TaxTMI 
TaxTMI 
2017 (12) TMI 806
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....ut enquiring the aspect of delayed payment of employees PF contribution. The Learned CIT ought to have noted that on record, the Learned AO had considered the written submissions furnished by the appellant regarding delayed remittance of employees contribution of PF. The Learned CIT omitted to note that the Learned AO, while completing the assessment satisfied himself that the claim made by the appellant was relying on the decision of the Hon'ble High Court of Kerala in the case of Kerala State Warehousing Corporation Ltd. and allowed the claim. It is now well settled that where there are two views possible and the assessing officer takes a view in favour of the assessee, there is no error in so far as prejudicial to the interest of revenue in terms of sec.263 of the IT Act. 3. The Learned CIT ought to have noted that the Hon'ble Supreme Court decision in the case of CIT v. Vinay Cements Ltd. (213 CTR 268) is in favour of the appellant and is the law of the land. 4. For these and other grounds that may be further adduced at the time of hearing, the order of the learned AO requires to be modified suitably." 3. The Brief facts of the case are that the as....
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....ds that the Assessing Officer in the assessment order had passed the order on this issue allowing relief for without taking any inquiry. Therefore, the assessment order passed by the A.O. is erroneous insofar as to prejudicial to the interest of the revenue. Hence, the CIT set aside the order passed by the A.O. and directed him to pass de novo assessment order in accordance with law after affording opportunity to the assessee. 5. Aggrieved by the order of the CIT, the assessee is in appeal before us. 6. The learned AR for the assessee submitted that the learned CIT erred in revising the assessment order u/s 263 of the Act without appreciating the fact that the issue of belated payment of PF has been considered by the Assessing Officer at the time of assessment with reference to a specific question, for which the assessee has filed its explanation. The AR further submitted that the learned CIT omitted to note that the learned AO, while completing the assessment, satisfied himself with the claim made by the assessee was in accordance with the decision of the Hon'ble Kerala High Court in the case of Kerala State Warehousing Corporation Limited v. CIT. The A.O. has taken one of t....
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...., for the reason that the A.O. has failed to examine the issue of belated payment of employees' contribution to PF, which caused prejudicial to the interest to the revenue. The CIT further observed that the A.O. not only failed to examine the issue, but also failed to apply his mind in the right perspective, which caused prejudicial to the interest of the revenue. Therefore, the assessment order passed by the A.O. was erroneous insofar as it is prejudicial to the interest of the revenue. It is the contention of the assessee that the assessment order passed by the A.O. neither erroneous nor prejudicial to the interest of the revenue as the issue of provident fund has been considered by the A.O. at the time of original assessment by a specific question for which the assessee has filed its reply. The A.O. after satisfied with the explanation furnished by the assessee and also considering the ratio of the jurisdictional High Court in the case of CIT v. Kerala State Warehousing Corporation Limited has taken one of the possible views with which the CIT does not agree, may not be a reason for treating the assessment order as erroneous insofar as it is prejudicial to the interest of the re....
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....rt in the case of Kerala State Warehousing Corporation Limited, after considering the Hon'ble Supreme Court decision in the case of CIT v. Vinay Cement (213 CTR 268), observed that the belated payment of contribution to PF before the due date of filing of return is sufficient compliance of provisions of section 43B and hence allowable as deduction. Though the subsequent decision of the jurisdictional High Court in the case of CIT v. Merchem Ltd. (supra) is in favour of the Revenue with regard to belated payment of employees' contribution to PF, the A.O. has taken a possible view on the basis of earlier decision of the jurisdictional High Court. Since the A.O. has taken one of the possible views, in our considered view, the view taken by the A.O. is a possible view. This view is further supported by the decision of the Hon'ble Supreme Court in the case of CIT v. Vegetable Products Ltd. [(1973) 88 ITR 192 (SC)], wherein the Hon'ble Supreme Court observed that if there is two reasonable constructions of a taxing provision are possible, that construction which favours the assessee must be adopted. In this case, the A.O. has taken one of the possible views and allowed the deduction towa....
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....of the figures as reflected in the computation of development charges establishes that the development charges claimed by the assessee per sq. ft. is Rs. 251.11/- which is lower than Rs. 299.41/- accepted by the department for the assessment year 2007-08 while concluding the assessment under section 143(3). One mode of computation works out to Rs. 296.68/- per sq. ft. The development charges of Rs. 251.11/- per sq. ft. claimed by the assessee is just and reasonable and does not result in any loss to the revenue. Thus, the Commissioner invoking the provisions of section 263, is uncalIed for as the order passed by the Assessing Officer is no way prejudicial to the interest of the revenue. The revenue has miserably failed to satisfy that the valuation of the work-in-progress accepted by the Assessing Officer is erroneous and prejudicial to the interest of the revenue. Yet another important aspect which is significant to notice is that the Assessing Officer has accepted the valuation of the work-in-progress of the assessee for the assessment year 2007-08, while concluding the assessment under section 143(3). [Para 16] The twin tests propounded by the Courts for invoking the pr....
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....he Income-tax Act. The Hon'ble High Court after considering relevant provisions, held that the order passed by the A.O. could not be held to be erroneous simply because in his order he did not make an elaborate discussion in that regard. The relevant part of the order is extracted below:- "The power of suo motu revision under sub-section (1) is in the nature of supervisory jurisdiction and 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 under this sub-section, viz., (i) the order is erroneous; and (ii) by virtue of the order being erroneous prejudice has been caused to the interests of the revenue. It has, therefore, to be considered firstly as to when an order can be said to be erroneous. One finds that the expressions 'erroneous', 'erroneous assessment' and 'erroneous judgment' have been defined in Black's Law Dictionary. According to the definition, 'erroneous' means 'involving error; deviating from the law'. 'Erroneous assessment' refers to an assessment that deviates from the law and is, therefore, inval....
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.... must be some prima facie material on record to show that 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 tax than what was just has been imposed. Therefore, in order to exercise power under section 263(1) there must be material before the Commissioner to consider that the order passed by the ITO was erroneous insofar as it is prejudicial to the interests of the revenue and that it must be an order which is not in accordance with the law or which has been passed by the ITO without making any enquiry in undue haste. An order can be said to be prejudicial to the interests of the revenue if it is not in accordance with the law in consequence whereof the lawful revenue due to the State has not been realised or cannot be realised. There must be material available on the record called for by the Commissioner to satisfy him prima facie that the aforesaid two requisites are present. If not, he has no authority to initiate proceedings for revision. Exercise of power of su motu revision under such circumstances will amount to arbitrary exercise of power. It is well-sett....