TaxTMI 
TaxTMI 
2016 (11) TMI 720
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....nit. On the basis that the said order was erroneous and prejudicial to the interests of the Revenue, the Commissioner of Income Tax assumed jurisdiction under section 263 of the Income Tax Act and passed Annexure B order, holding that the assessee was not entitled to set off loss of one 100% export oriented unit against the profit of two other 100% export oriented units. According to the Commissioner, such set off would result in giving the assessee 100% deduction from the profit of the profit earning units and that such deduction would go against the intention of the legislature as envisaged in the second proviso to sub-section (1) of section 10B. 4. The assessee challenged this order of the Commissioner before the Income Tax Appellate Tribunal in ITA.696/08 and the Tribunal held that the order of the assessing officer was not erroneous and prejudicial to the interests of the Revenue and that, therefore, in the facts and circumstances of the case, the assumption of jurisdiction under section 263 of the Act by the Commissioner was held to be improper. Reading of the order shows that the reasoning adopted by the Tribunal is that the view taken by the assessing officer is one of the....
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....9; and the cases where this power was invoked have been explained as follows: "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. 8. The phrase 'prejudicial to the interests of the revenue' is not an expression of art and is not defined in the Act. Understood in its ordinary meaning it is of wide import and is not conferred (confined) to loss of tax. The High Court of Calcutta in Dawjee Dadabhoy and Co. v. S. P. Jain, (31 ITR 872) : (AIR 1957 Cal 244), the High Court of Karnataka in Commissioner of Income-tax, Mysore v. T. Narayana Pai, (1975) 98 ITR 422, the High Court of Bombay in Commissioner of Incometax v. Gabriel India Ltd., 203 ITR 108 : (1994 Tax LR 116) and the High Court of Gujarat in Commissioner of Income-tax v. Smt. Minalben S. Parikh, (1995) 21....
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....e of the possible views. The Tribunal arrived at this conclusion relying on the judgment of the Bombay High Court in Hindustan Unilever Limited v. Deputy Commissioner of Income Tax and Union of India [325 ITR 102] where, on identical facts, the court has held thus: "23. The fourth and final ground which has weighed with the Assessing Officer in re-opening the assessment is that the assessee claimed a deduction of Rs. 14.53 crores under Section 10B. The deduction was restricted to Rs. 11.11 crores in the order. While re-opening the assessment, the Assessing Officer has proceeded on the basis that Section 10B provides an exemption and that in respect of the Crab Stick Unit the assessee had suffered a loss of Rs. 1.33 crores. The Assessing Officer has observed that since the income of the unit was exempt from taxation, the loss of the unit could not have been set off against the normal business income. However, this was allowed by the assessment order and it is opined that the assessee's income to the extent of Rs. 1.33 crores has escaped assessment. 24. There is merit in the submission which has been urged on behalf of the assessee that the Assessing Officer has while re-openin....
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....The earlier provision specifically stipulated that profits and gains derived by an assessee from a hundred percent export oriented undertaking to which the section applies shall not be included in the total income of the assessee. Section 10A as at present stands, came to be substituted by the Finance Act, 2000 with effect from 1 April 2001. The section as it now stands, is not a provision for exemption, but a provision which enables an assessee to claim a deduction. As it now stands, the section contemplates a deduction of such profits and gains as are derived by a hundred per cent export oriented undertaking from the export of articles and things or computer software for a period of ten consecutive assessment ears beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce such articles or things or computer software, as the case may be. The deduction has to be allowed from the total income of the assessee. In Hindustan Lever Ltd. vs. Deputy Commissioner of Income Tax [(2010) 325 ITR 102 (Bom)] a Division Bench of this Court considered the provisions of Section 10B, while considering a petition challenging the action ....