Ms Anil Kapoor Film Co. Pvt. Ltd. Vs Pr. CIT (ITAT Mumbai)
Conclusion: Revisional order passed by the Principal Commissioner in case of Anil Kapoor Film Co. Pvt. Ltd was upheld as AO had not made enquiries/verification, to satisfy himself with respect to creditworthiness of the lender and genuineness of the transactions before framing the assessment.
Held: Assessee was in the business of producing feature films/TV serials, declared nil income/loss from the business. AO completed assessment under section 143(3). Commissioner observed that assessee claimed to have obtained loan from one “M/s. A Pvt. Ltd.” amounting to Rs.2 crores and the confirmation of the loan transactions were furnished and the assessment order was passed. It was observed by CIT that the creditworthiness/genuineness of the transactions of the lender was never verified/examined by AO and even in the loan confirmation documents, the address of the lender was not mentioned and further assessee company neither filed the return of income of M/s A Pvt. Ltd. nor the bank statement, therefore, the assessment was held to be erroneous and prejudicial to the interest of Revenue. It was held revisional order passed by CIT was valid as AO should have made enquiries/verification, to satisfy himself with respect to creditworthiness of the lender and genuineness of the transactions before framing the assessment, thus, AO was directed to pass fresh assessment order after providing due opportunity of being heard to assessee.
FULL TEXT OF THE ITAT JUDGMENT
The assessee is aggrieved by the impugned order dated 08/08/2018 of the Ld. Pr. Commissioner of Income Tax, Mumbai, invoking revisional jurisdiction under section 263 of the Income Tax Act, 1961 (hereinafter the Act).
2. During hearing, the ld. counsel for the assessee, Shri Ratan Samal along with Ms. Ruchi M. Rathod, claimed that necessary evidences/details were filed before the Ld. Assessing Officer and the genuineness of the transactions was proved. The Ld. counsel invited our attention to various pages of the paper book and relied upon the decision in CIT vs Kwality Steel Suppliers Complex 395 ITR 1 (Supreme Court), CIT vs Dwarkadhish Investment Pvt. Ltd. & Ors. (2011) 330 ITR 298(Del.) and CIT vs Vikas Polymers ITR 3/1991, order dated 16/08/2010.
2.1. On the other hand, Shri Rajeshwar Yadav, ld. CIT-DR, strongly defended the impugned order by explaining that first of all a certificate has been filed by the assessee in the indexed paper book by explaining that so far as page-10 of the paper book is concerned, the loan confirmation and bank statement/balance-sheet of loan transactions were only filed before the Assessing Officer and the balance sheet copies of Assessment Year 2014-15 of the lender M/s Anubhav Vimaya Pvt. Ld., copy of balance sheet of 2015-16 reflecting 50% of the receipt of loan from the assessee, bank statement of the lender i.e. M/s Anubhav Vimaya Pvt. Ld. showing receipt of Rs. 1 crore were not filed before the Ld. Assessing Officer. This claim of the Ld. CIT-DR was not confronted by the Ld. counsel for the assessee. It was also explained by the ld. CIT-DR that no proper application was made before the ld. Assessing Officer and the documents filed before the Ld. Commissioner of Income Tax (Appeal), for the first time is an additional evidence and the ld. Assessing Officer could not examine the authenticity of the same. From the page-12 of the paper book, it was explained that these documents were filed only before two days from passing the assessment order and there is no application of mind by the Ld. Assessing Officer. Our attention was further invited to page-78 of the paper book by arguing that certain entries needs verification as the source of Rs.2 crore was not established by the assessee. It was pleaded that the assessment order was pssed on 29/12/2016, whereas confirmation was filed on 27/12/2016, thus, how the Assessing Officer can verify the genuineness of the transactions and even the details are without address. It was pointed out that there is no finding of the Ld. Assessing Officer with respect to examination of source. The crux of the argument is that standard operating procedure was not even followed by the ld. Assessing Officer, therefore, it is covered under sub-section (a)(b)(e) of explanation 263 of the Act. It was pleaded that the cases relied upon by the assessee are not applicable to the facts of the present appeal and even the Assessing Officer did not raise any query with respect to the claimed loan as there is no whisper of the same in the assessment order. At this stage, a query was raised by the Bench whether there is discussion in the assessment order with respect to taking loan, the ld. counsel for the assessee fairly agreed that “YES”, there is no whisper.
