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| The Tax Publishers2020 TaxPub(DT) 4621 (Bom-HC) : (2021) 430 ITR 0121 : (2021) 277 TAXMAN 0443 INCOME TAX ACT, 1961
Section 263
Assessee's case was clearly a case of 'No consideration' as opposed to mere 'inadequate consideration'. This was a clear case of non-application of mind to the material on record, without even going into the issue as to whether material supplied by assessee was adequate or inadequate to determine its claim for deduction under section 10B made order passed by AO as erroneous and prejudicial.
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Revision under section 263 - Erroneous and prejudicial order - Lack of enquiry on AO's part -
CIT held order passed by AO as erroneous and prejudicial to the interest of revenue on the ground that AO allowed assessee's claim for deduction under section 10B without making any enquiry. Assessee's case was that in invoking revision jurisdiction CIT made reference to the SFIO report and thus CIT acted under dictation. Held: Analysis of assessment order, indicated that in its first three paragraphs, there was a reference to the nature of business undertaken by assessee and reference of case of assessee under section 92CA to the TPO for determination of arm's length price in respect of international transactions reported for the relevant assessment year. Then paragraph 4, along with its sub-paragraphs 4.1 to 4.7 dealt with disallowance under section 40(a)(ia) in the context of commission exceeding Rs. 18.00 crore paid by the assessee during the relevant assessment year, even though the TDS on the commission paid was negligible. Paragraph 5 dealt with the expenditure incurred towards research and development. Paragraph 6 deals with the issue of depreciation on UPS. Finally, paragraph 7 deals with computation on the basis of opinion in paragraphs 4, 5 and 6. Thus, on the issue of deduction under section 10B there was absolutely no consideration and yet, AO had allowed such deduction. This was clearly a case of 'no consideration' as opposed to mere 'inadequate consideration'. This was a clear case of non-application of mind to the material on record, without even going into the issue whether material supplied by assessee was adequate or inadequate to determine its claim for deduction under section 10B. In such a situation, it was not possible to say that the CIT, in this case, acted under dictation from any extraneous authority and, therefore, order passed by AO was rightly treated as erroneous and prejudicial.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2007-08
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