Bombay H.C : the Commissioner of Income-tax has intervened under section 263 of the Act only because of its finding that while completing the assessment for the assessment year 2004-05

High Court Of Bombay

CIT vs. Forest Development Corporation of Maharashtra Ltd.

Section : 145

Assessment Year : 2004-05

B. P. Dharmadhikari And S.B. Shukre, JJ.

IT Appeal No. 2 Of 2010

April 6, 2015

JUDGMENT

1. Heard Shri Parchure, learned counsel for the appellant and Shri Thakar, learned counsel for the respondent.

1.1 The Income-tax Appellate Tribunal (“the ITAT”) by the impugned order dated June 30, 2009, found interference by the Commissioner of Income- tax (“the CIT”) under section 263 of the Income-tax Act, 1961, unwarranted.

2. Shri Parchure, learned counsel submits that the Commissioner of Income-tax has intervened under section 263 of the Act only because of its finding that while completing the assessment for the assessment year 2004-05, the Assessing Officer (“the AO”) omitted to look into the correctness or otherwise of the apportionment of common expenses to agricultural and non-agricultural segments. Shri Parchure, learned counsel submits that the Commissioner of Income-tax has found that the Assessing Officer has acted mechanically in the matter. According to the learned counsel, percentage of apportionment between two expenditures was different in every year, thereby necessitating application of mind to relevant facts and as the assessment order does not disclose this approach, it is vitiated. He further submits that the Commissioner of Income-tax has placed back the matter for fresh consideration and, therefore, no prejudice is caused to the assessee.

3. Shri Thakar, learned counsel, has invited our attention to the previous history. According to him, since the assessment year 1996-97, this practice is in vogue and the percentage of agricultural and non-agricultural receipt is worked out and in that proportion expenses are also bifurcated under these two heads. He submits that as the system is well settled, in return filed, the apportionment was, accordingly, shown and it has been accepted by the Assessing Officer. As such, there was no scope for intervention under section 263 of the Act. He has also relied upon the Division Bench judgment of the Rajasthan High Court in the case of CIT v. Rajasthan Financial Corpn. [1998] 229 ITR 246/[1996] 88 Taxman 58.

4. With the assistance of respective counsel, we have perused the papers. The facts show that the proportion of agricultural and non-agricultural income/ receipts has been used even while working out the apportionment of expenditure under that head. The previous history not in dispute shows that since 1996-97, the said method is being adopted. It is not in dispute that in the return filed by the assessee (State Government Corporation), the receipts were, accordingly, mentioned and the expenditure for those receipts was, accordingly, apportioned and appropriated. This return has been accepted. As such, it cannot be said that the assessment order does not show any application of mind.

5. The perusal of above mentioned judgment shows the limited scope available to the Commissioner of Income-tax while exercising the jurisdiction under section 263 of the Income-tax Act, 1961. Here, a long settled practice has been lost sight of and without observing anything in concrete about irrelevance of the method or apportionment being followed, the matter has been sent back. Had the Commissioner of Income-tax noted some facts which necessitated departure from this method, its intervention could have been understood. However, that is not the position here.

6. In this situation, we do not see any error in the appellate order of the Income-tax Appellate Tribunal. No case is made out and no substantial question of law arises. The appeal is rejected. No order as to costs.

[Citation : 374 ITR 538]

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