2.2. We have considered the rival submissions and perused the material available on record. Before adverting further, it is our bounded duty to examine section 263 of the Act, which is reproduced hereunder for ready reference and analysis:-
“263. (1) The Principal Commissioner or Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment.
46[Explanation 1 .]—For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,—
(a) an order passed on or before or after the 1st day of June, 1988 by the Assessing Officer shall include—
(i) an order of assessment made by the Assistant Commissioner or Deputy Commissioner or the Income-tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A;
(ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General or Principal Commissioner or Commissioner authorised by the Board in this behalf under section 120;
(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 Commissioner or Commissioner;
(c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the 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.
47[Explanation 2.—For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer 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 Commissioner or Commissioner,—
(a) the order is passed without making inquiries or verification which should have been made;
(b) the order is passed allowing any relief without inquiring into the claim;
(c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or
(d) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person.]
(2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed.
(3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, National Tax Tribunal, the High Court or the Supreme Court.
Explanation.—In computing the period of limitation for the purposes of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded.”
2.3. If the aforesaid section is analyzed, it speaks about the powers of the Ld. Pr. Commissioner or the Commissioner to consider whether the assessment order is erroneous in so far as prejudicial to the interest of Revenue and after giving opportunity of being heard and he make such enquiry as he deems necessary and pass such order thereon as the circumstances of the case so justify including, enhance and modifying the assessment or canceling the assessment and directing a fresh assessment. It has been further explained with the insertion of Explanation-2 inserted by the Finance Act, 2015 w.e.f. 01/06/2015. Undisputedly, the Ld. Commissioner served upon the assessee a show cause notice dated 28/06/2018 as to why the assessment framed under section 143(3) of the Act should not be revised or modified. The assessee vide letter dated 03/08/20 18 filed written submissions. Before the Ld. Pr. Commissioner, the assessee submitted that the Ld. Assessing Officer duly examined the issue involved, raised appropriate queries, called for relevant details and on examination of such details allowed relief to the assessee. Identical plea was raised before this Tribunal.
2.4. Now, we shall deal with the cases and the ratio laid down therein and also some other cases which are available on the issue in hand, so that we can reach to a justifiable conclusion. Before this Tribunal, the assessee has relied upon the decision of Kwality Steel Suppliers Complex ((Supra)), the issue is with respect to dissolution of the firm owing to death of the partner, therefore, it is on different facts. Even in the case of Dwarkadhish Investment Pvt. Ltd. ((Supra)), the facts are with respect to cash credit under section 68 of the Act, wherein, it was held that the initial burden is upon the assessee to prove identity of creditors. In the case of CIT vs Vikas Polymers ((supra)), on going through the assessment record of the assessee, it was found by the Ld. Commissioner that the Ld. Income Tax Officer did not enquire into the genuineness of the capital investment of the two partners. The reply of the assessee was that Smt. Ratni Devi is an existing assessee and her assessment was completed after due verification of the investment. Identical is the situation for other persons. In that situation, the Hon’ble High Court reached to a particular conclusion, whereas, in the case of the present assessee, the genuineness and source of loan was not examined by the ld. Assessing Officer and even there is no whisper in the assessment order with respect to issue in hand, therefore, the cases relied upon by the assessee may not help the assessee. It is a clear case that the assessment order was framed in a slip shot manner and without application of mind, therefore, the assessment order is erroneous as well as prejudicial to the interest of Revenue.
2.5 In another decision in Narayn Tatu Rane vs Income Tax Officer (2016) 70 taxman.com 227 (Mum. Trib.). In this case, since, the commissioner had not brought any material on record to substantiate the inference and merely passed the revisional order only to carry out fishing and roving enquiries with objective of substituting his view with that of the Assessing Officer, in that situation the revisional order was held to be not justified, whereas, it is not so in the present appeal.
