INCOME TAX ACT, 1961

Section 263 Section 80-IA(4)

Revision under section 263 - Erroneous and prejudicial order - Verification/examination of letter filed by assessee - Denial of deduction under section 80-IA(4) by CIT

Assessment was framed under section 143(3) read with section 92CA after making the disallowance of depreciation vide Order, dt. 18-3-2015. CIT under section 263 on verification of assessment records observed that assessee had claimed deduction under section 80-IA(4)(i). Assessee was a wholly owned subsidiary company of Netafirm ACS, Israel, which entered into an agreement with the Government of Andhra Pradesh. As per the provision of section 80-IA-4(i) a foreign company was not entitled to the deduction. CIT also observed that the similar deduction was also disallowed in the immediately preceding assessment order, i.e., 2010-11 in the order framed under section 143(3) and accordingly disallowed the deduction under section 80-IA(4)(i).Held: Assessee had filed a letter from the Govt. of Andhra Pradesh dated 6-6-2018 clarifying the agreement between Netafim ACS & India Ltd. It was a fact that this clarification by way of letter was not available at the time of original assessment proceedings under section 143(3). Order of the AO cannot be held erroneous in so far prejudicial to the interest of the revenue merely on the ground that the AO had not verified/examine the facts properly but the necessary verification was duly carried out by the AO during the assessment proceedings. Clarification being additional document filed by assessee needs to be examined/verified by the AO in order to establish the veracity of the same. Therefore, the issue was restored to the file of the AO for the limited purpose of carrying out the verification/examination of the letter filed by the assessee written by the State Govt. of Andhra Pradesh and adjudicate the issue afresh in accordance to the provisions of law.

Relied:Malabar Industrial Company Ltd. v. CIT reported in (2000) 243 ITR 83 (SC) : 2000 TaxPub(DT) 1227 (SC), CIT v. Sunbeam Auto Ltd. (2011) 332 ITR 167 (Del-HC) : 2011 TaxPub(DT) 88 (Del-HC) and CIT v. Reliance Communication Ltd. 76 Taxmann.com 226 and CIT v. AMIT Corporation 21 taxmann.com 64

REFERRED :

FAVOUR : Matter remanded.

A.Y. : 2011-12

SUBSCRIBE FOR FULL CONTENT