TaxTMI 
TaxTMI 
2017 (12) TMI 1734
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....4C r.w.s.143(3) of the Act was completed on 17/04/2014 determining the income at Rs..79,16,99,428/- under normal provisions and book profits U/s 115JB at Rs..1166,18,01,549/- 3. Later the Comptroller and Auditor General of India(CAG) has raised objection that deduction U/s 80IA in respect of Power Plant unit SBU 2 (2 X 300MW), which were earlier owned by JSW (Vijaynagar) Ltd. and then transferred to assessee company as a result of merger, has wrongly allowed by the AO without considering provisions of section 80IA(12A) of the Act, copy of CAG letter is placed at Page Nos. 85 & 86 of paper book. The said objection of the CAG was accepted by the Pr. CIT vide letter dated 20/06/2016, copy of which is placed at Page Nos. 87 & 88 of the paper book. The assessee filed detailed reply on the said objection of CAG vide Letter dated 29/11/2016, copy of which is placed at Page Nos. 39 to 42 of the paper book. However, Ld.PCIT has not considered the said submissions of the assessee and issued notice U/s 263 of the Act dated 17/02/2017 on the following issues: - 1. Irregular allowance of deduction u/s.80IA in respect of Power Plant unit SBU 2 (2 X 300MW), which were earlier owned by....
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....d in facts of the case by directing the Ld. Assessing Officer that the assessee is not entitled to deduction u/s.80IA of the Act in respect of amount of income enhanced u/s.92CA of the Act, ignoring the fact that no such allowance was given at all by Learned Assessing Officer while passing the order u/s.143(3) r.w.s.144C(3) of the Act. (vi) The Ld. PCIT has erred in facts of the case as well as in law by directing the Ld. Assessing Officer that the assessee was not entitled to deduction u/s. 80IA of the Act on enhanced assessed income as a result of disallowance made u/s.14A of the Act, 1961, ignoring the binding circular issued by the Board and superseding order of Ld. CIT(A) for the year under consideration and of Hon'ble ITAT orders for the earlier years facts remaining same. (vii) The Ld. PCIT grossly erred in facts of the case and in law by directing the Learned Assessing Officer to restrict the deduction u/s.80IA of the Act to the extent of taxable business income wrongly interpreting provisions of section 80A of the Act and ignoring the various judicial pronouncements in this regard, including those of Jurisdictional High Court. 6. The Learned Counse....
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.... been already considered by the Ld.CIT(A), in view of the Explanation (c) to sub-section (1) of section 263 of the Act, Ld. PCIT cannot exercise jurisdiction U/s 263 of the Act. He placed reliance on the decision of Hon'ble Jurisdictional High Court in case of Ranka Jewellers v. Addl. CIT [328 ITR 148]. 9. Regarding second issue of irregular allowance of deduction U/s.80IA on enhanced income due to disallowance U/s 92CA of the Act, the Learned Counsel for the assessee submitted that, the Ld.PCIT in the order stated that AO should have reduced deduction U/s 80IA on account of addition U/s 92CA of the Act in view of specific provision of section 92C(4) of the Act. In this regard Learned Counsel for the assessee submits that proviso to section 92C(4) states that no deduction under chapter VIA shall be allowed on enhanced income due to arm's length adjustment U/s 92CA of the Act. It does not say that deduction claimed by the assessee shall be reduced by the amount of addition made U/s 92CA of the Act. He submits that as evident from the assessment order, since AO has allowed deduction U/s 80IA as claimed by the assessee, question does not arise to reduce it further by the am....