2.6. In the case of M/a Amira Enterprises Ltd. vs Pr. CIT (ITA No.3206/Del./2017), the business of the assessee was trading of rice. It was found by the Tribunal that the Pr. CIT himself did not take any enquiry to reach to a conclusion that the assessment order is erroneous and prejudicial to the interest of Revenue. In that situation, a particular view was taken, therefore, this decision may not help the assessee.
2.7. Likewise, in the case of M/s Indus Best Hospitality vs Pr. CIT (ITA No.3125/Mum/2017), the bench relied upon the decision from Hon’ble jurisdictional High Court in the case of CIT vs Nirav Modi 390 ITR 292. The issue was whether the Ld. Assessing Officer examined the gift received by the assessee and accepted the same as genuine. No enquiry was caused by the ld. CIT to find out whether the Assessing Officer was satisfied with respect to correctness of the claim of the assessee whether erroneous. In that situation, the bank took a decision.
2.8. So far as, the case of Metacaps Engineering and Mahendra Construction COMPANY (J.V.) (2017) 86 taxman.com 128 (Mum. ITAT) is concerned, therein the assessee was awarded as civil construction contract of a project. As the assessee had insufficient capital and infrastructure, it sub-contracted the project to sub-contractor ‘Urja” on back to back basis. The entire responsibility and completion of contract was taken over by the sub-contractor. Revisional jurisdiction was invoked mainly on the ground of excessive expenses on labour payment, etc. In that situation, a particular view was taken.
2.9. There are certain decisions, which favour of the case of the Revenue and one such decision is Arvee International vs Addl. CIT (2006) 8 SOT 452 (Mum. Trib.), wherein, the assessment was framed without application of mind. It was held that mere allegation that Assessing Officer has taken a view in the matter will not put the matter beyond the purview of section 263 unless the view so taken by the Assessing Officer is a judicial view based on proper enquiry and legal aspect.
2.10. In the case of Horizon Investment Company Ltd. vs CIT (ITA No. 1593/Mum/2013), wherein, it was clear that there was a lack/absence of enquiry by the Assessing Officer, therefore, the jurisdiction in relation to deduction of the said expenditure was held to be validly assumed.
2.11. In the case of CIT vs I.C.I. India Pvt. Ltd. 139 ITR 105 (Cal.), it was held as under:-
“An expenditure may not be an allowable deduction under section 10(2)(v ) of 1922 Act on the ground that the repairs are not current repairs and yet, it may be allowed under section 10(2)(xv) of 1922 Act provided its conditions are fulfilled.
In the instant case, merely because some columns and beams were repaired by the company it did not necessarily follow that the expenditure incurred on it was in the nature of a capital expenditure.
That apart, it was not the finding of the Tribunal in the instant case that any structural alteration was made. By a mere patch work, the building would have lasted only for 5 to 10 years and the money that would have been spent in it would have been a complete waste. Therefore, plastering of certain portions of the concrete works with cement and some columns and beams by the process of guniting became absolutely essential. No doubt, that process had extended the life of the “building” by many more years, but not exceeding its original life. Further, the repairs had not improved in original condition.
It was an admitted fact that the building needed an extensive repair. The company had, no doubt, made extensive repairs by incurring a huge expenditure. But the magnitude of repair went with the magnitude of wear and tear, and not with the question as to whether the expenditure incurred in it was a capital or a revenue expenditure. The quantum of expenditure by itself was also not a determining factor.
Where a building needs repair, it is not for the taxing authorities but for its owner to decide how and in which manner, process or appliances it is to be carried out including the extent of its repair and the expenditure to be incurred on it. Even where structural repairs are carried out, the expenditure incurred on it is not necessarily a capital expenditure, for every repair, if properly done, must, as a matter of course, improve the condition of the building.
