A T AND S INDIA PRIVATE LIMITED,NANJANGUD,MYSORE V. PRINCIPAL COMMISSIONER OF INCOME TAX,KOLKATA-2, KOLKATA

ITA 1220/KOL/2024

AI Insights

The case revolves around an appeal by A T and S India Private Limited against the order of the Pr. Commissioner of Income Tax, Kolkata-2, which revised the assessment order for the assessment year 2018-19 under section 263 of the Income Tax Act. The PCIT's revision was based on two grounds: the disallowance of a warranty provision expense and the alleged excess claim of brought forward unabsorbed losses and depreciation. The Tribunal examined whether the original assessment order was erroneous and prejudicial to the interest of the Revenue, ultimately finding that it was not, as the provisions for warranty were based on technical estimates and past experiences, and the claims of unabsorbed losses and depreciation were in accordance with the law and previous assessments.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 473945 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2018-2019
• Other Referred Cases: Rotork Controls India Pvt. Ltd. Vs. CIT, Malabar Industrial Co. Ltd. Vs. CIT, CIT Vs. Max Indian Ltd., CIT Vs. G M Mittal Stainless Steel Pvt. Ltd., CIT Vs. Gabriel India Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHIJIT KUNDU
• Assessee Lawyers: ANUP SINHA
• Keywords: Set aside; Business income; Opportunity of being heard; Depreciation; Principle of natural justice; Assessment record; Unabsorbed depreciation; Revision of order
• Section: 143(3); 263; 208; 13; 144C

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI PRADIP KUMAR CHOUBEY, JM ITA No.1220/KOL/2024 (Assessment Year: 2018-19) A T and S India Private Limited 12A, Industrial Area Nanjangud H.O, Mysore-571301, Karnataka Vs. PCIT, Kolkata-2 Aaykar Bhavan, P-7, Chowringhee Square, Kolkata-700069, West Bengal (Appellant) (Respondent) PAN No. AAECA2930J Assessee by : Shri Anup Sinha, AR Revenue by : Shri Abhijit Kundu, DR Date of hearing: 09.12.2024 Date of pronouncement : 21.01.2025 O R D E R Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the Pr. Commissioner of Income Tax, Kolkata-2 (hereinafter referred to as the “Ld. PCIT”] dated 31.03.2024 for the AY 2018-19. 02. The common issue raised in all the grounds is against the invalid exercise of revisionary jurisdiction by PCIT u/s 263 of the Act thereby set aside and revising the order passed u/s 143(3) read with section 144C of the Act on the ground that the same is erroneous and so far as prejudicial to the interest of the Revenue. 03. The facts in brief are that the assessee filed the return of income for the instant assessment year on 29.11.2018, declaring total income of ₹32,25,51,500/-. The case of the assessee was selected for scrutiny Page | 2 ITA No. 1220/KOL/2024 AT & S India Pvt. Ld.; A.Y. 2018-19 and the assessment u/s 143(3) was framed vide order dated 15.11.2021, assessing the income at Rs. 35,48,74,770/-. Thereafter the ld. PCIT on perusal of the assessment records found that the assessment so framed was erroneous in so far as prejudicial to the interest of the Revenue for two reasons namely (i) the assessee company has debited ₹2,42,60,000/- in Profit and Loss account on account of provision for warranty under the head of other expenses which were not allowable and (ii) that assessee has reduced ₹31,35,42,299/- on account of brought forward unabsorbed losses and depreciation from business income of ₹61,92,86,177/- to arrive at a gross total income of ₹32,25,52,500/-. According to the PCIT at the end of A.Y. 2017-18 only unabsorbed depreciation of ₹9,23,52,053/- remained to be adjusted against the income of the subsequent assessment year. However, the assessment order for A.Y. 2018-19, stated that brought forward unabsorbed losses and depreciation amounting to ₹31,35,42,299/- was set off against the current year income and thus, thereby, claiming the excess brought forward losses to the tune of ₹22,11,90,246/- i.e.(Rs. 31,35,42,299-Rs. 9,23,52,053/-. Accordingly notice u/s 263 of the Act was issued 08.01.2024 as show cause notice to the assessee as to why the assessment framed by the ld. AO should not be revised for being erroneous and prejudicial to the interest of the Revenue for the reasons stated hereinabove. The assessee replied to the said show cause notice. The PCIT after taking into consideration the reply of the assessee that revised the assessment order passed u/s 143(3) read with section 144C of the Act and directed the ld. AO to modify the assessment order for taxing the correct amount after verifying those discrepancies as pointed out in the show cause notice after allowing reasonable opportunity of hearing to the assessee. Page | 3 ITA No. 1220/KOL/2024 AT & S India Pvt. Ld.; A.Y. 2018-19 04. The ld. AR vehemently submitted before us that the order passed by the ld. PCIT u/s 263 of the Act is without jurisdiction as the assessment was validly framed u/s 