AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2021 (1) TMI 1072
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....ok in light of Rule 18(6) of ITAT Rules and have also perused the judicial decisions relied upon by both the sides. 4. Briefly stated, the facts of the case are that the appellant filed its return of income on 30.10.2007 declaring taxable income of Rs. 5,10,62,326/-. Return was selected for scrutiny assessment and an order dated 05.11.2009 was framed u/s 143(3) of the Act and total income of the assessee was computed as under: Income from business [as per return of income] 4,00,62,319/- Add : Disallowance on account of expenses 2,12,08,600/- Disallowance u/s 14A r.w.r. 8D 26,35,73,535/- Disallowance on account of repair and Maintenance 90,36,373/- Consultancy expenses 20,36,319/- 29,58,54,827 33,59,17,153 1,10,00,000 34,69,17,153 5. During the year under consideration, the appellant had received ICD of Rs. 50 lakhs from Eicher Ltd, carrying interest @ 9% per annum on 14.06.2006. Since Eicher Ltd was subsidiary of the appellant company and the appellant company held more than 10% share holding in Eicher Ltd, the Assessing Officer raised a query asking the assessee to explain as to why p....
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....f business. As per clause (ii) of section 2(22)(e) the dividend does not include the loan given in the ordinary course of business of financing. Therefore, for this reason also, the ICD received by assessee from EL cannot be treated as deemed dividend in the hands of assessee. In view of the above, it may be appreciated that provisions of section 2(22)(e) of the Income Tax Act are not applicable in respect of ICD received by the assessee from EL." 7. The Assessing Officer was convinced with this reply of the assessee and completed the assessment after making additions mentioned elsewhere. 8. The ld. CIT assumed jurisdiction u/s 263 of the Act by serving notice as under: Image01 OFFICE OF THE COMMISSIONER OF INCOME TAX, DELHI-IV, ROOM NO-397, 3RD FLOOR, CENTRAL REVENUE BUILDING, I.P.ESTATE, NEW DELHI-2 F. No. CIT-IV/ /2010-11/ 1616 Dated: 25.08.2010 To, The Principal Officer M/s Eicher Goodearth Investments Ltd. Eicher House, 12, Commercial Comples Greater Kailash-II, (Masjid Moth) New Delhi Sub: Proceedings u/s 263 of the I.T. Act 1961- M/s Eicher Goodearth Investments Ltd. A.Y. 2007-08 - reg- An examination of .ho income-tax assessment records of M/s....
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.... [supra], we are of the considered opinion that the ld. CIT has proceeded on wrong assumption of facts. 10. The facts, in true perspective, are that the appellant had an opening outstanding balance of Rs. 610 lakhs payable to Eicher Ltd in respect of ICDs received in earlier years. The ICD of Rs. 50 lakhs received during the year under consideration alongwith opening balance of ICD was fully repaid by the appellant to Eicher Ltd by 17.07.2006. We find that at the time of receipt of deposit and repayment thereof, i.e. 14.06.2006 and 17.07.2006, shares of Eicher Ltd. were listed on the recognised stock exchange i.e. Bombay Stock Exchange and National Stock Exchange till 22.02.2007 and 13.03.2007 respectively. Eicher Ltd was registered as NBFC with the Reserve Bank of India. 11. As mentioned elsewhere, during the assessment proceedings itself, the Assessing Officer specifically required the appellant to explain as to why the aforesaid ICD of Rs. 50 lakhs be not treated as deemed dividend in the hands of the appellant company. As mentioned elsewhere, the assessee had made a specific reply which was duly considered by the Assessing Officer. 12. The contention of the ld. DR that the r....
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....r being erroneous ". 16. The Hon'ble Bombay High Court in the case of Gabriel India Ltd 203 ITR 108 has held as under: "The power of suo motu revision under subsection (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 accordin....
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....n incorrect or incomplete interpretation a lesser tax than what was just has been imposed. We, therefore, hold that in order to exercise power under sub-section (1) of section 263 of the Act there must be material before the Commissioner to consider that the order passed by the Income-tax Officer was erroneous in so far as it is prejudicial to the interests of the Revenue. We have already held what is erroneous. It must be an order which is not in accordance with the law or which has been passed by the Income-tax Officer without making any enquiry in undue haste. We have also held as to what is prejudicial to the interests of the Revenue. An order can be said to be prejudicial to the interests of the Revenue if it is not in accordance with the law in consequence whereof the lawful revenue due to the State has not been realised or cannot be realised. There must be material available on the record called for by the Commissioner to satisfy him prima facie that the aforesaid two requisites are present. If not, he has no authority to initiate proceedings for revision. Exercise of power of suo motu revision under such circumstances will amount to arbitrary exercise of power. It is well....
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.... order of the Commissioner was passed there were two views on the word "profits" in that section. The problem with Section 80HHC is that it has been amended eleven times. Different views existed on the day when the Commissioner passed the above order. Moreover, the mechanics of the section have become so complicated over the years that two views were inherently possible. Therefore, subsequent amendment in 2005 even though retrospective will not attract the provision of Section 263 particularly when as stated above we have to% take into account the position of law as it stood on the date when the Commissioner passed the order dated March 5,1997, in purported exercise of his powers under Section 263 of the Income Tax Act. 3. For the above reasons, civil appeals filed by the department stand dismissed." 19. We have given thoughtful consideration to the orders of the authorities below. It is a settled position of law that powers u/s 263 of the Act can be exercised by the Commissioner on satisfaction of twin conditions, i.e., the assessment order should be erroneous and prejudicial to the interest of the Revenue. By 'erroneous' is meant contrary to law. Thus, this power can....
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....isional powers could not be exercised, called for no interference. Since with respect to computation and assertions of other aspects of deduction under section 54Fofthe Act, the Tribunal has remanded the proceedings, nothing stated in this order would affect either side in considerations of such claim. 7. No question of law arises. Tax Appeals are dismissed." 21. We find the Hon'ble Delhi High Court in the case of CIT Vs. Anil Kumar reported in 335 ITR 83 has held that where it was discernible from record that the A.O has applied his mind to the issue in question, the ld. CIT cannot invoke section 263 of the Act merely because he has different opinion. Relevant observation of the High Court reads as under: "63. We find the Hon'ble Delhi High Court in the case of Vikas Polymer reported in 341 ITR 537 has held as under: "We are thus of the opinion that the provisions of s. 263 of the Act, when read as a composite whole make it incumbent upon the CIT before exercising revisional powers to : (i) call for and examine the record, and (ii) give the assessee an opportunity of being heard and thereafter to make or cause to be made such enquiry as he deems necessary. It is ....