The object and the purpose of every repair is to improve the bad condition of the building, to prevent its further deterioration as far as possible and to keep it wind and water-tight. So long the repair does not bring into existence an additional advantage or benefit of an enduring nature or change the nature, character or the identity of the building itself, the expenditure must be regarded as a revenue expenditure. On the other hand, if it does, it will be in the nature of a capital expenditure. Guniting is nothing but a modern process of plastering by a machine. The company had used this modern process. The process of gun iting had not improved the original condition of building nor had extended its original life. The finding of the Tribunal was that the object of the repairs was to maintain and preserve the building. The court also agreed with the finding of the Tribunal, namely, that the process of guniting had not brought into existence any new benefit or advantage of enduring nature to the company. In view of aforesaid, it could be concluded that the entire repair expenditure incurred by the assessee on its office premises (building in question) was revenue expenditure and allowable as deduction.
Reference was answered in favour of the assessee.
2.12. In CIT v. Oxford University Press 108 ITR 166 (Born.), wherein, the Hon’ble High Court held as under:-
“This court held in the case of Gulamhussein Ebrahim Matcheswalla v. CIT [1974] 97 ITR 24 (Bom.), that the expression ‘repair’ must be understood in contradistinction to renewal or restoration and the test to be applied is to see whether as a result of the expenditure what is being done is to preserve and maintain an already existing asset. If the amount is spent for the purpose of bringing into existence a new asset or obtaining a new advantage then such an expenditure would not be revenue expenditure. The mere quantum of expenditure is not by itself decisive of the question whether it is of the nature of revenue or capital. A sum can be allowed as cost of repairs even though the expenditure in a particular year is heavy on account of the fact that it is undertaken to remedy the effect of several years of wear and tear or neglect and also in spite of the fact that such expenditure may not be necessary for several years to come after repairs have been effected. It is thus clear that what the court is required to find out is whether as a result of the expenditure a new asset or a new advantage is being brought into existence. The court will also have regard to the aspect as to whether as a result of the expenditure what is being done is to preserve and maintain an already existing asset.
In the instant case, it was clear as to why and in what circumstances the guniting work was undertaken by the assessee in relation to the building. In their letter, the architects of the assessee stated that during the inspection of the building, which was undertaken in January, 1961, it was observed that the reinforcement of the slabs had decayed and cracks were visible underside of the slab and on the floors and some of the steel reinforcement in the slab had little or no cover. Further, that the assessee had been spending good amounts on the repairs of such cracks and plasterings of the slabs on which the reinforcements had disappeared but the amount spent for plaster patch work that was undertaken was a waste and that, therefore, since the plastering by means of an ordinary method was of no use, plastering by the process of guniting was advised. The nature of the guinting process was explained by the assessee. Having regard to the nature of the guniting process that was undertaken for carrying out the plastering and repair work to the building and the reasons and circumstances as to why the gun iting process had been employed, it became very clear that by employing this method, which was nothing but an improved method of plastering and repairing work, all that the assessee had done was to preserve and maintain the already existing asset. No new asset or new advantage as such could be said to have been brought into existence by reason of expenditure incurred for doing the guinting work. As a result of guniting work done the assessee had not changed the nature of the asset, viz., the building as a whole, and the same in no way increased the accommodation or earning capacity of the building; in that sense no new advantage of enduring benefit had been brought into existence. The repairs also could not be regarded as heavy structural repairs, for, according to the assessee’s architects, what could not be achieved by the ordinary method of plastering was achieved by a sophisticated method of process of guniting. In this view of the matter, it seemed very clear that the expenditure incurred for guniting work done as also the expenditure being the architects’ fees paid in connection therewith would have to be regarded as expenditure of a revenue nature.
All that the assessee did in the instant case was to undertake the plaster repairing work out by adopting a new method called gun iting process, and by incurring the expenditure by adopting such a process the assessee was merely maintaining and preserving an asset which it already possessed and thus though to some extent the life of the asset had been prolonged and the asset was made to give better service then it was doing in the past, the expenditure would have to be regarded as revenue expenditure.