143(3) read with section 144C of the Act dated 15.11.2021 which was neither erroneous nor prejudicial to the interest of the Revenue. The ld. AR pointed out that the revisionary jurisdiction was invoked for two reasons as stated in the show cause notice copy of which is available at page no.27 and 28 of the Paper Book. The ld. AR thereafter referred to the reply dated 14.02.2024, filed by the assessee before the ld. PCIT, the copy of which is available at page no.29 to 54 of the Paper Book. The ld. AR stated so far as the first issue is concerned which is qua charging provisions for warranty of ₹2,42,60,000/-, the same were provided based on the technical estimate as the assessee is supplying PCBs manufactured by the assessee company. The ld AR submitted that products sold to customers on the guarantee of seamless functioning of the product. The ld. AR submitted that the assessee has been allowed the similar warranty provisions in all the proceeding and succeeding assessment years where the assessments were framed u/s 143(3) read with section 144C of the Act and in none of the assessment years these provisions have been disallowed by the Revenue. The ld. AR also referred to the decisions of Hon'ble Apex Court in the case of Rotork Controls India Pvt. Ltd. Vs. CIT (2009) 180 Taxman 422 (SC), wherein the Hon'ble Apex Court has held that warranty provisions are allowed where the same were based upon technical evaluation. The ld. AR submitted in present case also all the provisions were created on technical evaluation and the past experience and therefore, the assessment order cannot said to be erroneous and prejudicial to the interest of the Revenue on this score. Similarly, the ld. AR submitted that so far as the second issue on which the ld. PCIT invoked the jurisdiction u/s 263 of the Act, is Page | 4 ITA No. 1220/KOL/2024 AT & S India Pvt. Ld.; A.Y. 2018-19 concerned , the claim made by the assessee of ₹31,35,42,299/- on account of brought forward unabsorbed losses and unabsorbed depreciation was correct and as per the provisions of the Act and has been determined on the basis of assessments framed by the ld. Assessing Officer. The ld. AR referred to page no. 9 of tax audit report, a copy of which is available at page no.79 to 93 of he Paper Book (particularly page no.189), wherein the tax audit auditor has stated the unabsorbed depreciation being assessed at ₹61,00,55,596/- out of which an amount of Rs. 51,77,03,543/- was set off in the return of income for A.Y. 2017-18 and the remaining amount of Rs. 9,23,52,053/- was carried forward to the subsequent year. The ld. AR submitted that the ld. PCIT took the said figure from page no.39 of the tax audit report, whereas the assessed unabsorbed depreciation by the ld. AO was ₹85,55,67,855/-. Therefore, the ld. PCIT has grossly erred in taking the figure of unabsorbed depreciation and brought forward losses of ₹61,00,55,596/- instead of correct figure of ₹88,55,69,855/- and consequently, coming to the conclusion that the claim by the assessee of brought forward unabsorbed depreciation was excess to the tune of ₹22,11,90,246/-. Therefore, invocation of jurisdiction u/s 263 of the Act on this score is also invalid and not sustainable in the eyes of the law. Thereafter, the ld. AR brought to the notice of the Bench the unabsorbed brought forward losses and unabsorbed depreciation as per the notice u/s 263 and as assessed by the ld. AO from A.Y. 2010-11 to 2013-14, which were to the tune of ₹65,36,55,033/- and ₹85,55,67,855/- respectively. The ld. AR referred to page no.106, which is a copy of the order passed u/s 254/ 143(3) read with section 144C(3) of the Act dated 25.04.2017, assessing the revised unabsorbed deprecation at ₹9,61,42,010/- for A.Y. 2010-11, page no.99 which is a copy of the order u/s 154/251/143(3) dated 18.10.2016, assessing the deprecation at Page | 5 ITA No. 1220/KOL/2024 AT & S India Pvt. Ld.; A.Y. 2018-19 ₹74,16,83,086/-, page no.102 of the Paper Book having order u/s 154/143(3) of the Act dated 30.05.2018, assessing the business loss/ of ₹54,06,92,584/- for A.Y. 2012-13 and page no. 105 having an order dated 18.10.2016, assessing the loss at ₹13,07,05,208/-. Thus, the total unabsorbed depreciation and loss as per the said orders as referred above were ₹65,36,55,033/- and 8,55,67,855/- respectively. The ld. AR further contended that the information complied and contained in the audit report is wrong as the same was complied on the basis of assessment orders and not the orders giving appeal effect to the appellate orders and therefore is not binding as the figures are apparently wrong as has been clarified in the case of 1.Rajkot Engineering Association and Others 2. Tax Advocates Association and Others Vs. Union of India (1986) 162 ITR 28(Guj). 