TaxTMI 
TaxTMI 
TaxTMI 
2019 (7) TMI 2068
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....n proceedings: 1 erred in initiating revision proceeding under section 263 of the Act, without appreciating that section 263 cannot be invoked unless conjunctive conditions that assessment order passed under section 143(3) r.w.s. 144C (3) of the Act by the Assistant Commissioner of Income Tax, LTU - 1 ('AO') dated 16 February 2017 is erroneous in law as well as prejudicial to the interest of the Revenue, are satisfied; 2 erred in initiating revisionary assessment proceedings under section 263 of the Act, without appreciating that section 263 cannot be invoked in case where the view taken by the learned CIT is based on the presumption that, inadequate enquiry being made at the time of regular assessment proceedings, without pointing out any specific error or defect to show the order is erroneous as well as prejudicial to the interest of the revenue; 3 erred in not appreciating the fact that assessment order cannot be said to be erroneous and prejudicial to the interest of Revenue when there are two possible views on a given issue and the AO, following one of the views, had passed the assessment order; 4 erred in initiating revisionary assessment proceedings under Se....
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....tion under section 80IC in the following manner:- Name of Unit (Baddi Plant) Profit & gains derived from undertakings u/s 80IC Rate of Deduction u/s 80IC claimed Deduction claimed u/s 80IC Consumer Division 142,87,94,072/- 100% 142,87,94,072/- Hospital Products 9,92,54,866/- 30% 2,92,90,888/- Ethicon Sutures 74,97,60,944/- 30% 22,49,28,283 3. The Ld. CIT(LTU), further noted that initial assessment from which assessee has claimed the deduction u/s 80IC is assessment order 2008-09. Accordingly, AY 2013-14 is the sixth year of claim. As per provisions of section 80IC, the claim / deduction under this provision is available to assessee @30% from sixth year onwards from its first claim whereas the assessee had claimed deduction @100% of the profit. The Ld. CIT(LTU)further noted that assessee, in its audit report claimed that there were substantial expansion during financial year 2009-10 in the said unit by installing new plant & machinery, accordingly AY 2010-11 become the initial assessment year and AY 2013-14 being 4th year of claim of deduction u/s 80IC, the Ld. CIT(LTU), by taking her view that assessment year has been defined and the expression "or" has been used i....
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....nsidered for the period of deduction u/s 80IC at 100%. Hence, the assessee wrongly claimed deduction u/s 80IC at 100% of eligible unit in respect of consumer division in the sixth year of operation in violation of the provisions of section 80IC. Therefore, the Ld. CIT(LTU) directed the AO to give effect of her order. Aggrieved by the order of Ld. CIT(LTU), the assessee has filed present appeal before us by raising the grounds of appeal, which we have quoted above. 6. We have heard the submission of Ld.AR for the assessee and Ld. DR for the revenue and perused the material available on record with the assistance of ld. representatives of the parties. Grounds 1 to 4 relates to validity of proceedings u/s 263 of the Act. The Ld.AR for the assessee submits that provisions of section 263 can be invoked only in case where twin conditions, i.e. order being erroneous and prejudicial to the interest of revenue are cumulatively satisfied. In support of his submission, the Ld.AR relied upon the decision of Malabar Industrial Co. Ltd vs CIT 243 ITR 83 (SC) and Bombay High Court in CIT vs Gabriel India Ltd 203 ITR 108 (Bom). The Ld.AR further submitted that revisionary proceedings are not vali....
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....ion of substantial expansion cannot be (initial year). The Ld.AR for the assessee fairly submitted that Hon'ble Supreme Court in Classic Binding Industries 407 ITR 429 (SC) held that there cannot be multiple assessment years for claiming deduction u/s 80IC. Once the taxpayer has started claiming deduction u/s 80IC and initial assessment year has commenced, there cannot be another initial assessment year thereby allowing 100% deduction for next five year. However, the Hon'ble Supreme Court in the Full Bench decision in PCIT Vs Arham Softronics (102 Taxmann.com 343) dated 20-02-2009, after considering the decision of Classic Binding Industries (supra) held that there can be multiple initial assessment year for claiming deduction u/s 80IC and hence, where a unit claiming deduction u/s 80IC undertakes substantial expansion, the initial assessment year will commence again from the year in which it undertakes substantial expansion and assessee shall be eligible for 100% deduction. The ld. AR for the assessee would submit that in view of the decision of larger bench of Hon'ble Apex Court in PCIT Vs Arham Softronics (supra) the grounds of appeal raised on merits are covered in favour of th....
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....uld have been written more celebratory. This section does not visualise a case of substitution of the judgement of the CIT for that of the ITO, who passed the order, unless the decision is held to be erroneous. This is may be visualised where the ITO while making the assessment examines the accounts, makes enquiries, applied his mind to the facts and circumstances of the case and determine the income either by accepting the accounts for by making some estimate himself. The CIT on perusal of records, may be of opinion that the estimate made by the officer concerned was on the lower side and left to the CIT, he would have estimated the income at a higher figure than one determine by the ITO. That would not vest the CIT with power to re-examine the accounts and determine the income himself at the higher figure. This is because ITO 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 CIT does not feel satisfied with the conclusion. It may be said in such a case that in the opinion of the CIT the order in question is prejudicial to the interest of revenue. But th....