INCOME TAX ACT, 1961

Section 263

Revision under section 263 - Validity - Deduction under section 10B was allowed by AO without setting off of brought forward losses. -

Assessee was engaged in the business of undertaking R&D activity in biotechnology. Pr. CIT examined the assessment orders and took the view that deduction allowed to the assessee by AO under section 10B should not have been allowed. Accordingly, he initiated revision proceedings under section 263 on the ground that the assessment order was erroneous and prejudicial to the interests of revenue. Main reasoning given by Pr. CIT was deduction under section 10B was allowed by AO without setting off of brought forward losses. Held: Assessee had placed reliance on the decision of High Court in the case of CIT v. Tata Elxsi Ltd. (2012) 349 ITR 98 (Karn-HC) : 2011 TaxPub(DT) 1960 (Karn-HC) in order to contend that the setting off of brought forward loss was not required for the purpose of computing deduction under section 10B. PCIT did not follow the binding decision of High Court by observing that the issue is still not reached finality as the matter is pending before Supreme Court. It is a well settled proposition of law that all the authorities have to necessarily follow the decision rendered by High Court. Accordingly, Pr. CIT was not justified in refusing to follow the decision rendered by the jurisdictional High Court. Hence, deduction under section 10B should be allowed without setting off of brought forward losses and order of Pr. CIT would fail.

Followed:CIT & Anr. v. Yokogawa India Ltd. (2016) 391 ITR 274 (SC) : 2016 TaxPub(DT) 5139 (SC), Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR 83 (SC) : 2000 TaxPub(DT) 1227 (SC) and CIT-2 v. Western Outdoor Interactive (P) Ltd. (2012) 349 ITR 309 (Bom-HC) : 2012 TaxPub(DT) 3202 (Bom-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2011-12

INCOME TAX ACT, 1961

Section 263

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