05. The ld. AR therefore, finally submitted that the claim of the assessee qua the brought forward of unabsorbed depreciation and losses is in accordance with the above said orders passed by the d AO giving appeal effect to the order of the appellate authorities and therefore, the order passed by the ld. AO allowing the set off of unabsorbed losses and depreciation is correct and the jurisdiction u/s 263 of the Act is not available to the PCIT. The ld. AR stated that before exercising the revisionary jurisdiction u/s 263 of the Act, the twin conditions have been set satisfied concurrently i.e. the order has to be erroneous as well as prejudicial to the interest of the Revenue. In the present case, as has been submitted hereinabove on both the counts, the order passed by the ld. AO is correct and as per the provisions of the Act and therefore, cannot be said to be erroneous and prejudicial to the interest of the Revenue. In this case none of the conditions as envisaged in section 263 of the Act were satisfied and therefore, the jurisdiction u/s 263 of the Act is not available to the ld. Page | 6 ITA No. 1220/KOL/2024 AT & S India Pvt. Ld.; A.Y. 2018-19 PCIT. The ld. AR argued that even the jurisdiction is not available if one of the two conditions is satisfied. In defense of his arguments the ld. AR relied on the case of the Hon'ble Apex Court in the case of Malabar Industrial Co. Ltd. Vs. CIT (2000) 243 ITR 83 (SC). The ld. AR further contended that where two views are possible and ITO has taken one of the possible views with which the PCIT does not agree then the assessment order cannot be treated as erroneous or prejudicial to the interest of the Revenue, unless the view taken by the ld. AO is unsustainable in law. The ld. AR submitted that in the present case, the ld. AO has taken a view which has been accepted by the Department in the preceding and succeeding assessment years so far as charging the provisions of warranty is concerned and as regards to the second issue of claim of excess unabsorbed depreciation is concerned, there is no excess claim and whatever has been the claimed is in accordance with the appeal effect orders passed by the ld. AO as have been referred to above. The ld. AR stated that the information contained in the tax audit report is on the basis of assessment orders passed whereas the claim made by the assessee is on the basis of orders passed by the ld. AO giving appeal effect to appellate orders. The ld. AR therefore submitted that the assessment framed by the ld. AO is neither erroneous nor prejudicial to the interest of the Revenue. In defense of his argument, the ld. AR relied on the decision of CIT Vs. Max Indian Ltd. (2007) 295 ITR 282 (SC) and CIT Vs. G M Mittal Stainless Steel Pvt. Ltd. (2003) 263 ITR 255 (SC). The ld. AR also referred to the decision of CIT VS. Gabriel India Ld. (1993) 203 ITR 108 (Bom). Finally, the ld. AR submitted that the jurisdiction invoked by the ld. PCIT u/s 263 of the Act is invalid and bad in law and therefore, may kindly be quashed. Page | 7 ITA No. 1220/KOL/2024 AT & S India Pvt. Ld.; A.Y. 2018-19 06. The ld. DR on the other hand strongly rebutted the arguments put forth by the ld. AR by submitting that the provisions of warranty charged by the assessee to the profit and loss account is not apparently allowable and admissible under the Act as the provisions are based on estimated basis as there was no clear cut crytalisation of the claim against the assessee. The ld. DR submitted that the provisions were created on a hypothetical basis and also that the ld. AO has not examined these provisions at all. Therefore, the order passed by the ld. AO has suffered the vice of being erroneous and prejudicial to the interest of the Revenue. So far as the second issue on which the jurisdiction u/s 263 of the Act was invoked by the PCIT, the ld. DR contended that apparently, the tax auditor of the assessee had picked up figures after verification from the records and therefore apparently, the assessee has claimed higher brought forward unabsorbed losses/ depreciation. The ld. DR submitted that the jurisdiction u/s 263 of the Act was rightly invoked by the ld. PCIT so that this can be examined and verified at the level of the AO and assessed accordingly. 07. We have heard the rival conventions and perused the materials available on record. We observed that in the impugned case, the assessment was framed by the ld. AO u/s 143(3) read with section 144C(3) read with section 144B of the Act vide order dated 15.11.2001 copy of which is available in the paper book at page no.15 to 18. The ld. PCIT revised the said order on two grounds namely one the assessee debiting and charging an amount of ₹2,42,60,000/- on account of provisions for warranty in the profit and loss account which according to the ld. PCIT is not allowable expenditure and the second excessive claim of brought forward of unabsorbed losses / depreciation to the tune of ₹22,11,90,246/- against the current year Page | 8 ITA No. 1220/KOL/2024 AT & S India Pvt. Ld.; A.Y. 2018-19 