Sh Naraya Built UP (India) Pvt. Ltd., Gwalior V. C.I.T., Gwalior

ITA 140/AGR/2013

• Counselvise Citation: 14020314 RSA 2013
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 13-08-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 02-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIRUDH KUMAR
• Assessee Lawyers: MANUJ SHARMA S
• Keywords: Opportunity of being heard; Principle of natural justice; Period of limitation; Retrospective amendment; Tax effect
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.140/AGRA/ 2013 ASSESSMENT YEAR: 2008-2009 SHREE NARAYAN BUILT UP (I) P. LTD. VS. COMMISSIONER OF INCOME TAX, 704, SILVER ESTATE, THATIPUR, GWALIOR. GWALIOR (PAN AAGCS 5801 C) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJENDRA SHARMA & SHRI MANUJ SHARMA, ADVOCATES RESPONDENT BY : SHRI ANIRUDH KUMAR, CIT., D.R. DATE OF HEARING : 13.08.2013 DATE OF PRONOUNCEMENT : 27.08.2013 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 18.03.2013 PASSED BY THE LEARNED CIT, GWALIOR FOR A .Y. 2008-09. 2. THE GROUNDS RAISED BY THE ASSESSEE IN THE APPEAL IS AGAINST THE PASSING OF ORDER UNDER SECTION 263 OF THE I.T. ACT BY THE C IT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE CIT ON EXAMINATION OF ASSESSMENT ORDER, IT WAS OBSERVED THAT IN THIS CASE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME AT NIL, AFTER CLAIMIN G DEDUCTION UNDER SECTION 80IA(4)(I) OF THE ACT. THE A.O. COMPLETED ASSESSME NT UNDER SECTION 143(3) ITA NO.140 /AGRA/2013 A.Y. 2008-09 2 OF THE ACT ALLOWING DEDUCTION UNDER SECTION 80IA EX CEPT ON INTEREST INCOME. THE CIT ON EXAMINATION FOUND THAT DEDUCTION CLAIM O F THE ASSESSEE IS NOT ALLOWABLE SINCE DEDUCTION IN RESPECT OF PROFIT AND GAIN FROM UNDERTAKING OR ENTERPRISE ENGAGED IN INFRASTRUCTURE DEVELOPMENT IS TO BE ALLOWED UNDER THIS SECTION ONLY TO THOSE INDUSTRIAL UNDERTAKINGS OR EN TERPRISES WHICH DEVELOPED OR OPERATED AND MAINTAINING INFRASTRUCTURE FACILITY BY THEIR OWN FUNDS. ASSESSEE HAS NOT FULFILLED THE CONDITION AS PRESCRIBED IN TH E SECTION. AS PER EXPLANATION BELOW SUB-SECTION (13) OF SECTION 80IA INSERTED BY FINANCE ACT 2009 WITH RETROSPECT EFFECT FROM 01.04.2000 THE ASSESSEE CANN OT CLAIM EXEMPTION UNDER SECTION 80IA BECAUSE IT IS CLEARLY MENTIONED IN THE AFORESAID EXPLANATION. THE CIT ALSO FOUND THAT THE A.O. DID NOT VERIFY THE UNS ECURED LOAN OF RS.4,85,35,831/-. THE CIT REJECTED THE ASSESSEES S UBMISSION OBSERVING THAT AS PER SECTION 80IA AND IN VIEW OF SUB-SECTION 13 I T IS CLEAR THAT ASSESSEE IS NOT ENTITLED TO DEDUCTION BECAUSE THE COMPANY EMPLO YEE EXECUTED THE WORK CONTRACT ALLOWED BY M.P. RURAL ROAD DEVELOPMENT AUT HORITY. THE CIT HELD AS UNDER :- (CIT PAGE NO.8 & 9) 9. IT IS CLEAR FROM THE ABOVE AMENDMENT THAT AN AS SESSEE CAN CLAIM A DEDUCTION UNDER