TaxTMI 
TaxTMI 
2016 (8) TMI 1080
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....sment year 2009-10. 2. The assessee raised the following grounds of appeal: 1. The learned Principal Commissioner of Income-tax - Bangalore - I ("the learned CIT") has erred in initiating proceedings under Section 263 of the Income-tax Act, 1961 ("the Act") without appreciating that the assessment order passed under section 143(3) of the Act was not erroneous and prejudicial to the interests of the revenue. 2. The learned CIT has erred in not relying upon the decision of the Supreme Court in the case of Malabar Industries Co Ltd v. CIT [2000] 243 ITR 83 (SC) wherein it has been held that "where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erron....
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....n as to why the assessment order cannot be treated as erroneous and prejudicial to the interests of revenue for the following reasons: "During the year a net charge of Rs. 14,40,19,057/-has been charged to the P&L a/c as provision for warranty. The etails of warranty provision provided in schedule- 15 'Notes on account' do not disclose that the warranty provision has been charged on a scientific basis. The provision for warranty thus claimed is to e disallowed especially in view of the decision of the Supreme Court in the case of Rotork Controls India Pvt. Ltd. Vs CIT Chennai 180 Taxman 422. The assessment order passed by the Assessing Officer, thus suffers from the errors which have caused prejudice to the interest of the revenue." 3.....
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....ssessment after affording due opportunity to the assessee-company. 4. Being aggrieved by this order, assessee-company is before us in the present appeal. 4.1 Learned AR of the assessee contended that the issue of provision for warranty was considered by the AO during the course of assessment proceedings. In this connection, he has invited our attention to the written submissions filed before the Addl.CIT, Bangalore, dated 31/12/2012 and also placed at pages 84 to 91 of the paper book. He also invited our attention to the questionnaire issued by him u/s 144A of the Act which are placed at pages 68 & 69 of the paper book Thus, learned AR of the assessee submitted that after considering the submissions made, the AO has allowed the claim and ....
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....fic basis as per guidelines laid down by the Hon'ble Apex Court in the case of Rotork Control India Pvt.Ltd.(supra). From perusal of the assessment order it is not discernable whether the AO had applied his mind on this aspect. No doubt once it is established that the AO had applied his mind on this issue and took one of the possible view, it is settled law that CIT cannot exercise jurisdiction u/s 263 of the Act, but in the present case, we have gone through the written submissions filed before the Addl.CIT as well as the ACIT during the course of assessment proceedings wherein the Addl.CIT has sought for details of the provisions made for warranty expenditure. The Addl.CIT, Range 11, in exercise of power vested with him u/s 144A had issue....
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....e said that the assessee-company had followed the guidelines laid down by the Hon'ble Apex Court in the case of Rotork Control India Pvt.Ltd (supra). Thus, in our considered opinion, constitutes nonapplication of mind on this aspect by the AO. The ratio laid down by the Hon'ble Apex Court in the case of Malabar Industries Co. Ltd. (supra) is squarely applicable to the facts of the case wherein the Hon'ble Apex Court held that where AO merely accepted the claim of the assessee in absence of any supporting material without making any enquiry, exercise of jurisdiction by the CIT was held to be justified. The relevant paragraph is as under: "10. In the instant case, the Commissioner noted that the ITO passed the order of nil assessment without....