II. Section 37(1) of the Income-tax Act, 1961 – Business expenditure – Allowability of – Assessment year 1963-64 – During relevant assessment year, assessee-company paid certain amount to its deceased employee as gratuity, calculating quantum of 2 years’ salary payable to deceased at time of his dealth – ITO disallowed assessee’s claim in respect of aforesaid expenditure – AAC finding that gratuity fixed for non-covenanted staff was only 12 months’ salary, held that gratuity payment in excess of 12 months’ salary was ex-gratia payment – He thus, allowed deduction of amount representing 12 months’ salary as legitimate business expenditure and disallowed rest as being in nature of ex-gratia payment – Tribunal confirmed AAC’s order – Whether, on facts, Tribunal rightly affirmed AAC’s order, and therefore, order passed by Tribunal could not be interfered with – Held, yes
FACTS-II
During the relevant assessment year, the assessee-company paid certain amount to its deceased employee as and by way of gratuity, roughly calculating the quantum of 2 years’ salary payable to the deceased at the time of his death. The assessee claimed the said payment as an allowable expenditure in computing its assessable income. The ITO disallowed the claim on the ground that there was no contractual obligation to pay any gratuity and, therefore, the payment was an ex-gratia payment and not a legitimate business expenditure. On appeal, the AAC held that the gratuity paid to the deceased’zs heirs was equivalent to approximately 2 years’ salary while the gratuity fixed for the non-covenanted staff was only 12 months’ salary and in view of this he held that the gratuity payment in excess of 12 months’ salary was an ex-gratia payment. In other words, he allowed a deduction of amount representing 12 months’ salary as legitimate business expenditure but disallowed the rest as being in the nature of ex-gratia payment.
On cross appeals, the Tribunal upheld the order of the AAC.
On reference :
HELD-II
In the instant case the AAC held that since the gratuity fixed for non-covenanted staff was subject to a maximum of 12 months’ salary, in respect of covenanted staff the members thereof could at least expect that much gratuity if not more and, having regard to this aspect of the matter, the AAC held that part of the gratuity paid to the heirs of deceased to the extent of Rs. 24,000 being 12 months’ salary could be regarded as proper and legitimate business expenditure while that part which was in excess of 12 months’ salary was to be regarded as ex gratia payment and he, therefore, disallowed the excess amount. The matter was carried in further appeal to the Tribunal, the Tribunal had confirmed this finding of the AAC. In this view of the matter, it was held that the Tribunal was right in allowing a deduction of the expenditure only to the extent of Rs. 24,000 being the part of the gratuity amount paid by the assessee to the heirs of deceased.”
2.13. The Hon’ble Calcutta High Court in CIT vs J.K. Industries Pvt. Ltd. 125 ITR 218 (Cal.), held as under:
“It had been found by the Tribunal that with the capital borrowed the assessee had acquired a business asset for the purposes of its own business. Further finding was that it was the object of the assessee to house its own office as also the offices of the companies managed by it. The findings of the Tribunal had not been challenged nor was it contended at any stage that the housing of the offices of the managed companies was not a part of the business of the assessee. Had this point been mooted at the proper stage the agreements between the assessee and the managed companies could have been considered to ascertain whether the assessee was in any way liable to arrange for office of the managed companies. Following the decision of the Supreme Court in CIT v. Kirkend Coal Co. [1969] 74 ITR 67 the question which was neither raised nor argued before the Tribunal could not be raised at this stage.
Even otherwise, it could not be said that it would not be conducive to the business of the assessee if all the companies managed by it were housed in the same building. It would lead to some economy and greater efficiency in management.
In view of aforesaid, it could be concluded that amounts paid as interest and the municipal taxes were allowable as deduction.
As regards renovation expenses for the assessment year 1961-62, the expenses in putting up the wooden panelling did not result in any enduring benefit to the assessee and, therefore, was deductible as a revenue expenditure. The revenue did not challenge the other expenses. Hence the entire expenditure on renovation was deductible.”