income. According to PCIT, due to the above two reasons, the assessment framed by the AO is rendered as erroneous in so far as prejudicial to the interest of the Revenue. A show cause notice u/s 263 of the Act was issued on 08.01.2024 as to why the assessment so framed should not be cancelled and revised which was comprehensively replied by the assessee submitting that the two items as proposed di not render the assessment order as erroneous and prejudicial to the interest of the revenue and in fact the basic conditions for invoking the jurisdiction u/s 263 of the Act were also not fulfilled. However, the submissions of the assessee did not find favour with the PCIT and he accordingly by passing order u/s 263 of the Act revised the assessment directing the ld. AO to modify the assessment order after verifying the above discrepancies and after allowing proper opportunity of hearing to the assessee. Now, the issue for adjudication before us is that whether the assessment order is really erroneous and prejudicial to the interest of the Revenue. We observe that so far as the provisions for warranty on sale of PCBs are concerned same were created to take care of any defect in future in PCBs manufactured by the assessee. Pertinent to state that the assessee company is engaged in exports of its manufactured goods namely printed circuit boards (in short, PCBs) to AT&S Austria for distribution in the overseas markets as per clause 5.4(b) of the distribution agreement entered between the assessee AT&S India Pvt Lgtd. and the AT&S Austria and all the risks associated with product defects or non-conformities with the standard norms are borne by assessee. Therefore, in order to meet the expenses connected therewith, the assessee has to provide for provisions for warranty in its books of account which is based upon a technical estimate by a technical team. We note that the assessee has been charging similar provisions of warranty based on the technical team in the earlier as Page | 9 ITA No. 1220/KOL/2024 AT & S India Pvt. Ld.; A.Y. 2018-19 well as succeeding assessment years right from A.Y. 2013-14 to 2020-21 and the department has accepted the said provisions credited for these warranties in the assessments framed u/s 143(3) of the Act. In the current year also, we note that the assessee has credited similar provisions for warranty to take care of any defects or non- conforming in the products sold by it .i.e. PCBs which are based on the technical estimate as has been done in the proceeding and succeeding assessment years. In our opinion, the said provisions charged to the Profit and Loss account cannot be said to have rendered the assessment order as erroneous and prejudicial to the interest of the Revenue on the ground of non-crystallization . The case of the assessee find force from the decision of Rotork Controls India Pvt. Ltd. (supra), wherein the Hon'ble Apex court has held that provision for warranty charged on the basis of technical evaluation and past experience was allowable expense. Therefore, so far as the first issue is concerned, we are inclined to note that the jurisdiction by the PCIT u/s 263 of the Act has wrongly been invoked. With regards to the excessive claim of brought forward unabsorbed loss / depreciation, we observe that the claim made by the assessee is based upon the orders passed by the ld. AO giving appeal effect to the various appellate orders the copies of which are available at page nos. 99,102,105 and 106 whereas the figures picked up by the tax auditors in para 32A of the tax audit report from the assessment orders. The copy of TAR is available at page no.79-93. 08. We note that the figures of unabsorbed loss/ depreciation were appearing in the assessment orders passed by the ld. AO which were before giving appeal effect to the appellate orders. We have fully examined these orders as these are available in the paper book and find that even the claim of assessee is in accordance with the orders Page | 10 ITA No. 1220/KOL/2024 AT & S India Pvt. Ld.; A.Y. 2018-19 passed by the AO u/s 254/143(3) of the Act. For the sake of ready reference the unabsorbed depreciation as has been picked up by the tax auditors as taken by ld PCIT and as has assessed by the ld. AO are extracted below:- SL no. Assessment Yer Assessed unabsorbed depreciation as per the notice under section 263 of the Act (Rs.) Assessed unabsorbed deprecation by the ld. AO (Rs.) 1. 2010-11 9,61,42,010 9,61,42,010 2. 2011-12 4,78,76,170 28,27,50,738 3. 2012-13 46,60,37,416 34,59,69,899 4. 