SECTION 80IA(4) ONLY IF, IT MAKES THE INVESTMENT IN THE ELIGIBLE PROJECT AND ITSELF EXECU TES THE DEVELOPMENT WORK. AN ASSESSEE WILL BE DENIED A DEDU CTION U/S 80IA (4) IF IT ENTERS INTO A CONTRACT WITH ANOTHER PERSON, FOR EXECUTING A WORKS CONTRACT. WHILE THOSE WHO PARTICI PATE IN AN ELIGIBLE PROJECT AS PER THE IMPUGNED SECTION BY WAY OF INVESTMENT ARE ENTITLED TO SEEK A DEDUCTION U/S 80IA(4), ON TH E OTHER HAND THOSE ASSESSEES WHO MERELY EXECUTE A CIVIL CONSTRUC TION WORK OR ITA NO.140 /AGRA/2013 A.Y. 2008-09 3 OTHER WORK CONTRACT ARE NOT ENTITLED TO CLAIM SUCH A DEDUCTION. THE CONTRACTS EXECUTED BY THE ASSESSEE, PURSUANT TO WHICH IT HAS CLAIMED A DEDUCTION U/S 80IA(4) MUST THEREFORE, BE MEASURED FROM THE ABOVE METRICS LAID DOWN BY THE HONBLE COU RTS IN THE MATTER OF WORKS CONTRACT. I HAVE PERUSED THE COPIES OF THE AGREEMENTS WITH THE M.P. RURAL ROAD DEVELOPMENT AUT HORITY WHICH WERE EXECUTED BY THE ASSESSEE FOR EXECUTING T HE IMPUGNED CONTRACTS, WHICH ARE CLAIMED TO FALL WITHIN THE DOM AIN OF SECTION 80IA(4). IT IS CLEAR FROM THEM THAT THE UNDERLYING STATUS OF THE ASSESSEE IN EACH OF THEM IS THAT OF A CONTRACTOR, W HO HAS BEEN ENGAGED IN A WORKS CONTRACT. 10. IT IS CLEAR FROM THE ABOVE THAT THE ASSESSEE HA D EXECUTED A WORKS CONTRACT IN RESPECT OF EACH OF THE PROJECTS F OR WHICH IT HAS CLAIMED A DEDUCTION U/S 80IA(4) OF THE ACT. THE ASS ESSEE HAS ALSO BEEN UNABLE TO ESTABLISH AS TO HOW IT MADE AN INVES TMENT IN THE PROJECT, APART FROM NOT BEING ABLE TO PROVE THAT IT HAD NOT EXECUTED A WORKS CONTRACT AS IS EVIDENT ABOVE. THE RELIANCE PLACED BY ASSESSEE ON THE JUDGEMENTS IN CASES OF AC IT VS. BHARAT UDYOG LTD. (2008) 24 SOT 412 (MUM) AND CIT V S. LAXMI CIVIL ENGINEERING P. LTD. (2011) 2011 TPI 654 (ITAT -PUNE) DOES NOT COME TO THE ASSISTANCE OF THE ASSESSEE BECAUSE THE ISSUE AT HAND IN THOSE CASES WAS WHETHER MERELY A DEVELOPER, WHO HAD NOT OPERATED AND MAINTAINED AN INFRASTRUCTURE FACIL ITY, WAS ENTITLED TO DEDUCTION U/S 80IA WHEREAS IN THE CASE OF THE ASSESSEE, THE AGREEMENTS ENTERED INTO BY THE ASSESSEE WITH TH E M.P. RURAL ROAD DEVELOPMENT AUTHORITY REVEAL THAT THE ASSESSEE WAS NOT IN ANY WAY A DEVELOPER BUT WAS ONLY A CONTRACTOR. THUS , THESE CASE LAWS ARE NOT APPLICABLE TO THE FACTS OF THE ASSESSE ES CASE. 11. IT IS FOUND THAT THERE IS NO DISPUTE ABOUT THE FACT THAT AS THE LAW STANDS NOW IN THE LIGHT OF RETROSPECTIVE INSERT ION OF EXPLANATION BELOW TO SECTION 80IA(13), THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80IA(4).THIS EXPLANATION , INTRODUCED BY FINANCE ACT, 2009 WITH RETROSPECTIVE EFFECT FROM 1 ST APRIL, 2000, PROVIDES THAT FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT NOTHING CONTAINED IN THIS SECTION (I. E. 80IA) SHALL APPLY IN RELATION TO A BUSINESS REFERRED TO SUB-SEC