TaxTMI 
TaxTMI 
2015 (11) TMI 1277
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....ture incurred on Initial Public Offer of Equity Shares amounting to Rs. 3,27,82,000/- (being one-fifth of the total expenditure of Rs. 16.39 core) on the ground that the Appellant is not an industrial undertaking. 2. The Appellant prays that the disallowance of deduction amounting to Rs. 3,27,82,000/- under section 35D of the Act be deleted." 2. In this case, the brief background is that in the return of income, the Assessee had claimed deduction u/s 35D at Rs. 3,27,82,000/- (being 1/5th of total expenditure of Rs. 16,39,10,000/-), being amortization of expenditure incurred on the Initial Public Offer of equity shares. The Assessee's return of income was scrutinized and order u/s 143(3) of the Act was passed by A.O. u/s 143(3) of the Act dated 31.12.2008. In the said assessment order, the A.O. allowed Assessee's claim of deduction u/s. 35D of the Act at Rs. 3,27,82,000/-. Thereafter the CIT-7, Mumbai passed revision order u/s 263 of the Act dated 02-03-2011, holding that assessment order was erroneous and prejudicial to the interest of revenue since Assessee was not entitled for deduction u/s 35D of the Act. As per provisions of section 35D of the Act, the deduction u/s 3....
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....he assesse has argued the matter in detail. He has assailed the order of lower authorities and argued that assessee was eligible to claim deduction u/s 35D. Various reasons given by the Ld Counsel in support of his arguments are as under : (i) Though the decision of Hon'ble Bombay High Court in the case of CIT vs. Emirates Commercial Bank Ltd (262 ITR 55) is on S. 32A(2)(b )(iii), the ratio will still apply to issue u/s. 35D of the Act because both the sections talk of "industrial undertaking", (ii) Hon'ble Delhi High Court's decision in the case of Ansal Housing and Construction Ltd. v. CIT (320 ITR 420) is on construction of immovable property which is held as not "manufacture or production of an article or a thing". This is well settled by the Hon'ble Supreme Court in the case of CIT v. N.C. Budharaja & Co. (204 ITR 412) and there can be no dispute on that. However, this decision cannot apply to a Banking Company as it is not engaged in the business of building, etc., (iii) Present case is covered by the decision of the Hon'ble Supreme Court in the case of CIT v. Peerless Consultancy & Service (P.) Ltd. (248 ITR 178), (iv) Hon'ble ITAT's Order in A.Y.....
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....sts of revenue and called for an explanation from assessee. The assessee has explained before the CIT that the assessee is an industrial undertaking for the purpose of sec. 35D and is eligible for the claim. For this submission, he relied upon the decision of Emirate Commercial Bank Ltd. (supra) & HSBC Securities and Capital Markets (India) Pvt. Ltd. (supra) and submitted that the claim of the assessee for deduction u/s 5D is in accordance with law and is eligible. The learned Commissioner after considering the explanation given by the assessee and also considering the case laws relied upon by the assessee has held that the Assessing Officer has not at all examined the issue and passed the assessment order without application of mind and the order is erroneous and prejudicial to the interests of revenue. The learned Commissioner further held that the assessee is a bank and not an industrial undertaking for the purpose of section 35D. 11. We find that the Hon'ble Bombay High Court in the case of Emirates Commercial Bank (supra) considered the submissions of the assessee and held that the assessee fulfilled the conditions as laid down u/s 32A(2)(b)(iii) of the Act, and allowed the....
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....ld that the assessee is a bank and not an 'industrial undertaking' for the purpose of section 35D and accordingly, we uphold the order of the CIT on merits of the case. 15. In so far as another argument of the learned counsel is concerned that the AO has taken a possible view after examining the details filed before him by the assessee, we have gone through the assessment order passed by the AO and the AO has not discussed anything about the issue involved in this appeal. In our opinion, the AO has not examined issue and simply without applying the mind allowed the claim of the assessee, therefore, the order of the AO becomes erroneous and prejudicial to the interests of the Revenue. In this context, the Hon'ble Delhi High Court in the case of GEE VEE Enterprises Vs. ACIT, 99 ITR 375 wherein the Hon'ble Delhi High Court has observed as under:- "It is not necessary for the Commissioner to take further inquiries before cancelling the assessment order of the Income-tax Officer. The Commissioner can regard the order as erroneous on the ground that in the circumstances of the case the Income-tax Officer should have made further inquiries before accepting the statements made by the....