2013-14 Nil 13,07,05,208 Total 61,00,55,596 85,55,67,855 09. We note that the figures of brought forward losses/ deprecation picked up by the tax auditor from A.Y. 2010-11 to 2012-13, are on the basis of orders passed u/s 143(3) against which the appeals were already filed and decided as well. Even the AO passed orders giving appeal effect. Therefore, the assessment order was very much in accordance with the law. In our opinion, the order passed by ld. AO is neither erroneous nor prejudicial to the interest of the Revenue. In our considered view , before invoking the jurisdiction u/s 263 of the Act, the PCIT has to satisfy the twin conditions as envisaged in Section 263 of the Act concurrently which in our opinion is not satisfied at all and therefore, the jurisdiction has been resorted to invalidly. The case of the assessee is squarely covered by the decision of Hon'ble Apex court in the case of Malabar Industrial Co. Ltd. (supra), wherein the Hon'ble Court has held as under:- “5. To consider the first contention, it will be apt to quote section 263(1) which is relevant for our purpose : \"Revision of orders prejudicial to revenue.—(1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous insofar as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances Page | 11 ITA No. 1220/KOL/2024 AT & S India Pvt. Ld.; A.Y. 2018-19 of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment.\" 6. A bare reading of this provision makes it clear that the pre-requisite to exercise of jurisdiction by the Commissioner suo motu under it, is that the order of the ITO is erroneous insofar as it is prejudicial to the interests of the revenue. The Commissioner has to be satisfied with twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the revenue. If one of them is absent - if the order of the ITO is erroneous but is not prejudicial to the revenue or if it is not erroneous but is prejudicial to the revenue - recourse cannot be had to section 263(1). 7. There can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer; it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. The phrase 'prejudicial to the interests of the revenue' is not an expression of art and is not defined in the Act. Understood in its ordinary meaning, it is of wide import and is not confined to loss of tax. The High Court of Calcutta in Dawjee Dadabhov & Co. v. S.P. Jain [1957] 31 ITR 872 , the High Court of Karnataka in CIT v. T. Narayana Pai [1975] 98 ITR 422, the High Court of Bombay in CIT v. Gabriel India Ltd. [1993] 203 ITR 208 and the High Court of Gujarat in CIT v. Smt. Minalben S. Parikh [1995] 215 ITR 81/ 79 Taxman 184 treated loss of tax as prejudicial to the interests of the revenue. 8. Mr. Abraham relied on the judgment of the Division Bench of the High Court of Madras in Venkatakrishna Rice Co. v. CIT [1987] 163 ITR 129 interpreting 'prejudicial to the interests of the revenue'. The High Court held, \"In this context, it must be regarded as involving a conception of acts or orders which are subversive of the administration of revenue. There must be some grievous error in the Order passed by the ITO, which might set a bad trend or pattern for similar assessments, which on abroad reckoning, the Commissioner might think to be prejudicial to the interests of Revenue Administration\". In our view, this interpretation is too narrow to merit acceptance. The scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the revenue. If due to an erroneous order of the ITO the revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the revenue. 9. The phrase 'prejudicial to the interests of the revenue' has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the revenue, for example, when an ITO adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the ITO has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the ITO is unsustainable in law. It has been held by this Court that where a sum not Page | 12 ITA No. 1220/KOL/2024 AT & S India Pvt. Ld.; A.Y. 2018-19 earned by a person is assessed as income in his hands on his so offering, the order passed by the Assessing Officer accepting the same as such will be erroneous and prejudicial to the interests of the revenue - Rampyari Devi Saraogi v. CIT [1968] 67 ITR 84 (SC) and in Smt. Tara Devi Aggarwal v. CIT [1973] 88 ITR 323 (SC). 10. In the instant case, the Commissioner noted that the ITO passed the order of nil assessment without application of mind. Indeed, the High Court recorded the finding that the ITO failed to apply his mind to the case in all perspective and the order passed by him was erroneous. It appears that the resolution passed by the board of the appellant-company was not placed before the Assessing Officer. Thus, there was no material to support the claim of the appellant that the said amount represented compensation for loss of agricultural income. He accepted the entry in the statement of the account filed by the appellant in the absence of any supporting material and without making any inquiry. On these facts, the conclusion that the order of the ITO was erroneous is irresistible. We are, therefore, of the opinion that the High Court has rightly held that the exercise of the jurisdiction by the Commissioner under section 263(1) was justified. 