 [CIT(A)] Rs.189,36,96,537 Less : Reduction by ITAT: (1)Disallowance of capital expenditure on current repairs allowed as revenue expenditure. Rs.76,97,392 (2) Expenditure on feasibility studies allowed as revenue expenditure. Rs. 8,50,000 (3) Receipts for Oil co-ordination committee excluded. Rs. 145,96,00,000 (4) Addl.amount to be allowed on expenditure on Visbreaker Units. Rs. 25,13,70,150 (5) Depreciation on Boiler connected facilities. Rs. 3,43,00,176 (6) Overhead expenditure allowed as revenue Rs. 38,36,941 (7) Disallowance of provisions for gratuity debited. Rs. 5,07,423 Rs.175,81,62,082 Balance business income Rs. ....
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....d that, since the assessee itself has submitted that profit of the CEP is in negative, therefore, no deduction is to be computed u/s 80-IA for CEP Unit for the current year. 6. Before us, the learned Counsel Shri Girish Dave, submitted that, here in this case the time limit to initiate the action u/s 263 would begin from the date of completing the original assessment order, which is dated 23.03.2000 and not the order giving effect to the ITAT order, because nothing has been decided by the AO regarding deduction u/s 80-IA in his order giving effect to Tribunal order. The variation in the claim of deduction u/s 80-IA has occurred due to enhancement of business income at various stages. If at all, the claim of deduction can be said to be erroneous, then the same should reckoned or said to have arisen in the original assessment order dated 23.03.2000. He submitted that, there is another angle in claim of deduction u/s 80-IA, that, the assessee has also made a claim for deduction u/s 80-IA with regard to Captive Power Plant (CPP), which was included in the Capital Expansion Project (CEP). In the original assessment order, the AO has specifically disallowed the claim of deduction u/s 80-....
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....material placed on record. The subject matter of impugned order u/s 263, is setting aside the order passed by AO giving effect to the Tribunal order. The said order has been held to be erroneous insofar as prejudicial to the interest of the Revenue by the learned CIT on the ground that, the deduction under Chapter VI-A should be restricted to the business income of the assessee finally determined and it cannot exceed the gross total income of the assessee. The case of Mr.Dave before us is that, the impugned order is barred by limitation, because the time limit to initiate action u/s 263 in this case would begin from the date of completing of the original assessment order, i.e. 23.03.2000 and not the order giving effect to the Tribunal order. The reason being that, the later order had nothing to do with the computation of income or disallowing or allowing of claim of deduction under Chapter VI-A. From the facts as discussed above, it is seen that the deduction under Chapter VIA and more specifically deduction u/s 80- IA with regard to CEP unit have been varied right from the stage of filing of revised return to the stage of ITAT order, due to enhancement and reduction of the gross t....
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....ate authority. Here in this case, the assessee's claim for deduction u/s 80-I with regard to CPP unit, which was disallowed by the AO, has been finally allowed by the Tribunal. Now the AO has to compute the deduction u/s 80-I of such units. It has been admitted that the CPP is a part of CEP and the deduction u/s 80-I is included in the overall claim of deduction of CEP unit. Therefore, the AO has to determine the deduction u/s 80-I and such a deduction has to be in accordance with the provisions of section 80A(2) read with sections 80AB and 80B(5). Accordingly, we affirm the order of the learned CIT. 8.2 Now coming to the argument of the learned Counsel, Shri Girish Dave, that the impugned proceedings u/s 263 is barred by limitation and the case of the assessee is covered by the decision of the Hon'ble Supreme Court in the case of CIT v. Alagendran Finance Limited (supra), we find that first of all, the learned CIT has not transgressed upon the issue of determination of either the profit of eligible unit nor the allowability of deduction u/s 80-I / 80- IA. He has simply required the AO to compute the deduction in accordance with Chapter VI-A. He has not touched upon any part of th....
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.... deduction. Accordingly, the AO was directed to grant the benefit in accordance with the law. In the order giving effect to the ITAT order, the AO has computed the income in the following manner:- Business income as per order Dated 8-3-2002 before deduction under Chapter VI-A Rs.138,35,63,753 Less : Reduction by ITAT: (1) Disallowance of capital expenditure on current repairs allowed as revenue expenditure. Rs. 91,06,235 (2) Expenditure on feasibility studies allowed as revenue expenditure. Rs. 4,83,500 (3) Receipts for Oil co-ordination committee excluded. Rs. 47,86,03,000 (4) Addl. Depreciation on Piping, Heat Exchanger etc. Rs. 2,04,59,587 (5) Disallowance of projects consultancy/technical assistance fee deleted. Rs. 1,37,33,625 (6) Income from Petroleum India International excluded Rs. 86,00,000 (7) Interest u/s 244A offered for 1997-98 excluded Rs. 29,61,145 (8) Addl. Depreciation on MODVAT reversal. Rs. 17,58,606 Rs. 53,57,05,698 Balance Rs. 84,78,58,055 Add : (1) Receipts from Oil Co-ordination Committee excluded from 1997-98 assessable....
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....evenue. After considering the assessee's submission and on detailed reasoning, he held that the assessee's claim that, Tribunal has accepted the method of computation of deduction u/s 80-I on the profit of CPP, is not correct. The only direction of the Tribunal was to allow the deduction u/s 80-I in accordance with the law. The Tribunal did not consider the issue whether the OCC receipts of Rs. 145.96 crore should be included in the computation of deduction u/s 80-IA in respect of CEP unit. Accordingly, he directed the AO to recompute the deduction u/s 80-I by computing the profits of the CPP by working out the total units of power generated and purchased by CPP, less expenses incurred in relation to CPP unit. 11. Before us, the learned Counsel Shri Girish Dave, submitted that the claim of deduction u/s 80-IA with regard to the CPP was disallowed by the AO. Finally, the Tribunal vide order dated 25.11.2004 has allowed the claim of deduction u/s 80-I. Therefore, the learned CIT cannot set aside or revise the order, which is mainly giving effect to the ITAT order. Thus, not only the learned CIT has transgressed his revisionary jurisdiction, but also the impugned order is barred by l....