TaxTMI 
TaxTMI 
2015 (11) TMI 300
X X X X Extracts X X X X
X X X X Extracts X X X X
....rd of assessment, ld. CIT noticed that (i) Rs. 17.08 crore was required to be disallowed u/s. 14A read with Rule 8D of the Act but only an amount of Rs. 6.12 crore was disallowed by the A.O. (ii) Assessee had claimed deduction of Rs. 3,75,48,727/- on account of amortization value of lease hold land which was not allowable as according to him A.O had completed the assessment without considering the provisions of Section 35D. (iii) Assessee had claimed depreciation at 15% instead of 10% on office equipments and (iv) Assessee had claimed deduction of Rs. 14,74,336/- u/s. 35D which according to ld. CIT was not allowable as Assessee was in the business of providing services and that the expenses were incurred prior to 1.04.2009. He accordingly issued a notice dated 16.03.2015 calling upon the Assessee to show cause as to why appropriate order u/s. 263 be not passed and in response to which Assessee interalia objected to the initiation of proceedings u/s. 263 and submitted that the notice was without jurisdiction. On merits, on the issue of disallowance of disallowance u/s. 14A it was submitted that the issue was subject matter of appeal before ld. CIT(A) and was considered and decided b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nly, that the assessment order for the present assessment year was erroneous, it could not be regard as prejudicial to the interests of the Revenue as decisions on those issues, even if they were adverse to the appellant, could only result into enhancement of only such business income of the appellant which was fully exempt u/s. 80-IAB; (b) that it was not open to him to assume jurisdiction u/s. 263 unless the assessment order was both erroneous and prejudicial to the interests of the Revenue; (c) that further, as elaborately explained in the appellants written submission dated 23.3.2015 addressed to him, the assessment order for the present assessment year could not be regarded as erroneous in respect of any of the issues that he had sought to raise vide his Notice u/s. 263 2. Without prejudice to the foregoing Ground No. 1, in law and in the facts and circumstances of the appellant's case, the impugned order is void and deserves to be cancelled also for the reason that vide his impugned order, the learned CIT had cancelled the assessment and directed the learned Assessing Officer to make fresh assessment of the appellant's total income for the present assessment year whi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Without prejudice to the foregoing Grounds No. 1, 2 and 3, in law and in the facts and circumstances of the appellant's case, the learned CIT has grossly erred in failing to appreciate that as explained in the appellant's written submission, in truth and substance, the appellant's claim described as "Amortized value of leasehold land" was for depreciation in respect of leasehold lands and that it had nothing to do whatsoever with Section 35D as assumed by him and further, that since leasehold land was an intangible asset, it was eligible to deduction for depreciation @ 25% as against @10% claimed by the appellant and that it could just not be open to him to regard the assessment order as either erroneous or prejudicial to the interests of the Revenue inasmuch as it granted the appellant's claim of deduction @10%. 6. Without prejudice to the foregoing Grounds No. 1, 2 and 3, in law and in the facts and circumstances of the appellant's case, the learned CIT has grossly erred in holding that the learned Assessing Officer's action of granting the appellant's claim for depreciation on Office Equipment @15% applicable to Machinery and Plant is erroneous and prejudicial to the interest....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion and deduction u/s. 35D, he submitted that during the course of assessment proceedings, A.O had raised specific queries on the aforesaid three issues and in response to the query raised by the A.O., Assessee had furnished the reply. He submitted that vide letter dated 21.03.2013 had submitted the justification with respect the claim of depreciation of lease hold land development along with other details. With respect to the claim of deduction made u/s. 35D, Assessee vide letter dated 08.01.2013 had filed the necessary details along with the chart showing details of claim made in each of the preceding year along with the order in which the initial claim was made. With respect to the claim of depreciation, Assessee vide letter dated 08.11.2012 had filed the chart showing the details of fixed assets acquired during the year along with the depreciation claimed thereon. Ld. A.R. pointed to the copies of the letters of the Assessee which were addressed to the A.O and the copies of which were placed at page 37 to 63 of the paper book. The ld. A.R. therefore submitted that after considering the submissions of Assessee and on being satisfied with the replies given by the Assessee no add....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 282 (SC). He further submitted that even otherwise the order of A.O cannot be considered to be pre-judicial to the interest of the Revenue because the entire income under the head "profits and gains of business and profession" is exempt u/s. 80IB and even assuming that if there are certain disallowances, the disallowances would result in increasing the income under that head which would correspondingly go the increase the quantum of deduction u/s. 80IB and in that sense also, the order of A.O cannot be considered to be prejudicial to the interest of Revenue. He therefore submitted that the order of ld. CIT deserves to be quashed both on merits and legally. 7. The ld. D.R. on the other hand supported the order of ld. CIT and further submitted that when A.O has allowed the claim of the Assessee without any discussion, the order passed by the A.O was erroneous and prejudicial interest of Revenue. With respect to the claim of amortization of lease hold land that was allowed by A.O, he submitted that A.O had not examined the claim of the Assessee in the light of provisions of Section 35D(2) as the section does not provide for amortization of land and thus it was wrong application of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d the same can be exercised only if the circumstances specified therein exist. Two circumstances must exist to enable the Commissioner to exercise power of revision u/s 263, namely (i) the order is erroneous (ii) by virtue of being erroneous prejudice has been caused to the interests of the Revenue. 11. Interpretation of Section 263 has been subject matter of consideration in various decisions including the decision in the case of Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83 where the Hon'ble Apex Court while interpreting Section 263 at para 7 has observed as under:- 7. There can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer, it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. 12. In the case of CIT vs. Gabriel India Ltd. (1999) 203 ITR 108, the Hon'ble High Court while interpreting Section 263 has held that a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erits on the issue of amortization of cost of lease hold land, we find on perusing the computation of total income, which is placed at page 27 to 30 of the paper book, that the claim of Assessee of amortized value of lease hold land development was not u/s. 35D whereas ld. CIT in the order has held that the claim of Assessee was u/s. 35D and therefore in such a situation, A.O's order on that issue cannot be considered to be erroneous more so because there was no such claim u/s. 35D by Assessee. As far as the claim of depreciation on office equipments @ 15% is concerned, it is Assessee's submission that the claim of depreciation at 15% on the office equipment which comprises of similar items as are in the present year, has been allowed by the A.O in earlier years in the assessment order passed u/s. 143(3) and those orders have attained finality. As far as the claim of deduction u/s. 35D is concerned it is not the case of the Revenue that the expenses have been incurred in the year under consideration but on the contrary it is assessee's submission that the same have been incurred in earlier years and the deduction u/s. 35D has also been allowed in earlier years. It is also not a cas....