11. The second contention has to be rejected in view of the finding of fact recorded by the High Court. It was not shown at any stage of the proceedings that the amount in question was fixed or quantified as loss of agricultural income and, admittedly, it is not so found by the Tribunal. The further question whether it will be agricultural income within the meaning of section 2(1A) of the Act as elucidated by this Court in CIT v. Raja Benoy Kumar Sahas Roy[1957] 32 ITR 466 does not arise for consideration. It is evident from the order of the High Court that the findings recorded by the Tribunal that the appellant stopped agricultural operation in November 1982 and the receipt under consideration did not relate to any agricultural operation carried on by the appellant, were not questioned before it. Though we do not agree with the High Court that the amount was paid for breach of contract as indeed it was paid in modification/relaxation of the terms of the contract, we hold that the High Court is justified in concluding that the said amount was a taxable receipt under the head 'Income from other sources'. 12. We find no merit in the appeal and dismiss the same with costs.” 010. Similarly, an order cannot be termed as erroneous unless it is not accordance with law. The ld. PCIT has to give a finding as to how the assessment is erroneous and prejudicial to the interest of the revenue. The ld. PCIT cannot invoke the jurisdiction merely to get some issues examined and verified by the AO. The ld. PCIT has to come to definitive conclusion that based on his perusal of the assessment records and after taking into account the reply of the assessee , the assessment so framed by the AO is erroneous and Page | 13 ITA No. 1220/KOL/2024 AT & S India Pvt. Ld.; A.Y. 2018-19 prejudicial to the interest of the revenue. In our opinion the ld PCIT has form an opinion in a judicious manner because on the basis of his opinion the whole machinery of re-examination and reconsideration of the assessment order would be set in motion. Therefore, ld. PCIT has invoked the revision proceedings without forming a judicious opinion as to the order being erroneous and prejudicial to the interest of the revenue and the PCIT cannot re vise the assessment merely on the ground that AO has not made elaborate discussion with regards to the impugned issues. The case of the assessee is supported by the decision of the Hon'ble Bombay High Court in case of Gabriel India Ltd.(supra), wherein Hon'ble court held as under:- “an order cannot be termed as erroneous unless it is not in accordance with law. The Hon'ble High Court held that the power of CIT is a quasi-judicial act and as such, the CIT has to form an opinion in a judicious manner because on the basis of the said opinion the whole machinery of re-examination and reconsideration of an order of assessment, which has already been concluded, is again set in motion. It was further held that the said opinion of CIT is an important decision and the same cannot be based on the whims or caprice of the CIT. It was further held that when the AO passed assessment order after verification the said order cannot be termed as erroneous simply because in his order he has not made an elaborate discussion in this regard” 011. Further where two views are possible and AO has taken one view with which the ld. PCIT does not agree , even then the assessment framed by the AO cannot be treated as erroneous and prejudicial to the interest of the revenue. In the present case the AO has accepted the claim of the assessee qua provisions for warranty on sale of PCBs of Rs. 2,42,60,000/- based on the fact that the same were allowed by the revenue in the preceding and succeeding assessment years and the claim was based upon the technical estimate and past experience. Even the case if the assessee is squarely covered by the Hon’ble Apex Court decision in the case of Rotork Controls India Pvt. Ltd. (supra). Therefore, the view taken by the AO cannot be said to be not in accordance with law or not sustainable in law. Again, the case of the Page | 14 ITA No. 1220/KOL/2024 AT & S India Pvt. Ld.; A.Y. 2018-19 assessee is squarely covered by the decision of Hon’ble Apex Court in the case of CIT Vs Max India Ltd. (supra) wherein the Hon’ble Court has held that where two views are possible and the AO has taken one of the possible view , the same can not be termed as erroneous justifying the revision proceedings u/s 263 of the Act. Similar view has been taken by the Hon’ble Apex Court in CIT Vs G M Mittal Stainless Steel Pvt Ltd.(Supra). 012. Considering these facts and circumstances and the ratio laid down by the Hon'ble Courts as discussed above, we are inclined to quash the revisionary proceedings as well as consequent order by the ld. PCIT. 013. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 21.01.2025. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated:21. 01.2025 Sudip Sarkar, Sr.PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata "