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2018 (2) TMI 1515
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....ounting to Rs. 20,01,05,275/- and book profit of Rs. 5,33,99,601/-. Subsequently, the assessee revised the return of income declaring total income of Rs. 5,57,99,062/-. During the year under consideration, the assessee had entered into international transactions with its associated enterprises exceeding Rs. 15 crores and, therefore, a reference was made to the Transfer Pricing Officer who made an upward adjustment to the arms' length price amounting to Rs. 7,23,16,22,270/- in relation to the international transactions. The assessee filed objections before the Hon'ble DRP who reduced the adjustment on account of arms' length price to Rs. 6,45,87,22,468/-. The final assessment order was passed on 31.12.2014 at a total income of Rs. 6,51,45,21,530/- after allowing assessee deduction u/s 80IA of the Act amounting to Rs. 2,00,01,05,275/-. 2.2 Subsequently on 15.3.2017, the Ld. Pr. CIT issued a show cause notice to the assessee proposing action u/s 263 of the Act on the following issues :- "(i) On examination of the assessment order along with the data submitted by the company in the course of the assessment proceedings, it is seen that there are certain omissions in the body....
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....ow cause notice. However, the Ld. Pr. CIT was not convinced by the contentions of the assessee and he proceeded to set aside the order of assessment and directed the AO to make an order afresh on the ground that deduction u/s 80IA (4) (i) was not allowable to the assessee as the assessee was only an operating company and not an enterprise engaged in the business of infrastructure development. Another ground for setting aside the order of final assessment by the Ld. Pr. CIT was that the assessee had migrated to new licence whereas provisions of section 80IA were silent on the issue of migration of licence. The Ld. Pr. CIT was also of the view that there was a factual error in determining the initial assessment year from which the deduction u/s 80IA was allowable to the assessee and, therefore, in the year under consideration the assessee company was not eligible for 100% deduction but only for 30% deduction. The AO was directed to make a fresh assessment in light of the directions of the Ld. Pr. CIT. 2.4 Now, the assessee has approached the ITAT and has challenged the action of the Ld. Pr. CIT in holding the final assessment order as erroneous and prejudicial to the interest of t....
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....t of the fifteen years beginning from the year in which the undertaking or the enterprise starts providing telecommunication services, It was submitted that the contention of the Ld. Pr. CIT that the first year of claim has to be the year of commencement of the business operations was contrary to the provisions of the Act as well as CBDT Circular No. 1/2016 dated 15th February, 2016. 3.3 On the issue of migration from IP-VPN licence to NLD/ILD licence, it was submitted that the assessee company had commenced providing telecommunication services prior to March 31, 2005 under the terms of IP-VPN licence granted by DoT and during the year 2005 the DoT issued a directive mandatorily requiring migration of IP-VPN services into NLD/ILD. It was submitted that the assessee company continued to offer the eligible telecommunication services without any change. It was submitted that the grant of NLD/ILD licence did not result in creation of a new undertaking. It was submitted that the Ld. Pr. CIT's contention that the new undertaking had been created on migration from one licence to another was incorrect the assessee had continued to render the same telecommunication services as were being....
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....ad made extensive enquiries about the assessee's claim of deduction u/s 80IA. Therefore, it will be wrong to infer that there has been no application of mind by the A.O while considering the claim of the assessee although he might not have expressed it in terms of a lengthy discussion on the issue. The Hon'ble Delhi High Court in CIT vs. Sunbeam Auto Ltd 332 ITR 167 (Del) has opined in Para 17 of its order as under:- "17. We have considered the rival submissions of the counsel on the other side and have gone through the records. The first issue that arises for our consideration is about the exercise of power by the Commissioner of Income-tax under section 263 of the Income- tax Act. As noted above, the submission of learned counsel for the Revenue was that while passing the assessment order, the Assessing Officer did not consider this aspect specifically whether the expenditure in question was revenue or capital expenditure. This argument predicates on the assessment order, which apparently does not give any reasons while allowing the entire expenditure as revenue expenditure. However, that by itself would not be indicative of the fact that the Assessing Officer had not ap....
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....ity. (See Parashuram Pottery Works Co. Ltd. v. ITO [1977] 106 ITR 1 (SC) at page 1 0 ) . . From the aforesaid definitions it is clear that an order cannot be termed as erroneous unless it is not in accordance with law. If an Income-tax Officer acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately. This section does not visualize a case of substitution of the judgment of the Commissioner for that of the Income-tax Officer, who passed the order unless the decision is held to be erroneous. Cases may be visualized where the Income-tax Officer while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimate himself. The Commissioner, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the Income- tax Officer. Th....
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....cts on record or inferences drawn from facts on record per se justified and mandated further enquiry or investigation but the Assessing Officer had erroneously not undertaken the same. However, the said finding must be clear, unambiguous and not debatable. The matter cannot be remitted for a fresh decision to the Assessing Officer to conduct further enquiries without a finding that the order is erroneous. Finding that the order is erroneous is a condition or requirement which must be satisfied for exercise of jurisdiction under Section 263 of the Act. In such matters, to remand the matter/issue to the Assessing Officer would imply and mean the CIT has not examined and decided whether or not the order is erroneous but has directed the Assessing Officer to decide the aspect/question. 17. This distinction must be kept in mind by the CIT while exercising jurisdiction under Section 263 of the Act and in the absence of the finding that the order is erroneous and prejudicial to the interest of Revenue, exercise of jurisdiction under the said section is not sustainable. In most cases of alleged "inadequate investigation", it will be difficult to hold that the order of the Assessin....
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....st of the Revenue." 5.2 Again, the Hon'ble Delhi High Court in CIT vs. Delhi Vs. New Delhi Television Ltd. 360 ITR (Del) held as under:- "18. In the present case, jurisdictional pre-conditions stipulated in Section 263 of the Act are not satisfied. The Assessing Officer did conduct investigation and accepted the claim under Section 80HHF on being satisfied that the conditions stipulated in the said Section are satisfied. It is not the case of "no investigation". It is also not a case where perse further investigation was required. Commissioner in his order, as noticed above, has been tentative and hesitant and did not decide whether the claim under Section 80 HHF has been rightly allowed by the Assessing Officer. He has noted the stand of the respondent, before him and before the Assessing Officer, but refrained from forming any opinion as to whether the acceptance of the claim by the Assessing Officer was erroneous or not. Power of review under Section 263 of the Act can be invoked only if the order is erroneous and for this the Commissioner must record the reason that the order was erroneous and the claim under Section 80FIFIF was wrongly allowed. Once the said claim ....
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.... 80HHF and was satisfied that the deduction made were as per law. Question No. 1 is also answered in favour of the respondent assessee and against the Revenue." 5.3 In the instant appeal before us, the AO has conducted an enquiry. The AO has asked the assesseee to substantiate its claim of deduction and the assessee, in compliance, has given a detailed reply. The AO, however, has not launched a lengthy discussion on the issue of deduction but that does not lead to an inference that there has been a lack of enquiry on his part on the issue. It is clear that an order cannot be termed as erroneous unless it is not in accordance with law. If an AO, acting in accordance with law, makes a certain assessment, the same cannot be branded as erroneous by the Ld. Principal Commissioner simply because, according to him, the order should have been written more elaborately. This section does not visualize a case of substitution of the judgment of the Commissioner for that of the AO. Therefore, it cannot be held that in the instant case the AO's order was erroneous and prejudicial to the interest of the revenue within the terms of section 263 of the Act. Once the said claim was considered and ....