CASE LAW DETAILS
Decided by: ITAT, DELHI BENCH ‘C’ : NEW DELHI
In the Case of : Flextronics Software System Ltd. v. CIT
Appeal No. : ITA NO. 2070/DEL/2008
Decided on : JANUARY 16, 2009
SUMMARY OF THE CASE LAWS
When the issue is debatable one where two views are possible, the order of the Assessing Officer cannot be revised on the ground that he has followed one of the possible views in the matter.
6. We have considered the facts of the case and rival submissions. The principles of law emerging from various decisions cited by the rival parties can be summarized as under :
(i) two pre-conditions have been prescribed for invoking jurisdiction under section 263, namely (a) the order passed by the Assessing Officer should be erroneous; and (b) it should be prejudicial to the interests of the revenue;
(ii) where proper enquiries have been conducted by the Assessing Officer and he has followed the principles of natural justice, the order passed by him cannot be said to be erroneous and prejudicial to the interests of revenue simply because the ld. Commissioner does not agree with him and he is of the view that addition of a higher amount should have been made;
(iii) when two opinions are possible in a particular matter and the Assessing Officer follows one view, the order cannot be said to be erroneous and prejudicial to the interests of revenue provided that he follows a possible view;
(iv) if enquiry is not made and deduction is allowed, such an order will tantamount to an order which is erroneous and prejudicial to the interests of revenue;
(v) if material exists on record on the basis of which jurisdiction under section 263 can be exercised, the ld. Commissioner can exercise such jurisdiction ; and
(vi) provisions granting exemptions have to be strictly construed as per language of the statute, but once it is found that the exemption is available, then, the grant of it should be liberally incorporated.
7. In regard to deduction under section 10B, the only grievance of the Id. CIT is that provision contained in sub-section (5) of section 80HHE comes in the way of grant of the deduction in the subsequent year. In this very connection, the Id. DR emphasized on the words “no deduction shall be allowed in relation to such profits under any other provision of this Act for the same or any other assessment year”. It does appear to us that the section may require further elaboration notwithstanding the order of the Tribunal in the case of Legato Systems India (P) Ltd. (Supra). This is so because a particular income can be brought to tax only in one year and, therefore, the deduction under section 80HHE or 10B can be claimed only in one year. It will be inconceivable that income is taxed in one year and deduction is allowed in that year in section 80HHE; and thereafter deduction is also claimed in respect of the same income in some other year in which it has not been offered for tax. Therefore, aforesaid order of the Tribunal makes the words “or in any other assessment year”, used in sub-section (5), as redundant. However, the fact stays that a particular interpretation has been placed on the meaning of these sections by or coordinate Bench, which cannot be ignored. Therefore, it can be said that the issue is debatable one where two views are possible. The Ld. Counsel for the assessee has cited authorities which clearly lay down that where two opinions are possible, the order of Assessing Officer will not be amenable to revisionary jurisdiction under section 263. On the other hand, the case of the Ld. DR is that exemption section should be strictly construed, for which the decision of Hon’ble Supreme Court in the case of IPCA Laboratories Ltd. (Supra) is an authority when it was held that the exemption provision cannot be interpreted broadly by introducing words which are not there or by misconstruing them. Having considered the rival submissions, we are of the opinion that in view of the order of the Tribunal in the case of said Legato Systems India (P) Ltd. (Supra), the issue is debatable. Therefore, we are also of the view that the order of Assessing Officer could not have been revised on this ground by the Ld. Commissioner as the Assessing Officer had followed one of the possible views in the matter.