INCOME TAX ACT, 1961

Section 263

Revision under section 263 - Erroneous and prejudicial order - Assessee pleaded no disallowance called for in relevant year -

The assessee received a notice under section 263 of the Act on the ground that the claim of the assessee under section 40(a)(ia) of the Act to the extent of Rs. 10,12,02,076 which included a sum of Rs. 2,36,07,661 for which no TDS was effected that was required to be disallowed under section 40(a)(ia) of the Act. The assessee filed detailed objections raising the issue of jurisdiction as well as on merits and contended that there was no error much less any error prejudicial to the interest of the revenue and assumption of the jurisdiction under section 263 of the Act was itself erroneous. The Commissioner however, rejected the plea of the assessee and concluded the proceedings and remitted the matter to the assessing officer to decide the matter afresh and in accordance with law. Being aggrieved, the assessee filed an appeal before the Tribunal. The Tribunal has affirmed the order passed by the Commissioner. Held: It wa0s the claim of the assessee that the assessee has not claimed the benefit of the disallowance under section 40(a)(ia) of the Act for the assessment year in question i.e., 2008-09 and the same was claimed in the previous assessment year i.e., 2007-08. Therefore, the matter requires factual adjudication. The Tribunal has not adverted to the aforesaid aspect of the matter and has not considered the submission made by the assessee that the amount of Rs. 2,36,07,661 was not a real amount but only the provision that was directly reversed. In view of the preceding analysis, the matter requires factual adjudication. In the result, the impugned Order, dated 20-1-2016 was quashed and the matter was remitted to the Tribunal for decision afresh in accordance with the observations made in this order.

Followed:Malabar Industrial Company v. CIT' (2000) 243 ITR 83 (SC) : 2000 TaxPub(DT) 1227 (SC).