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....9;ble Jurisdictional High Court decision in case of CIT v. Gabriel India Ltd [203 ITR 108]. Further he submits that, if AO has taken a possible view, such order cannot be subject matter of section 263 of the Act as held by Hon'ble Supreme Court in case of CIT v. Max India Ltd. [295 ITR 282]. Therefore, he submits that, this issue is also beyond the jurisdiction of Ld PCIT U/s 263 of the Act. 11. As far as forth issue regarding irregular allowance of deduction U/s.80IA of Power Plant unit SBU 2 (2 X 300MW) is concerned, the Learned Counsel for the assessee submitted that, the Ld.PCIT stated that the power plant unit SBU 2 (2 x 300MW) was owned by JSW (Vijayanagar) Ltd. and the same was later transferred to the assessee company (JSW Energy Ltd.) as a result of merger as per the scheme of amalgamation being effective from 11th December 2008 and the appointed date of merger is 1st April 2008. In view of the specific provision of section 80IA(12A) of the Act, deduction U/s 80IA is not available to units which were transferred under demerger or amalgamation after 1.4.2007. He submits that this observation of Ld.PCIT was based on audit objection raised by CAG. The Learned Counsel f....
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....2) and 80IA(12) of the Act existing at all as on the date of merger i.e. 01.04.2008 which got transferred from the amalgamating company (i.e. JSWEVL) to the amalgamated company (i.e. JSWEL) the assessee. 13. The Learned Counsel for the assessee invited our attention to the Circular No. 3/2008 explaining amendment to Section 80IA(12A) of the Act which states as under: - "Sub-section (12) of section 80-IA provides that where any undertaking of an Indian company which is entitled to the deduction under the said section is transferred before the expiry of the period specified therein, to another Indian company in a scheme of amalgamation or demerger, the provisions of the said section 80-IA shall apply to the amalgamated or the resulting company as they would have applied to the amalgamating or the demerged company if the amalgamation or demerger had not taken place. The main intention in providing benefit under section 80-IA had been to provide incentive to those who had taken initial investment and entrepreneur risk. Hence, it was felt that there was no justification for passing on the benefit to someone who had not taken these risks and had only acquired the eligible und....
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....h u/s. 132 of the Act by calling various details/documents, explanations regarding eligibility and quantum of deduction and the assessment order as passed u/s.143(3) r.w.s. 153A of the Act after due scrutiny and examining all relevant facts and law and claim made u/s.80IA of the Act for the said deduction has been allowed. Learned Counsel for the assessee places reliance on the judgment of the Hon'ble Delhi High Court in this regard in the case of CIT v. Escorts Ltd. [338 ITR 435] wherein it has been held that the department is not entitled to reopen an assessment based on a fresh inference of transactions accepted by the revenue for preceding years on the pretext of dubbing them as erroneous. 16. Reliance is also placed on the decision of Hon'ble Delhi High Court in case of CIT v. Tata Communication Internet Services Ltd [204 Taxman 606] where it was held that eligibility of deduction U/s 80IA can be examined only in first year and in subsequent years it cannot be disturbed unless there is change in facts of the case 17. He further submits that the Hon'ble jurisdictional Bombay High Court in the case of Prudential Assurance Co. Limited v. DIT (IT) [324 ITR 381] h....
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....pra). Further in all the four issues view taken by the Ld AO is supported with decisions of judiciary, hence such view cannot be treated as erroneous. Therefore, he submits that even if the view of AO is prejudicial to the interests of revenue it cannot be revised U/s 263 in absence of erroneous view as held by Apex Court in case of Malabar Industrial Co. Ltd v. CIT [243 ITR 83]. 22. Learned Counsel for the assessee submits that the contentions raised by the assessee in reply to show cause notice have not been dealt with and the Ld.PCIT relied only on the findings in the Assessment Order of the Assessment Year 2012-13 where the similar claim was denied by the Assessing Officer. Learned Counsel for the assessee further submits that except stating that Assessing Officer has examined the issue of claim for deduction u/s. 80IA while scrutinizing the case of the assessee for the Assessment Year 2012-13 and disallowed the claim and DRP also directed to disallow the claim and no proper enquires were made by the Assessing Officer during this year, Ld.PCIT did not examine the issue independently to come to the conclusion as to how the order of the Assessing Officer is erroneous and preju....
