The Tax Publishers2020 TaxPub(DT) 4706 (Mad-HC)

INCOME TAX ACT, 1961

Section 263

Though allowance of assessee's claim under section 72A by AO was not supported by any reasons set out in the order of assessment, but AO did refer to section 32(2) of SICA and judgment of Supreme Court in Indian Shaving Products Ltd. v. Board of Industrial and Financial Reconstruction & Anr. (1996) 218 ITR 140 (SC) View taken by AO to the effect that claim of assessee was liable to be allowed in the light of provisions of section 32(2) of SICA and its interpretation by Supreme Court was thus, correct one and, therefore, action of AO though prejudicial, could hardly be termed as 'erroneous' in so far as AO had followed dictum laid down by Supreme Court in case of Indian Shaving Products. Thus, in the absence of concurrent satisfaction of the two conditions under section 263, invocation of revisionery jurisdiction as regards allowance of assessee's claim of carry forward of losses pertaining to merged entity under section 72A was not justified.

Revision under section 263 - Erroneous and prejudicial order - Allowance of assessee's claim without affording any reason but in the light of dictum laid down by Supreme Court -

Assessee in terms of judgment of Supreme Court in Indian Shaving Products Ltd. v. BIFR (1996) 218 140 : 1996 TaxPub(DT) 787 claimed carry forward of losses pertaining to merged entity under section 72A. AO allowed the claim. CIT held order passed by AO as erroneous and prejudicial to the interest of revenue. Tribunal quashed order passed under section 263. CIT challenged this by way of appeal filed under section 260A. As per CIT allowance of assessee's claim was not supported by any reasons. Held: Though allowance of assessee's claim under section 72A by AO was not supported by any reasons set out in the order of assessment, but AO did refer to section 32(2) of SICA and judgment of Supreme Court in Indian Shaving Products Ltd. View taken by AO to the effect that claim of assessee was liable to be allowed in the light of provisions of section 32(2) of SICA and its interpretation by Supreme Court was thus, correct one and, therefore, action of AO though prejudicial, could hardly be termed as 'erroneous' in so far as AO had followed dictum laid down by Supreme Court in case of Indian Shaving Products Ltd. v. Board of Industrial and Financial Reconstruction & Anr. (1996) 218 ITR 140 (SC). Thus, in the absence of concurrent satisfaction of the two conditions under section 263, action of CIT was contrary to statute and was set aside.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2005-06



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