2.14. Now, we shall deal with certain other cases, which throws light on the issue in hand so that we can reach to a fair and justifiable conclusion. The Hon’ble Calcutta High Court in Rajmandir Estate Pvt. Ltd. vs Pr. CIT (2016) 70 taxman.com 124 (Calc.) order dated 13/05/2016 and the ratio laid down therein supports the case of the Revenue. It is noteworthy that while coming to a particular conclusion, Hon’ble Calcutta High Court considered following judicial pronouncements:-
i. CIT v.Calcutta Discount Co. Ltd. [1973] 91 ITR 8 (SC) (para 3),
ii. Sumati Dayal v. CIT [1995] 214 ITR 801/80 Taxman 89 (SC) (para 4),
iii. CIT v. Nova Promoters & Finlease (P.) Ltd. [2012] 342 ITR 169/206 Taxman 207/18 taxmann.com217 (Delhi) (para 4),
iv. CIT v. Durga Prasad More [19711] 82 ITR 540 (SC) (para 6),
v. CIT v. Precision Finance (P.) Ltd. [1994] 208 ITR 465/[1995] 82 Taxman 31 (Cal.) (para 6),
vi. ITO v. DG Housing Projects Ltd. [2012] 343 ITR 329/212 Taxman 132 (Mag.)/[2012] 20 taxmann.com587 (Delhi) (para 7),
vii. DIT v. Jyoti Foundation [2013] 35 ITR 388/219 Taxman 1 05/38 taxmann.com180 (Delhi) (para 7),
viii. CIT v. Steller Investment Ltd. [1991] 192 ITR 287/59 Taxman 568 (Delhi) (para 8),
ix. CIT v. Sophia Finance Ltd. [1994] 205 ITR 98/70 Taxman 69 (Delhi) (FB) (para 8),
x. CIT v. Divine Leasing & Finance Ltd. [2008] 299 ITR 268/[2007] 158 Taxman 440 (Delhi)(para 8),
xi. Lotus Capital Financial Services Ltd.v. ITO [IT Appeal No. 479 (Kol.) of 2011] (para 8),
xii. CIT v. Lotus Capital Financial Services (P.) Ltd. [ITAT No. 125 of 2012] (para 8),
xiii CIT v. Dataware (P.) Ltd. [ITAT No. 263 of 2011] (para 8),
xiv. CIT v. Roseberry Mercantile (P.) Ltd. [G.A. No. 3296 of 2010, dated 10-1 -2011] (para 8),
xv. CIT v. Sanchati Projects (P.) Ltd. [ITAT No. 140 of 2011] (para 8),
xvi. CIT v. Samir Bio-Tech. (P.) Ltd. [2010] 325 ITR 294 (Delhi) (para 8),
xvii. CIT v. Kamdhenu Steel & Alloys Ltd. [2014] 361 ITR 220/[2012] 206 Taxman 254/1 9 taxmann.com26 (Delhi) (para 8),
xviii. CIT v. Dwarkadhish Capital (P.) Ltd. [2011] 330 ITR 298/[2010] 194 Taxman 43 (Delhi) (paras 9, 10),
xix. CIT v. Kinetic Capital Finance Ltd. [2013] 354 ITR 296/[2011] 202 Taxman 548/1 4 taxmann.com150 (Delhi) (paras 9, 10),
xx. Zafa Ahmad & Co. v. CIT [2013] 214 Taxman 440/30 taxmann.com267 (All.) (paras 9, 10),
xxi. Anil Rice Mills v. CIT [2006] 282 ITR 236/[2005] 149 Taxman 313 (All.) (paras 9, 10),
xxii. CIT v. Five Vision Promoters (P.) Ltd. [2016] 380 ITR 289/236 Taxman 502/65 taxmann.com71 (Delhi) (para 11),
xxiii. CIT v. Gabriel India Ltd. [1993] 203 ITR 108/71 Taxman 585 (Bom.) (para 12),
xxiv. Hari Iron Trading Co. v. CIT [2003] 263 ITR 437/131 Taxman 535 (Punj. & Har.) (para 12),
xxv. CIT v. Leisure Wear Exports (P.) Ltd. [2012] 341 ITR 166/[2011] 202 Taxman 130/11 taxmann.com 54 (Delhi) (para 13),
xxvi. Omar Salay Mohamed Sait v. CIT [1959] 37 ITR 151 (SC) (para 14),
xxvii. Lalchand Bhagat Ambica Ram v. CIT [1959] 37 ITR 288 (SC) (para 14),
xxviii. Reliance Jute & Industries Ltd. v. CIT [1979] 120 ITR 921/2 Taxman 417 (SC) (para 15),
xxix. Karimtharuvi Tea Estate Ltd. v. State of Kerala [1966] 60 ITR 262 (SC) (para 15),