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....ccordance with the law. (i) Subhlakshmi Vinijya (P). Ltd v. CIT-1,155 ITD 17 (Kolkata-Trib.) (ii) CIT v. Amitabh Bachan, 384 ITR 200 (SC) (iii) Manmohak Properties (P) Ltd. v. CIT, 152 ITD 606 (Mumbai) (iv) CIT v. Infosys Technologies Ltd., 341 ITR 293 (Kar) (v) M/s. Crompton Greaves v. CIT in ITA.No. 1994/Mum/2013 and 2836/Mum/2014 dated 01.02.2016 (vi) Horizon Investment Co. Ltd. v. CIT in ITA.No.1593/Mum/2013 dated 27.06.2014. (vii) CIT v. South India Shipping Corpn. Ltd., 233 ITR 546 (MAD.) (viii) Rajmandir Estates Private Limited v. PCIT in ITA.No. 113 of 16 dated 13.05.2016 [Kolkata-High Court] 24. We have heard the rival submissions, perused the orders of the authorities below and the case laws relied on. A search and seizure action u/s. 132 of the Act was conducted on 16.03.2011 on JSW Group. The assessee was also covered in the Search action. The period covered in search assessment was Assessment Years 2005-06 to 2011-12. The assessment for the Assessment Year 2010-11 was completed u/s. 153A of the Act. However the assessment for the current Assessment Year i.e. 2011-12 was completed u/s. 144C....
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....rds and Assessment Order, Assessing Officer has not made disallowance u/s. 80IA in respect of power plant of SBU 2 and therefore order passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. Similarly he observed that by virtue of the TP Adjustment made u/s. 92CA and by virtue of the disallowance made u/s. 14A there was an increase in profits/income of the assessee and the Assessing Officer allowed the claim for deduction u/s.80IA on such enhanced income which according to the Ld.PCIT the deduction would have been restricted and therefore the Assessment Order passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue and lastly it is stated by the Ld.PCIT in the show cause notice that on perusal of the Assessment Order it is seen that the income computation under the head income from the house property income from capital gains and income from other sources amounted to Rs..100,35,34,962/- and whereas after allowing the claim for deduction u/s.80IA to the assessee the total income is computed at Rs..79,16,99,428/- which is less than Rs..100,35,34,962/-, therefore the order passed by the Assessing Officer is errone....
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....on of the Hon'ble Jurisdictional High Court, the Ld.PCIT cannot assume jurisdiction u/s. 263 of the Act on the issue of TP Adjustment and disallowance u/s. 14A r.w. Rule 8D which were already subject matter of the appeal before the Ld.CIT(A). Hence we hold that Assessment Order passed by the Assessing Officer is neither erroneous nor prejudicial to the interest of the Revenue in so far as these two issues are concerned. Thus, we set aside the order of the Ld.PCIT to that extent as it is beyond the scope of the provisions of section 263 of the Act. 28. Coming to the allowance u/s. 80IA in respect of SBU 2 unit is concerned the Ld.PCIT revised the Assessment Order observing as under:- "5.1 Irregular allowance of deduction u/s.80IA in respect of power plant unit SBU 2(2 x 800MW) As regards the issue of irregular allowance of deduction u/s.80IA in respect of power plant unit SHU 2 (2 x 300MW), the assessee submitted that the erstwhile company JSW Energy (Vijaynagar) Ltd. did not own power plant but was in the process of setting up two power plants which were under construction with a CWIP of Rs. 1,129.16 crores prior to the merger on 01.04.2008. The asses....
