TaxTMI 
TaxTMI 
2015 (10) TMI 2027
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....area of Yanam, obtained a registration certificate from Directorate of Industries and Commerce, Government of Pondicherry vide certificate no.1- 13/Ind/104/3631/A5/2004 dated 21.6.2004 and as per the said certificate, the date of commencement of production was from 19.3.2004. The case was selected for scrutiny as per the Board guidelines. In response to the notice issued u/s 143(2) of the Act, the assessee's A.R. Shri K. Balaji, ACA appeared and filed the details as per the questionnaire issued by the assessing officer. After examining the details filed by the assessee, the assessing officer completed the assessment u/s 143(3) of the Act and accepts the claim of deduction u/s 80-IB of the Act, while doing so, the A.O. disallowed interest income of Rs. 24,946/- as it is not eligible for deduction u/s 80-IB of the Act. 3. The CIT, Rajahmundry has issued a show-cause notice u/s 263 of the Act dated 2.2.2012 proposing revision of assessment order passed by the assessing officer u/s 143(3) dated 30.12.2009. The CIT proposed to revise the assessment order, on the sole reason that the A.O. has allowed deduction u/s 80-IB of the Act, which was otherwise not allowable as per the provisions....
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....of Pondicherry vide certificate mentioned here above(supra). The A.R. further submits that during the course of assessment, the assessing officer has issued a detailed questionnaire about the claim of deduction u/s 80-IB of the Act and in response to the said questionnaire, assesse has submitted detailed note on how the assessee is eligible for deduction u/s 80-IB of the Act. After considering the explanation of the assesse, the A.O. has allowed the claim of deduction u/s 80-IB of the Act, which is evident from the assessment order passed by the assessing officer. Further, the assesse submitted that the department has accepted the claim of deduction for all the three assessment years starting from assessment year 2004-05 to 2006-07, therefore, the CIT cannot deny the benefit of deduction for the current assessment year under the same set of facts. Further, the assesse submits that though there is a mentioning of year of commencement of production is 2004-05 in the audit report issued by the auditor who conducted the audit u/s 80-IB of the Act, it means that the assessment year 2004-05. Therefore, based on that typographical error, the CIT is not justified in disallowing the claim o....
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....cial production on 19.3.2004, therefore, it qualifies for deduction u/s 80-IB of the Act for the assessment year 2004-05. 7. It is pertinent to mention here that, to qualify for deduction u/s 80-IB of the Act, one of the essential condition is that the assessee concern should have begun manufacture or produce goods on or before 31.3.2004. On verification of records furnished by the assessee, it is proved that the assessing officer has allowed the deduction after examination of details filed by the assessee. It is also undisputed fact that the department has allowed the claim of the assessee right from the A.Y. 2004-05 to A.Y. 2006-07, it is only in the A.Y. 2007-08, the CIT has denied the benefit u/s 80-IB of the Act. 8. To invoke provisions u/s 263 of the Act, the twin conditions must be satisfied i.e. the order of the assessing officer is erroneous and further it must be prejudicial to the interest of the revenue. Unless both conditions are satisfied, the CIT cannot assume jurisdiction to pass order u/s 263 of the Act. It is not necessary that every order which is prejudicial to the interest of revenue is also erroneous. Unless the A.O's order is not erroneous, no action can be....
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....ot withdraw the relief for subsequent ears. More particularly so, when the revenue has not even suggested that there was any change in the facts warranting a dif ferent view for subsequent years. In this case for the assessment years 2000-01 and 2001-02 the relief granted under Section 10A of the Act to SEEPZ unit has not been withdrawn. There is no change in the facts which were in existence during the assessment year 2000-01 vis a vis the claim to exemption under section 10A of the Act. Therefore, it is not open to the department to deny the benefit of Section 10A for subsequent assessment years i.e. assessment years 200203 and 2003-04 and 2004-05. Besides that, on consideration of the facts involved both the Commissioner of Income Tax (Appeals) and the Tribunal have recorded a finding of fact that the SEEPZ unit is not formed by splitting up of the first unit." 10. In the case of Spectra Shares and Scrips Pvt. Ltd., (2013) 354 ITR 35, the Hon'ble A.P. High Court has culled out principles laid down by the Hon'ble Supreme Court and also various High Courts on the issue of exercise of jurisdiction by the CIT u/s 263 of the Act. It reads as follows: '(a) The Commissioner has ....
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.... which are already concluded , that the Department cannot be permitted to begin fresh litigation because of new views they entertain on facts or new versions which they present as to what should be the inference or proper inference either of the facts disclosed or the weight of the circumstance; that if this is permitted, litigation would have no end except when legal ingenuity is exhausted. (f) Whether there was application of mind before allowing the expenditure in question has to be seen; that if there was an inquiry, even inadequate that would not by itself give occasion to the Commissioner to pass orders under section 263 merely because he has a different opinion in the matter; that it is only in cases of lack of inquiry that such a course of action would be open; that an assessment order made by the Income-tax Officer cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately, there must be some prima fade material on record to show that the tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation, a lesser....
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....n the CIT conceded the position that the AD made the inquiries, elicited replies and thereafter passed the assessment order. The grievance of the CIT was that the AD should have made further inquiries rather than accepting the explanation. Therefore, it cannot be said that it is a case of 'lack of inquiry.-CIT vs. Gabrial India Ltd. (1993)114 CTR (Born) 81: (1993) 203 ITR 108 (Born) relied on. Even the CIT in his order, passed under s. 263, is not clear as to whether the expenditure can be treated as capital expenditure or it is revenue in nature. No doubt1 in certain cases, it may not be possible to come to a definite finding and therefore, it is not necessary that in all cases the CIT is bound to express final view. But, the least that was expected was to record a finding that order sought to be revised was erroneous and prejudicial to the interest of the Revenue. No basis for this is disclosed. In sum and substance, accounting practice of the assessee is questioned. However, that basis of the order vanishes in thin air when this very accounting practice, followed for number of years, had the approval of the IT authorities. Interestingly, even for future assessment years, t....