The Tax Publishers2020 TaxPub(DT) 4448 (Mad-HC) : (2020) 422 ITR 0235

INCOME TAX ACT, 1961

Section 263

Where AO allowed claim of carried forward of losses under section 72A, which arose in the light of an order passed by the Board for Industrial and Financial Re-construction ('BIFR'), considering fact that AO followed Supreme Court in case of Indian Shaving Products Ltd. and rightly applied provisions of section 32(2) of the SICA as well as section 72A of Income Tax Act, 1961, action of AO, though prejudicial, could hardly be termed as 'erroneous'.

Revision under section 63 - Erroneous and prejudicial order - AO allowed claim of carried forward of losses under section 72A, which arose in the light of an order passed by the Board for Industrial and Financial Re-construction ('BIFR') -

Revenue challenged order of Tribunal quashing order passed under section 263 even though AO wrongly allowed the claim of carried forward of losses under section 72A. Claim of assessee arose in the light of an order passed by the Board for Industrial and Financial Re-construction ('BIFR'). Held: Provisions of section 32(2) of the SICA as well as section 72A of IT Act, 1961 and the interplay thereof came to be considered by Supreme Court in case of Indian Shaving Products Ltd. Financial viability or otherwise, of the amalgamating company had to be determined first, in order to attract the provisions of section 72A. However, after the enactment of the SICA and the Constitution of the BIFR, the question of sickness or robust health of the entity is to be determined by the Board. It is only when the Board was satisfied that it would have, in the first place, entertained applications for revival, sanctioning appropriate schemes for rehabilitation. Thus, a sanction by the BIFR implies that the requirements of section 72(2) have been met. Section 263 empowers CIT to revise an order of assessment if the order in question is erroneous and prejudicial to the interests of the revenue, both conditions to be satisfied concurrently. The action of AO, though prejudicial, could hardly be termed as 'erroneous', in so far as AO followed the dictum laid down by the Supreme Court in the case of Indian Shaving Products.

Followed:Indian Shaving Products Limited v. Board of Industrial and Financial Reconstruction & Anr. (1996) 218 ITR 140 (SC) : 1996 TaxPub(DT) 787 (SC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :



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