TION (4) WHICH. (NOT READABLE) ITA NO.140 /AGRA/2013 A.Y. 2008-09 4 4. LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE A.O. MADE ASSESSMENT UNDER SECTION 143(3) OF THE ACT AND EXAM INED THE CLAIM OF THE ASSESSEE. THE RELEVANT ABSTRACT POINTED OUT BY THE LD. AUTHORIZED REPRESENTATIVE FROM A.OS. ORDER DATED 29.12.2010 I S REPRODUCED AS BELOW:- (PAPER BOOK PAGE NO.26 & 27) THE ASSESSEE WAS ENGAGES IN THE ROAD CONSTRUCTION WORK DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE HAS SHOW N CONTRACT RECEIPT OF RS.515.41 LACS DURING THE YEAR WHEREAS CONTRACT RECEIPT WAS OF RS.495.65 LACS DURING THELAST YEAR. THE ASSESSEE HA S DECLARED GROSS PROFIT @ 15.70% DURING THE YEAR WHEREAS THE GROSS P ROFIT WAS @ 13.57% DURING THE LAST YEAR. HENCE THE ASSESSEE HAS DECLARED BETTER GROSS PROFIT IN COMPARISON OF LAST YEAR. THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IA OF THE INCOME TAX ACT. THE REPLY OF THE ASSESSEE PLACED ON RECORD. IT WAS SUBMITTED THAT SINCE ASSESSEE IS FULFILLING ALL THE CONDITIONS AS PRESCRIBED U/S 80IA(4) OF THE INCOME TAX ACT HE IS ELIGIBLE FOR THE DEDUCT ION OF ITS PROFIT EARNED FROM THE CONSTRUCTIONS ACTIVITIES. THE ASSES SEE HAS RECEIVED TOTAL CONTRACT RECEIPTS OF RS.5,15,41,796/- DURING THE YE AR. THESE RECEIPTS INCLUDES A SUM OF RS.21,54,000/- RECEIVED FROM M/S DEEP VIJAY BUILDERS ON WHICH DEDUCTION U/S 80IA IS NOT ALLOWAB LE. THE ASSESSEE HAS NOT SUBMITTED SEPARATE CALCULATION OF PROFIT FR OM THIS ACTIVITY HENCE PROFIT @5% BEING AMOUNT RS.1,07,250/- WILL BE TREAT ED AS INCOME FROM THE CONTRACT WITH M/S DEEP JAI BUILDERS AND DEDUCTI ON U/S 80IA WILL NOT BE ALLOWED. FURTHER THE INTEREST INCOME OF RS.1 0,67,923/- WILL BE NOT BE CONSIDERED WHICH ALLOWING DEDUCTION U/S 80IA OF THE INCOME TAX ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE BO OKS OF ACCOUNTS HAS BEEN PRODUCED ALONG WITH THE VOUCHERS. THESE HAVE BEEN EXAMINED FROM TIME TO TIME. IT IS FOUND THAT CERTAI N VOUCHERS ARE NOT PROPER IN THE CASE OF EXPENSES UNDER THE VARIOUS HE ADS. THE DETAILS OF DEFECTIVE VOUCHERS HAVE PREPARED AND THE DISALLOWAN CES UNDER THE VARIOUS HEADS. THE DETAILS OF DEFECTIVE VOUCHERS HA VE PREPARED AND THE DISALLOWANCE UNDER THE VARIOUS HEADS MADE AS UNDER: - VEHICLE EXPENSES & REPAIRS EXPENSES RS.50,000/- ITA NO.140 /AGRA/2013 A.Y. 2008-09 5 GENERAL EXPENSES & DEDUCTIONS EXPENSES RS.77,589/ - TOTAL RS.1,27,589/- THE DETAILS OF THE ABOVE DEFECTIVE VOUCHERS HAVE B EEN PREPARED AS PER ANNEXURE SEPARATELY. THE TOTAL AMOUNT WILL B E ADDED TO THE INCOME OF THE ASSESSEE. IN VIEW OF ABOVE, THE TOTAL INCOME OF THE ASSESSEE IS COMPUTED AS UNDER:- INCOME FROM BUSINESS HEAD AS DECLARED BY THE ASSESSEE RS.6,96,050/- ADD- 1. ADDITION ON ACCOUNT OF EXPENSES DISALLOWED AS DISCUSSED ABOVE RS.1,27,589/- LESS