Punjab & Haryana H.C : This appeal is directed against the order of the Income-tax Appellate Tribunal, Amritsar Bench, Amritsar (for short, “the Tribunal”), dt. 1st Aug., 2003, allowing the appeal of the assessee against the order passed by the CIT under s. 263

High Court Of Punjab & Haryana

CIT vs. Max India Ltd.

Sections 260A, 263

Asst. Year 1992-93

N.K. Sud & S.S. Grewal, JJ.

IT Appeal No. 39 of 2004

18th May, 2004

Counsel Appeared

R.P. Sawhney with Kishan Singh, for the Appellant

JUDGMENT

N.K. Sud, J. :

This appeal is directed against the order of the Income-tax Appellate Tribunal, Amritsar Bench, Amritsar (for short, “the Tribunal”), dt. 1st Aug., 2003, allowing the appeal of the assessee against the order passed by the CIT under s. 263 of the Income-tax Act, 1961 (for short, “the Act”).

The assessee-company is engaged in the business of manufacturing of drug intermediaries, electronic chemicals and formulations. It filed its return of income for the asst. yr. 1992-93 on 29th Dec., 1992. Since the turnover of the assessee for the asst. yr. 1992-93 included exports, it had claimed deduction under s. 80HHC of the Act at Rs. 1,33,09,439. The assessment was completed by the AO on 15th March, 1995, and deduction under s. 80HHC of the Act was allowed as claimed by the assessee. However, on a perusal of the record, the CIT observed that while working out the deduction under s. 80HHC there was a negative figure of profit at one stage which had been ignored by the AO and thereby excess deduction under s. 80HHC had been allowed. Accordingly, vide order dt. 5th March, 1997, he held that the order passed by the AO was erroneous inasmuch as it was prejudicial to the interests of the Revenue and consequently, he set aside the assessment framed by the AO under s. 143(3) dt. 15th March, 1995, and directed him to recompute the deduction under s. 80HHC of the Act.

Aggrieved by the said order, the assessee preferred an appeal before the Tribunal which has been allowed. The Tribunal has recorded a finding that the computation made by the AO was in accordance with the view expressed by various Benches of the Tribunal, which have been discussed in detail in the order itself. Thus, it has been observed that since the view taken by the AO was a possible view, the CIT had no jurisdiction to exercise power under s. 263 of the Act and treat the order to be erroneous in any manner.

Mr. R.P. Sawhney, learned senior standing counsel for the Revenue, contended that when the assessment was framed by the AO, there was no order of the Tribunal available to him. Thus, accordingly on the basis of the subsequent decisions of the Tribunal, it could not be said that the view taken by the AO was a possible view.

We find no merit in this contention. For expressing a view, it is not necessary that it should be based on a judicial pronouncement. A view has to be expressed on the basis of the provisions of law as applicable to the facts of a case. It is not in dispute that the view expressed by the AO is in conformity with the view subsequently expressed by the various Benches of the Tribunal. We are, therefore, satisfied that the Tribunal was justified in holding that the view expressed by the AO was a possible view and since the AO has taken a possible view, the CIT had no jurisdiction to interfere by exercising his powers under s. 263 of the Act. In this behalf, we may refer to the decision of the Supreme Court in Malabar Industrial Co. Ltd. vs. CIT (2000) 159 CTR (SC) 1 : (2000) 243 ITR 83 (SC), wherein at p. 88 it has been held as under : “The phrase ‘prejudicial to the interests of the Revenue’ has to be read in conjunction with an erroneous order passed by the AO. Every loss of revenue as a consequence of an order of the AO cannot be treated as prejudicial to the interests of the Revenue. For example, when an ITO adopted one of the courses permissible in law and it has resulted in loss of Revenue; or where two views are possible and the ITO has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue, unless the view taken by the ITO is unsustainable in law. . . .”

6. In view of the above, we are satisfied that no substantial question of law arises out of the order of the Tribunal. The appeal is dismissed in limine.

[Citation : 268 ITR 128]

Scroll to Top
Malcare WordPress Security