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....kes it very clear that the order passed by the AO without making enquiries/verification which should have been made, or allowing any relief without enquiring into the claim, would be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, in view of the said explanation 2 to section 263 of the Act. 5.1.2 The basic plea that the assessee has taken in the context of the issue is that the subsection 12A to section 80IA is not applicable to its case. In this regard, it has been stated that JSW Energy (Vijaynagar) Ltd., has been the subsidiary of the assessee company (JSW Energy Ltd.) in which the assessee company had invested Rs. 188 crore and JSW Steel Ltd., has invested Rs. 80.01 crores; that the cost of the project (of power plants referred as SEW 2 units) as on 31.03.2008 amounted to Rs. 1129 crores; that before commissioning of those plants the subsidiary company got merged with the assessee company in a scheme of the company arrangement as approved by the Hon'ble Bombay High Court vide its order dated 10/12/2008; that the merger got effective w.e.f. 01.04.2008. 5.1.3 The assessee has further submitted that the generation of power s....
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....fore the order made by the Assessing Officer in the present case is erroneous and prejudicial to the interest of the Revenue. On a careful reading of the order of the Ld.PCIT, we find that the order passed by the Assessing Officer is held to be erroneous and prejudicial to the interest of the Revenue for the reason that no proper enquiries were made by the Assessing Officer. Ld.PCIT has not mentioned what kind of enquiries the Assessing Officer failed to do while completing the assessment. Ld.PCIT also failed to deal with any of the contentions raised by the assessee in the reply to the show cause notice. We also find that the Ld.PCIT has not given any finding as to how and in what manner the order of the Assessing Officer was erroneous and prejudicial to the interest of the Revenue. The Ld.PCIT has not made any enquiry on his own but simply directed the Assessing Officer to make further necessary enquiries and investigation. On the other hand, we see that the Assessing Officer called for the details in respect of the claim made u/s. 80IA for the Assessment Years 2005-06 to 2011-12 and the assessee furnished necessary details and the Assessing Officer allowed the claim for deductio....
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....t examined and decided whether or not order is erroneous but has directed the Assessing Officer to decide question. It was held that, the order of the Assessing Officer may or may not be wrong and the Commissioner can direct the Assessing Officer for reconsideration only when the order is erroneous. It was held that the order of revision cannot be passed by the Commissioner to ask the Assessing Officer to decide whether the order was erroneous. It was held that this is not permissible and the CIT must after recording the reasons held that the order is erroneous. 32. Hon'ble Delhi High Court in the case of DIT v. Jyoti Foundation (supra) held that enquiries were certainly conducted by the Assessing Officer and it was not a case of no enquiry, the order u/s. 263 itself recorded that the Director felt that the enquiries were not sufficient and further enquiries and details should have been called for. The enquiry should have been conducted by the Director himself to record the finding that the Assessment Order was erroneous. It was held that the CIT should not have set-aside the order and direct the Assessing Officer to conduct the enquiry. 33. In the case on hand before us ....
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....of which it can be said that Commissioner acting in a reasonable manner could have come to such a conclusion the very initiation of proceedings by him will be illegal without jurisdiction. It was also held that further enquiry and/or fresh determination can be directed by the Commissioner only after coming to the conclusion that the earlier finding of the Assessing Officer prejudicial to the interests of the Revenue. The Hon'ble High Court further held that the two conditions must be satisfied before the commissioner could exercise power u/s. 263 of the Act namely the order of the Assessing Officer must be found to be erroneous and further it must also be found to be prejudicial to the interests of the Revenue unless both the conditions are satisfied the commissioner does not get jurisdiction to pass the order u/s. 263 of the Act revising the Assessment Order. It was also held that it is not necessary that every order which is found erroneous is also prejudicial to the interests of the Revenue. 36. In the case of Malabar Industrial Co. Ltd. v. CIT [243 ITR 83] the Hon'ble Supreme Court held that the provisions of section 263 cannot be invoked to correct each and every ty....
