TaxTMI 
TaxTMI 
2020 (8) TMI 477
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.... (ii) Whether the Tribunal was correct in applying the provisions of Section 13(8) of the Act, thereby traversing beyond the scope of the appeal without appreciating the facts and circumstances and recorded a perverse finding? 2. Facts leading to filing of this appeal briefly stated are that assessee is a Trust engaged in the business of construction and real estate activities and is registered under Section 12AA of the Act on 07.12.2007. The assessee filed the return of income for the Assessment year 2009-10 and declared total turnover to the tune of Rs. 194.24 Crores and a sum of Rs. 57.39 Crores was claimed as profit. The assessee declared the income as 'NIL' and claimed deduction in respect of an amount of Rs. 57.39 Crores as deduction under Section 80IB(10) of the Act. The aforesaid deduction was allowed by the Assessing Officer vide order dated 18.03.2011. The order of the Assessing Officer was found to be erroneous and prejudicial to the interest of the revenue. Therefore, a show cause notice dated 18.10.2011 under Section 263 of the Act was issued by the Director of Income Tax (Exemption), Bangalore to the assessee proposing to disallow deduction of Rs. 57.....
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....re, grossly erred in setting aside the order under Section 263 of the Act. It was further submitted that the issue in the appeal before the Tribunal was whether the Director of Income Tax (Exemption) was justified in invoking the provisions of Section 263 of the Act in the fact situation of the case and therefore, the Tribunal could not have dealt with the merits of the matter and should not have set aside the order on merits passed under Section 263 of the Act. It is also urged that the Tribunal ought to have appreciated that the Assessing Officer had failed to examine the issue whether the income was expended for charitable purposes. In support of aforesaid submissions, reliance has been placed on a decision Supreme Court in 'COMMISSIONER OF INCOME-TAX, MUMBAI VS. AMITABH BACHAN', (2016) 69 TAXMANN.COM 170 (SC) and decision of this court in 'THE COMMISSIONER OF INCOME TAX AND ANR. VS. M/S INDIA HERITAGE TRUST', ITA NO.754/2007 DATED 04.08.2014. 5. On the other hand, learned counsel for the assessee submitted that since, the assessee does not fall within scope and ambit of Section 11(1)(a) of the Act, the income of the assessee has to be computed in accordance w....
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....siders that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he, may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. 7. Thus, from close scrutiny of Section 263 it is evident that twin conditions are required to be satisfied for exercise of revisional jurisdiction under Section 263 of the Act firstly, the order of the Assessing Officer is erroneous and secondly, that it is prejudicial to the interest of the revenue on account of error in the order of assessment. 8. The aforesaid provision was considered by the Supreme Court in MALABAR INDUSTRIAL CO. LTD.I supra and it was held that the phrase 'prejudicial to the interests of the revenue' has to be read in conjunction with an erroneous order passed by the Assessing Officer and every loss of revenue as a consequence of the order of the Assessing Officer cannot be treated as pre....
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.... Act. Therefore, it has been held that the order passed by the Assessing Officer is erroneous and is prejudicial to the interest of the revenue. The Tribunal by placing reliance on the decision in the case of HERO AUTO LIMITED SUPRA has held that lack of enquiry regarding eligibility of assessee for deduction under Section 80IB(10) of the Act cannot be upheld. It is pertinent to mention here that in the aforesaid decision, from perusal of paragraph 3, it is evident that there was not discussion in the order of Commissioner of Income Tax (Appeals) as to how and in what manner the enquiry was lacking and what was the fault and default committed by the Assessing Officer. The distinction between lack of enquiry and inadequate enquiry was also noted. Therefore, the Tribunal grossly erred in law in applying the aforesaid decision to the fact situation of the case and ought to have appreciated that the instant case was a case of lack of enquiry and not inadequate enquiry with regard to claim of the assessee with regard to deduction under Section 80IB(10) of the Act. 11. It is pertinent to mention here that in paragraph 21 itself the Tribunal has recorded the finding that the Assessing ....