INTEREST INCOME CONSIDERED RS.10,67,923/- SEPARATELY LOSS FROM CONTRACT BUSINESS RS.2,44,283/- PROFIT FROM THE BUSINESS WHICH IS NOT ELIGIBLE DEDUCTION U/S 80IA (COMPUTED AS PER RS.1,07,250/- PARA SUPRA) LOSS FROM THE BUSINESS WHICH IS ELIGIBLE DEDUCTION U/S 80IA RS.3,51,533/- NET LOSS ------------------ RS.2,44,283/- ----------------- INCOME FROM OTHER SOURCES INTEREST INCOME AS DECLARED BY THE ASSESSEE RS.10,67,923/- ITA NO.140 /AGRA/2013 A.Y. 2008-09 6 GROSS TOTAL INCOME RS.8,23,639/- LESS DEDUCTION U/S 80IA (SINCE LOSS FROM THE ELIGIBLE BUSINESS HENCE IT IS NIL) RS.NIL TOTAL INCOME RS.8,23,639/- R/O RS.8,23,640/- 5. LD. AUTHORIZED REPRESENTATIVE FURTHER SUBMITTED THAT ORDER OF THE A.O. HAS BEEN CHALLENGED BY THE ASSESSEE BEFORE CIT(A) A ND CIT(A) DECIDED THE APPEAL IN FAVOUR OF THE ASSESSEE ALLOWING DEDUCTION UNDER SECTION 80IA VIDE ORDER DATED 04.07.2011. THE FINDING OF THE CIT(A) I S REPRODUCED AS BELOW :- (CIT PAGE NO.45) IN THE RESULT AND AFTER PERUSAL OF APPELLANTS SUB MISSIONS, AO IS NOT FOUND JUSTIFIED IN TREATING THE INTEREST INCOME FROM FDRS AS INCOME FROM OTHER SOURCES FOR THE PURPOSE OF DED UCTION U/S 80IA. HOWEVER, AMOUNT OF REFUND FROM INCOME TAX DEP ARTMENT AND INTEREST EARNED THEREFROM IS TO BE TREATED AS INCOM E FROM OTHER SOURCES FOR PURPOSES OF DEDUCTION U/S 80IA. 6. LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE CIT IS NOT EMPOWERED TO EXERCISE THE POWER UNDER SECTION 263 O F THE I.T. ACT. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT ORDER OF T HE A.O. WAS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. HE HAS SUBMITTED THAT WHEN THE A.O. HAS TAKEN DEDUCTION UNDER SECTION 80IA OF THE ACT AS NIL THEN THERE IS NO QUESTION OF PREJUDICE TO THE REVENUE AS ON NIL TAX EFFECT IS NIL. AS REGARDS THE SUNDRY DEPOSIT, THE LD. AUTHORIZED REPRESENTATIVE S UBMITTED THAT THE A.O. ITA NO.140 /AGRA/2013 A.Y. 2008-09 7 WHILE MAKING ORIGINAL ASSESSMENT RAISED THE QUERIES VIDE LETTER DATED 01.11.2010 WHEREIN THE CLAUSE 5 IT IS CLEARLY STATE D THAT FULL POSTAL ADDRESS, PAN NO., MOBILE NO., PHONE NO., OF ALL THE SUNDRY C REDITORS AND UNSECURED LOAN PROVIDERS. IN CLAUSE NO.6 WHEREIN IT IS STATE D THAT TO JUSTIFY THE EXEMPTION WHICH YOU CLAIMED UNDER CHAPTER VI-A (U/S 80IA). THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT IN REPLY T O THE SAID QUERY LETTER OF THE A.O. THE ASSESSEE FURNISHED COMPLETE DETAILS BE FORE A.O. WHEN HE WAS MAKING THE ORIGINAL ASSESSMENT. