TaxTMI 
TaxTMI 
2019 (9) TMI 1399
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....sessment order should be erroneous as well as prejudicial to the interest of Revenue as has been held by the Supreme Court in the case of Malabar Industrial Co. (243 ITR 83). The Pr. CIT ought to have noted that there was no error in the assessment order passed u/s. 143(3) of the Act in as much as that the Electricity Duty levied u/s. 3(1) of the Kerala State Electricity Duty Act 1963 (KSED Act) on the appellant was not an exclusive levy but was applicable to all the licencees for distribution of power in the State of Kerala as per the definition of the term Licensee in section 2(d) of the KSED Act. 2. Notwithstanding the above claim and without prejudice to the above submissions, on merits of the case also, the action of the Pr. CIT in setting aside the assessment and re-doing the same is no sustainable in law going by the provisions of sec. 40(a)(iib) of the I.T. act since 'Duty' under KSED Act is not an exclusive levy on the appellant considering the provisions of section 3(1) of the KSED Act and the definition of the term 'Licensee' in sec. 2(d) of the KSED Act. As per sec. 2(d) of the said Act all persons who have been given a licence for distribution of power in the ....
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.... being an exclusive levy on the assessee which is a State Government undertaking by the State Government is to be disallowed u/s. 40(a)(iib) of the Act. Accordingly, the Pr. CIT set aside the assessment order dated 26/12/2016 as it was erroneous and prejudicial to the interests of the Revenue by invoking the provisions of section 263 of the Act. For this proposition, the Pr. CIT relied on the following judgments: 1) CIT vs. Jawahar Bhattacharjee (2012) 34 ITR 434 (Gau.) (FB). 2) CIT vs. Emery Stone Manufacturing Co. (1995) 213 ITR 843 (Raj.). 3) Malabar Industrial Co. Ltd. vs. CIT (2000) (243 ITR 83). 4. Against this, the assessee is in appeal before us. The Ld AR submitted that provisions of first limb of Section 40a(iib) of the IT Act 1961 is not applicable to the assessee since Electricity duty under Section 3(1) of the Kerala State Electricity Duty Act 1963 is applicable to all 10 licensees set up and operating in the state of Kerala by the private, state, central and bodies/authorities. It was submitted that levy is not therefore an exclusive levy as provided in the section. The Ld. AR submitted that levy of duty /taxes on consumption or sale of e....
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....rivate can never come within the purview of the term "appropriated". 4.3 The Ld. AR submitted that the section clearly provides that such appropriation is from a state Government undertaking by the state Government. There is a lot of significance or emphasis on the term used "a state Govt undertaking". It is definitely intentional and not accidental. It definitely is meant to cover charges other than taxes or duty levied from a state PSU by the state Government. It was submitted that in both the limbs of the Section use of words from a state government undertaking by the state government" is clearly conclusive of the intent, reach and ambit of section 40a(iib) of Act. According to the Ld. AR, the law of literal interpretation of statutes clearly provides that where the provisions of the section are clear and express, there is no need to look beyond the express provisions of the statute. It is definitely so in this case. The Ld. AR relied on the following leading cases on the literal interpretation of statutes in support of the above submission: 1. According to Viscount Haldane, L.C., if the language used has a natural meaning we cannot depart from that meaning unless, r....
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....o the matters, where such inquiry was prima facie warranted. The Commissioner is well within his powers to treat an order as erroneous on the ground that the Assessing Officer should have made further inquiries before accepting the wrong claims made by the assessee. The Assessing Officer cannot remain passive in the face of a claim, which calls for further enquiry to know the genuineness of it. In other words, he must carry out investigation where the facts of the case so require and also decide the matter judiciously on the basis of materials collected by him as also those produced by the assessee before him. The Assessing Officer was statutorily required to make the assessment under Section 143(3) after scrutiny and not in a summary manner as contemplated by Sub-section (1) of Section 143. The Assessing Officer is therefore, required to act fairly while accepting or rejecting the claim of the assessee in cases of scrutiny assessments. The Assessing Officer should protect the interests of the revenue and to see that no one dodged the revenue and escaped without paying the legitimate tax. The Assessing Officer is not expected to put blinkers on his eyes and mechanically accept what....