The Tax Publishers2021 TaxPub(DT) 2943 (Pune-Trib)

INCOME TAX ACT, 1961

Section 263

AO incorrectly applied the law because section 115JB was omitted to be applied, which ought to have been applied. In the hue of this factual scenario, it is clear that the assessment order passed by the assessing officer can be clearly described as erroneous and also prejudicial to the interest of the revenue, warranting the invocation of section 263.

Revision under section 263 - Validity - AO failed to apply section 115JB -

AO completed assessment under section 143(3) by making disallowance under section 40(a)(ia) and also not allowing deduction under section 80-IA(4). CIT(A) deleted the disallowance under section 40(a)(ia) and also held the assessee eligible for benefit of section 80-IA(4), thereby again computing the total income at Nil. PCIT, exercising power under section 263 held assessment order to be erroneous and prejudicial to the interest of Revenue on the ground that AO failed to apply section 115JB which was applicable in this case because of assessee being a private limited company. Held: AO did not apply section 115JB which ought to have been applied. This brings Tribunal to a situation where AO failed to apply the provisions of the Act in terms of section 115JB. Assessee relied on judgment of Supreme Court in the case of Malabar Industrial Co. Ltd. v. CIT [(2000) 243 ITR 83 (SC) : 2000 TaxPub(DT) 1227 (SC)], wherein validity of section 263 was approved in case of incorrect application of law and the assessment order was passed without application of mind. AO incorrectly applied law because section 115JB was omitted to be applied, which ought to have been applied. Therefore, revision under section 263 was warranted.

Applied :Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR 83 (SC) : 2000 TaxPub(DT) 1227 (SC).

REFERRED :

FAVOUR : Against the assessee

A.Y. : 2013-14



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