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....through the matter and concluded that the assessment order passed by the A.O was found to be erroneous and prejudicial to the interest of the revenue. 14. We have given a thoughtful consideration to the order passed by the CIT and are unable to persuade ourselves to uphold the same. We find that as per the mandate of Sec. 263, a statutory obligation is cast upon the CIT to afford an opportunity of being heard to the assessee, before an order passed by the A.O is revised in exercise of the revisional jurisdiction vested with him under the said statutory provision. The underlying purpose of affording of such an opportunity of being heard to the assessee is to give an opportunity to him to explain as to how the order passed by the A.O on the issues on which the same is sought to be revised by the CIT, is not erroneous and prejudicial to the interest of the revenue. We are of the considered view that the very purpose of affording of an opportunity of being heard to the assessee, on the issues on which the order passed by the A.O is sought to be revised by the CIT would be lost and rendered otiose, in case the reply of the assessee explaining as to why the order sought to be re....
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.... of the revenue on the issues on which it was sought to be revised, was not found to be acceptable. We may clarify that though there is no doubt that the jurisdiction to revise the order passed by the A.O remains within the exclusive domain of the jurisdiction of the CIT, but however, the internal safeguard provided by the legislature by affording an opportunity of being heard to the assessee would fail if the explanation/objections raised by the assessee during the course of such proceedings, therein demonstrating that the order of the A.O is not erroneous and prejudicial to the interest of the revenue are not judicially considered and brought to a logical end by the CIT. We would not hesitate to observe that despite the fact the assessee had during the course of the revisional proceedings placed on record irrefutable material which inescapably established that the order of the A.O was not erroneous and prejudicial to the interest of the revenue in respect of certain issues on which the same was sought to be revised, however, the same did never see the light of the day and except for forming part of the record and finding a mention in the order passed by the CIT u/s 263, were howe....
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....rs. If, on the other hand, the CIT is satisfied, after hearing the assessee, that the orders are not erroneous and prejudicial to the interest of the Revenue, he may choose not to exercise his power of revision. This is for the reason that if a query is raised during the course of scrutiny by the AO, which was answered to the satisfaction of the AO, but neither the query nor the answer were reflected in the assessment order, this would not by itself lead to the conclusion that the order of the AO called for interference and revision. In the instant case, for example, the CIT has observed in the order passed by him that the assessee has not filed certain documents on the record at the time of assessment. Assuming it to be so, in our opinion, this does not justify the conclusion arrived at by the CIT that the AO had shirked his responsibility of examining and investigating the case. More so, in view of the fact that the assessee explained that the capital investment made by the partners, which had been called into question by the CIT was duly reflected in the respective assessments of the partners who were income-tax assessees and the unsecured loan taken from M/s Stutee Chit & Finan....
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....e term "erroneous" used in conjunction with the term "prejudicial" makes it clear beyond any scope of doubt that both the preconditions have to be cumulatively satisfied, before the order passed by the A.O is revised by the CIT. Reliance in support of our aforesaid view is drawn from the judgment of the Hon'ble Supreme Court in the case of Malabar Industrial Ltd. Vs. CIT (2000 ) 243 ITR 83 (SC ) This case of the Coordinate Bench squarely applies to the facts of the assessee's case as the Ld.PCIT failed to demonstrate with reasons that the Assessment Order was erroneous and prejudicial to the interest of the Revenue not only that, the Ld.PCIT failed to address the objections of the assessee on the issues which explained that why the order sought to be revised is not erroneous and prejudicial to the interest of the Revenue. In the case on hand also the Ld.PCIT merely extracted the objections of the assessee and he could not explain why the objections were wrong and lead to the Assessment Order being erroneous and prejudicial to the interest of the Revenue and rather he has simply rested his decision by observing that the Assessing Officer in the subsequent year examined the claim ....
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....lf come to a conclusion, after applying his own mind, because, the words used in the section are,"..... and if he considers .....", here, application of his own mind becomes important. It is important to examine the similarity of the expression used under section 147(1) and 263(1). Under section 147(1), the expression used is "has reason to believe" and under section 263(1), the expression used is "if he considers". Though the expressions used are not verbatim pari materia, but the meaning which is to be drawn in both the expressions are pari materia, i.e., an independent, unpolluted and unadopted application of mind by the officer, invoking the provision. 23. We have seen from the impugned order of the CIT, dated 11.02.2011, the CIT admits, "A proposal was received on 10.06.2010 from the AO under section 263 of the Income Tax Act, 1961, pointing out some discrepancies/short comings in the assessment order". This clearly shows that in so far as the CIT was concerned, he did not apply his own mind, which the Hon'ble Supreme Court of India has said in ICICI Bank (supra) that there should be an independent application of mind. 24. On perusal of the SCN and the impugn....
