TaxTMI 
TaxTMI 
2018 (11) TMI 1108
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....account of shortlisted of share premium and hence it is not allowable as expenses under section 37(1) of the Income Tax Act. 2. Brief facts of the case are that assessee company is engaged in the business of software development, filed its return of income for assessment year 2009-10 on 26th September 2010 declaring taxable income of Rs. 30,25,87,218/-. The return of income was accompanied by the tax audit report, audited accounts and report under section 92 E (in Form 3CEB). The return of income was selected for scrutiny. The assessing officer while passing assessment order made transfer pricing adjustment and addition /disallowance under section 10A in the assessment order passed under section 143(3) on 15 January 2014. The assessment order was revised by learned PCIT vide its order dated 8th February 2016. 3. The notice under section 263 dated 04.12.2015 was served on the assessee. The assessee filed its reply dated 22.01.2016 in response to the show cause notice. In the reply the assessee contended that the assessment order was passed by assessing officer after considering the record and made various adjustment /disallowances while passing assessment order under section 143(3....
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....ed average exercise price, assumptions, risk-free interest rate, expected life, expected volatility expected dividend, price of the underlying share in the market at the time of option grant for the current and previous year. The assessing officer was directed to make fresh assessment order after giving opportunity to the assessee as per law. Thus, aggrieved by the order of learned PCIT the assessee has filed present appeal before us. 5. We have heard learned authorised representative ('AR') for the assessee and learned departmental ('DR') for the revenue and perused the material available on record. We have also deliberated on various case law relied by lower authority as well as by learned representative of the parties. The learned AR of the assessee submits that the assessing officer considered all the relevant material available on record and passed the assessment order. The assessee made complete discloser and disclosed all the related information in its Audited financial statement for the year ending on 31 March 2009. The assessee in the Note of account has clearly mentioned all the details relating to the ESOP expenses. The assessing officer passed assessment order after c....
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....r 2017 and the decision of Madras High Court in case of CIT Versus PVP Venture Ltd [2012] 23 taxmann.com 286 (Madras). 8. On the other hand the learned AR for the revenue supported the order of learned PCIT. The learned DR for the revenue submits that during the assessment the assessing officer simply accepted the computation of income furnished by the assessee. The assessing officer has not verified whether the claim of ESOP assessee is allowable or not. The assessing officer has not examined the various details and the scheme of ESOP. It is the duty of the assessing officer to ascertain the truth, the fact stated by the assessee in the return of income, when the circumstance of the cases is such to provoke and inquiry. The order passed by assessing officer is erroneous if the same is passed without making any enquiry or such inquiry which was necessary, has not been made. The learned PCIT in its order has clearly brought on record that the assessing officer without proper enquiry and in investigation allowed the claim of the assessee, therefore, the order passed by assessing officer is not only erroneous it is prejudicial to the interest of revenue as well, thus, the twin condit....
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....t "10. 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 subsection, viz., ( i) the order is erroneous; (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. We find 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, invalid, and is a defect that is jurisdictional in its nature, and does not refer to the judgment of the Assessing Officer in fixing the amount of valuation of the property. Similarly, 'erroneous judgment' means 'one rendered according to course and practice of Court, but contrary to law upon....
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....in Max India (supra) held the phrase "prejudicial to the interest of the revenue" under section 263 has to be read in conjunction with the expression "erroneous" order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interest of the revenue. For example, when the Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue; or 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 erroneous order prejudicial to the interest of the revenue, unless the view taken by the Income-tax Officer is unsustainable in law. 13. Now, we shall examine the issue on which the assessment order was cancelled and was directed to be passed afresh after giving proper opportunity to the assessee. We have seen that assessment order under section 143(3) was passed on 15 January 2014. The assessing officer issued notice under section 154 for rectification of the mistake in the assessment order, copy of which is placed on record vide page No.10 of Paper Book (PB). In the notice....