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED ONCE THE A.O. AFTER EXAMINING THE RECORD COMES TO T HE CONCLUSION SUCH ORDER CANNOT BE STATED TO BE ERRONEOUS ORDER. THE LD. AUT HORIZED REPRESENTATIVE SUBMITTED ONCE THE A.O. AFTER EXAMINING THE RECORD COMES TO A CONCLUSION SUCH ORDER CANNOT BE STATED TO BE ERRONEOUS ORDER. THE LD. A.R. SUBMITTED THAT WHEN THE ORDER OF THE A.O. IS NOT ERRONEOUS OR PREJ UDICE TO THE INTEREST OF THE REVENUE THESE TWO BASIC CONDITIONS HAS NOT BEEN SAT ISFIED, THEREFORE, THE ACTION OF THE CIT IN EXERCISE OF POWER UNDER SECTION 263 I S NOT IN ACCORDANCE WITH LAW. THE LD. A.R. RELIED UPON THE FOLLOWING ORDERS :- (1). HONBLE MADHYA PRADESH HIGH COURT (FULL BENCH) IN THE CASE OF CIT VS. K.L. RAJPUT 164 ITR 197 (M.P.). (2). HONBLE MADHYA PRADESH HIGH COURT (FULL BENCH) IN THE CASE OF CIT VS. MANDSAUR ELECTRIC SUPPLY CO. LTD., 140 ITR 677 (M.P.) (3). HONBLE MADHYA PRADESH HIGH COURT (FULL BENCH) IN THE CASE OF CIT VS. SIMPLEX METALICA 164 ITR 202 (M.P.) ITA NO.140 /AGRA/2013 A.Y. 2008-09 8 (4). HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT VS. NARPAT SINGH MALKHAN SINGH 128 ITR 77 (M.P.) (5). HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF KANHIRAM RAMGOPAL VS. CIT, 170 ITR 41 (M.P.) (6). HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT VS. BHIMRAJ SUNDERLAL 219 ITR 36 (M.P.) (7). HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT VS. SRINIVASA CONSTRUCTION CO. 236 ITR 503 (A.P.) (8). HONBLE KERLA HIGH COURT IN THE CASE OF CIT VS . PALGHAT SHADI MAHAL TRUST, 212 ITR 287 (KER.) (9). HONBLE SUPREME COURT IN THE CASE OF CIT VS. M AX INDIA LTD. (2007) 295 ITR 282 (SC) (10). HONBLE GUJRAT HIGH COURT IN THE CASE OF CIT VS. R.K. CONSTRUCTION CO. (2009) 313 ITR 65 (11). HONBLE PUNJAB & HARYANA HIGH COURT IN THE CA SE OF CIT VS. MUNJAL CASTINGS, (2008) 303 ITR 23 (12). HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. SAK SOFT LTD. (2008) 298 ITR 63 (MAD.) (13). HONBLE GUJRAT HIGH COURT IN THE CASE OF CIT VS. PANKAJ DHIRAJLAL DHRUVE( 2008) 305 ITR 332 (14). HONBLE BOMBAY HIGH COURT IN THE CASE OF GRAS IM INDUSTRIES LTD. VS. CIT (2010) 321 ITR 92 7. ON THE OTHER HAND, LD. D.R. RELIED UPON THE ORDE R OF THE CIT AND SUBMITTED THAT THE A.O. DID NOT MAKE ANY DISCUSSION IN HIS ORDER REGARDING ELIGIBILITY OF THE DEDUCTION UNDER SECTION 80IA OF THE ACT. AS REGARDS THE CONTENTION OF THE LD. A.R. REGARDING MERGER OF THE ASSESSMENT ORDER WITH CITS ORDER, THE LD. D.R. SUBMITTED THAT THE ORDER OF THE A.O. HAS BEEN MERGED ITA NO.140 /AGRA/2013 A.Y. 2008-09 9 WITH ORDER OF THE CIT FOR LIMITED ISSUE WHETHER INT EREST INCOME IS ELIGIBLE UNDER SECTION 80IA OR NOT. THE LD. D.R. SUBMITTED THAT ENTIRE ELIGIBILITY DEDUCTION UNDER SECTION 80IA NEITHER HAS BEEN DECID ED BY THE A.O. NOR HAS BEEN DECIDED BY THE CIT AS BEFORE THE CIT, THERE IS NO SUCH QUESTION IN ISSUE. THE LD. D.R. SUBMITTED THAT THE A.O. DID NOT TAKE T HE DEDUCTION UNDER SECTION 80IA AT NIL ONLY ON ACCOUNT THAT THERE WAS A LOSS. LD. A.R. SUBMITTED THAT CIT NEVER DISCUSSED ABOUT THE ELIGIBILITY OF THE ASSESS EE FOR DEDUCTION UNDER