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....aced before us, we are of the considered opinion that the CIT could not have invoked the jurisdiction under section 263 without his own independent application of mind; on otherwise debatable issues and by merely disagreeing on the view taken by the AO. 29. In the result, we set aside the order of the CIT dated 11.02.2011, passed under section 263 and annul the initiation of revision proceedings and as a consequence, we restore the order passed by the AO, under section 143(3) dated 15.12.2008. " 41. Similarly Pune Bench of the Tribunal in the case of Span Overseas Ltd v. CIT in ITA.No.1223/PN/2013 dated 21.12.2015, it has been held as under:- "7. A perusal of the impugned order shows, that the Commissioner of Income Tax in the instant case has merely reproduced the deficiencies pointed out by the Dy. Commissioner of Income Tax in the assessment order. The Commissioner of Income Tax has not given the reasons as to how the findings of the Assessing Officer are erroneous in so far as prejudicial to the interest of revenue. The contention of the assessee is that all the relevant documents were placed on record by the assessee during the course of assessment proceed....
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....o. 39 of the Paper Book explaining why the objection is factually wrong and unsustainable in law. The Ld.PCIT has not made any independent application of mind to the issue raised in show cause notice on allowance of deduction u/s. 80IA of the assessee by the Assessing Officer. 44. We further find that the claim for deduction u/s. 80IA arouse for the first time in the Assessment Year 2010-11 and the Assessing Officer after calling for the necessary details allowed the claim of the assessee. The initial year of claim for deduction u/s. 80IA is Assessment Year 2010-11. As this is a search case details are called for, for the Assessment Years 2005-06 to 2011-12 and during the course of Assessment Proceedings for all these years including the current i.e. Assessment Year 2011-12 the Assessing Officer vide letter dated 15.03.2013 which is placed at Page No.111 of the Paper Book required the assessee to furnish the following information: - "2. In addition to the requirements, you are requested to furnish following details in the case of M/s. JSW Energy Ltd (JSWEL) and M/s. JSW Energy (Ratnagiri) Ltd (JSWERL) (now merged with M/s. JSW energy Ltd) separately: i. You are....
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....icer has not made proper enquiries and there is no application of mind by the Assessing Officer. 46. The Hon'ble Jurisdictional High Court in the case of CIT v. Fine Jewellery (India) Ltd. [372 ITR 303] following its earlier decision in Idea Cellular Ltd v. DCIT [301 ITR 407] has taken a view that: "...if a query is raised during the Assessment Proceedings and responded to by the assessee, the mere fact that it is not dealt with in the Assessment Order would not lead to a conclusion that no mind had been applied to it." 47. There is a difference between "lack of enquiry" and "inadequate enquiry" and it is for the Assessing Officer to decide the extent of enquiry to be made as it is in his satisfaction as to what is required under the law. In the case of CIT v. Sunbeam Auto Ltd [332 ITR 167], the Hon'ble Delhi High Court has held that if there was any enquiry even inadequate that would not by itself give Commissioner to pass order u/s. 263 of the Act merely because the Commissioner has a different opinion in the matter and that only in cases where there is no enquiry the power u/s. 263 of the Act can be exercised. 48. Even though there has been an amendment....