xxx CIT v. Sunbeam Auto Ltd. [2011] 332 ITR 167/[2010] 189 Taxman 436 (Delhi) (para 16),
xxxi. Grindlays Bank Ltd. v. ITO [1978] 115 ITR 799 (Cal.) (para 17),
xxxii. Vijay Mallya Asstt. v. CIT [2003] 131 Taxman 477 (Cal.) (para 17),
xxxiii. CIT v. J.L. Morrison (India) Ltd. [2014] 366 ITR 593/225 Taxman 17 (Mag.)/46 taxmann.com215 (Cal.) (para 17),
xxxiv. Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83/1 09 Taxman 66 (SC) (para 18),
xxxv. CIT v. Max India Ltd. [2007] 295 ITR 282/1 66 Taxman 188 (SC) (para 18),
xxxvi. CIT v. Maithan International [2015] 375 ITR 123/231 Taxman 381/56 taxmann.com283 (Cal.) (para 20),
xxxvii. CIT v. Navodaya Castles (P.) Ltd. [2014] 367 ITR 306/226 Taxman 190/50 taxmann.com110 (Delhi) (para 20),
xxxviii . CIT v. N.R. Portfolio (P.) Ltd. [2013] 214 Taxman 408/2 9 taxmann.com291 (Delhi) (para 20),
xxxix. CIT v. Active Traders (P.) Ltd. [1995] 214 ITR 583/[1993] 69 Taxman 281 (Cal.) (para 20),
xl. CIT v. Jawahar Bhattacharjee [2012] 341 ITR 434/209 Taxman 174/24 taxmann.com215 (Gau.) (FB) (para 20) and
xli. Tara Devi Aggarwal v. CIT [1973] 88 ITR 323 (SC) (para 27).
2.15. In CIT vs Fine Jewellery (India) Ltd. and CIT vs Nirav Modi ((supra)), no doubt these cases throw light on the issue but were decided by Hon’ble jurisdictional High Court to the peculiar facts of the case and on the basis of factual finding recorded by the Tribunal.
2.16. Admittedly, an incorrect assumption of fact or an incorrect application of law would satisfy the requirement of order being erroneous u/s. 263 of the Act. The phrase “prejudicial to the interest of the Revenue” u/s. 263, has to be read in conjunction with the expression “erroneous” order by the Assessing Officer. Every loss of Revenue as a consequence of assessment order cannot be termed as prejudicial to the interest of Revenue, meaning thereby, “prejudice” must be prejudice to the Revenue administration. At the same time, if another view is possible, revision is not permissible. Our view is fortified by the decision from Himachal Pradesh Financial Corp. (186 Taxmann 105)(HP), Bismillah Trading Co. (248 ITR 292)(Ker.) and CIT vs. Green World Corpn. (314 ITR 8 1)(SC). For invoking revisional jurisdiction u/s. 263 of the Act, the assessment order must contain grievous error which is subversive of the administration of Revenue. Further, exact error must be disclosed by the Commissioner as was held in CIT vs. G.K. Kabra (211 ITR 336)(AP). Section 263 of the Act enables the Commissioner to have a re-look at the orders or proceedings of the lower authority to effect correction, if so needed, particularly, if the order is erroneous and prejudicial to the interest of the Revenue. The object of the provision is to raise revenue for the state and section 263 is enabling provision conferring jurisdiction upon the Commissioner to revise the order. The provision is intended to plug the leakage of the revenue by the erroneous and prejudicial order. Our view find support from the ratio laid down in following decisions:-
i. CIT vs Infosys Technologies ltd. (2012) 341 ITR 293 (Karn.),
