TaxTMI 
TaxTMI 
2025 (6) TMI 1944
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....A of the Act 1961, deduction of amount of Rs. 58,29,019/- under Section 80G of the Act 1961, deduction of expenses of Rs. 58,20,219/- under Section 37(1) and Freight charges of Rs. 18,10,250/- under Section 80IA of the Act 1961." 2. The aforesaid substantial question of law has to be answered in the following factual backdrop:- 3. The respondent herein/assessee namely M/s. Vimla Infrastructure (India) Pvt. Ltd. is a company engaged in the business of development, operation and maintenance of infrastructure facilities, specifically private railway sidings/logistic parks/integrated rail systems, under contractual arrangements with the Indian Railways. The assessee filed its return of income for the assessment year 2015-16 claiming deduction under Section 80IA(4) of the IT Act to the tune of Rs. 15.90 crores as an "infrastructure facility" developer and deduction under Section 80G of the IT Act for donation to the Prime Minister's National Relief Fund. As pleaded, return included all the necessary documents, however, the assessment was selected for scrutiny under CASS and during the assessment, the Assessing Officer issued detailed notices under Section 142(1) of the IT Act on v....
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....of law has been formulated and set-out in the opening paragraph of this judgment. 5. Mr. Amit Chaudhary, learned Standing Counsel for the Income Tax Department appearing for the appellant herein/Revenue, would submit that the learned ITAT is absolutely unjustified in setting aside the order passed under Section 263 of the IT Act without verifying the facts whether the order was erroneous and prejudicial to the interest of revenue. He would rely upon the decision of the Supreme Court in the matter of Malabar Industrial Co. Ltd. v. Commissioner of Income Tax, Kerala State (2000) 2 SCC 718 to buttress his submission. 6. Mr. Neelabh Dubey, learned counsel appearing for the assessee Company/respondent herein through video conferencing, would oppose the appeal and support the impugned order passed by the ITAT and submit that the order of the ITAT is absolutely in accordance with law, as the learned ITAT has clearly recorded that neither the order of the AO was erroneous nor it was prejudicial to the interest of revenue, therefore, the PCIT could not have invoked Section 263 of the IT Act. In that view of the matter, the appeal deserves to be dismissed and the substantial question o....
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.... (b) "record" shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer or the Transfer Pricing Officer, as the case may be, had been the subject-matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of Principal Commissioner or Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. Explanation 2.-For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer or the Transfer Pricing Officer, as the case may be, shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner,- (a) the order is passed without making inquiries or verification which ....
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.... Revenue or if it is not erroneous but is prejudicial to the Revenue - recourse cannot be had to Section 263(1) of the Act. 7. There can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer; it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. 8. The phrase "prejudicial to the interests of the Revenue" is not an expression of art and is not defined in the Act. Understood in its ordinary meaning it is of wide import and is not confined to loss of tax. The High Court of Calcutta in Dawjee Dadabhoy & Co. v. S.P. Jain (1957) 31 ITR 872 (Cal), the High Court of Karnataka in CIT v. T. Narayana Pai (1975) 98 ITR 422 (Kant), the High Court of Bombay in CIT v. Gabriel India Ltd. (1993) 203 ITR 108 (Bom) and the High Court of Gujarat in CIT v. Minalben S. Parikh (1995) 215 ITR 81 (Guj) treated loss of tax as prejudicial to the ....