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....ent or cancelling the assessment and directing a fresh assessment. The key words that are used by section 263 are that the order must be considered by the Commissioner to be "erroneous in so far as it is prejudicial to the interests of the Revenue". This provision has been interpreted by the Supreme Court in several judgments to which it is now necessary to turn. In Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83, the Supreme Court held that the provision "cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer" and "it is only when an order is erroneous that the section will be attracted". The Supreme Court held that an incorrect assumption of fact or an incorrect application of law, will satisfy the requirement of the order being erroneous. An order passed in violation of the principles of natural justice or without application of mind, would be an order falling in that category. The expression "prejudicial to the interests of the Revenue", the Supreme Court held, it is of wide import and is not confined to a loss of tax. What is prejudicial to the interest of the Revenue is explained in the judgment of the Supreme Court (headn....
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....e at a figure higher than the one determined by the Income tax officer. That would not vest the Commissioner with power to examine the accounts and determine the income himself at a higher figure. It is because the Income tax officer has exercised the quasi judicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion.... There must be some prima facie material on record to show that the 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" The Hon'ble High Court has considered the definitions given to the words "erroneous", "erroneous assessment" and "erroneous judgment" in Black's Law Dictionary and accordingly held that an order cannot be termed as erroneous unless it is not in accordance with law. An order can be termed as "erroneous" only if it is not in accordance with the law. 17. The Hon'ble Delhi High Court has also followed the above said view in the cas....
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....fficer 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 to the Assessing Officer would imply and mean the Commissioner of Income tax has not examined and decided whether or not the order is erroneous but has directed the Assessing Officer to decide the aspect/question...." Similar view has been expressed by Hon'ble Madras High Court in the case of CIT Vs. Amalgamations Ltd (238 ITR 963). 19. The law interpreted by the High Courts makes it clear that the Ld.Pr. CIT, before holding an order to be erroneous, should have conducted necessary enquiries or verification in order to show that the finding given by the assessing officer is erroneous, the Ld Pr. CIT should have shown that the view taken by the AO is unsustainable in law. In the instant case, the Ld Pr. CIT has failed to do so and has simply expressed the view that the assessing officer should have conducted enquiry in a particular manner as desired by him. Such a course of action of the Ld Pr. C....
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....r not. It does not authorize or give unfettered powers to the Ld Pr. CIT to revise each and every order, if in his opinion, the same has been passed without making enquiries or verification which should have been made. In our view, it is the responsibility of the Ld Pr. CIT to show that the enquiries or verification conducted by the AG was not in accordance with the enquires or verification that would have been carried out by a prudent officer. Hence, in our view, the question as to whether the amendment brought in by way of Explanation 2(a) shall have retrospective or prospective application shall not be relevant." 49. The Coordinate Bench in the case of Crompton Greaves Ltd v. CIT in ITA.No. 1994/Mum/2013 and ITA.No. 2836/Mum/2014 by order dated 01.02.2016 held that the Explanation 2 to section 263 of the Act which was inserted by Finance Act 2015 w.e.f 01.04.2015 is retrospective and applicable to Assessment Years prior to Assessment Year 2015-16. However, the Coordinate Bench of Mumbai Tribunal in another case i.e. in the case of M/s.Metacaps Engineering & Mahendra Construction Co. (J.V) v. CIT in ITA.No. 2895/Mum/2014 dated 11.09.2017 held that Explanation 2 of section 263 ....
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....how that it has used new plants and machinery which has not been previously used for any purpose and the new undertaking is not formed by splitting up or reconstruction of business already in existence, it is entitled to the deduction under section 80-IA for subsequent years. Since the assessee had been granted claim of deduction right from the assessment year 2004-05 under section 80-IA, consequently it cannot be denied deduction for the subsequent years inasmuch as restraint of section 80-IA(3) cannot he considered for every year of claim of deduction, but can he considered only in the year of formation of the business." 51. Therefore, as could be seen from the above decision the eligibility of a claim for deduction u/s. 80IA and the bar if any is to be considered only in the first year of claim for deduction made under u/s. 80IA of the Act. It was held that since the assessee had been granted claim of deduction right from the Assessment Year 2004-05 u/s. 80IA of the Act consequently it cannot be denied deduction for the subsequent years. In as much as restraint of section 80IA(3) cannot be considered for every year of claim of deduction but can be considered dividend only in ....