SECTION 80IA OF THE ACT. 8. WE HAVE HEARD LD. REPRESENTATIVES OF THE PARTIES AND RECORDS PERUSED. THE ISSUE UNDER CONSIDERATION IS PERTAINING TO SECT ION 263 OF I.T. ACT. THE SAID SECTION READS AS UNDER:- 263. (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 IN S O FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, HE MAY, AFTER GIVI NG THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUS ING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THER EON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORD ER ENHANCING OR MODIFYING THE ASSESSMENT, OR CANCELLING THE ASSESSM ENT AND DIRECTING A FRESH ASSESSMENT. [ EXPLANATION .FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT, FOR THE PURPOSES OF THIS SUB-SECTION, ( A ) AN ORDER PASSED [ON OR BEFORE OR AFTER THE 1ST DA Y OF JUNE, 1988] BY THE ASSESSING OFFICER SHALL INCLUDE ( I ) AN ORDER OF ASSESSMENT MADE BY THE ASSISTANT COMM ISSIONER [OR DEPUTY COMMISSIONER] OR THE INCOME-TAX OFFICER ON T HE BASIS OF THE DIRECTIONS ISSUED BY THE [JOINT] COMMISSIONE R UNDER SECTION 144A; ITA NO.140 /AGRA/2013 A.Y. 2008-09 10 ( II ) AN ORDER MADE BY THE [JOINT] COMMISSIONER IN EXER CISE OF THE POWERS OR IN THE PERFORMANCE OF THE FUNCTIONS OF AN ASSESSING OFFICER CONFERRED ON, OR ASSIGNED TO, HIM UNDER THE ORDERS OR DIRECTIONS ISSUED BY THE BOARD OR BY THE CHIEF COMM ISSIONER OR DIRECTOR GENERAL OR COMMISSIONER AUTHORISED BY T HE BOARD IN THIS BEHALF UNDER SECTION 120; ( B ) RECORD [SHALL INCLUDE AND SHALL BE DEEMED ALWAY S TO HAVE INCLUDED] ALL RECORDS RELATING TO ANY PROCEEDING UN DER THIS ACT AVAILABLE AT THE TIME OF EXAMINATION BY THE COMMISS IONER; ( C ) WHERE ANY ORDER REFERRED TO IN THIS SUB-SECTION A ND PASSED BY THE ASSESSING OFFICER HAD BEEN THE SUBJECT MATTER OF AN Y APPEAL [FILED ON OR BEFORE OR AFTER THE 1ST DAY OF JUNE, 1988], T HE POWERS OF THE COMMISSIONER UNDER THIS SUB-SECTION SHALL EXTEND [A ND SHALL BE DEEMED ALWAYS TO HAVE EXTENDED] TO SUCH MATTERS AS HAD NOT BEEN CONSIDERED AND DECIDED IN SUCH APPEAL.] [(2) NO ORDER SHALL BE MADE UNDER SUB-SECTION (1) A FTER THE EXPIRY OF TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH T HE ORDER SOUGHT TO BE REVISED WAS PASSED.] (3) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SECTI ON (2), AN ORDER IN REVISION UNDER THIS SECTION MAY BE PASSED AT ANY TI ME IN THE CASE OF AN ORDER WHICH HAS BEEN PASSED IN CONSEQUENCE OF, OR T O GIVE EFFECT TO, ANY FINDING OR DIRECTION CONTAINED IN AN ORDER OF THE A PPELLATE TRIBUNAL, [NATIONAL TAX TRIBUNAL,] THE HIGH COURT OR THE SUPR EME COURT. EXPLANATION .IN COMPUTING THE PERIOD OF LIMITATION FOR THE PUR POSES OF SUB-SECTION (2), THE TIME TAKEN IN GIVING AN OPPORT UNITY TO THE ASSESSEE TO BE REHEARD UNDER THE PROVISO TO SECTION 129 AND ANY PERIOD DURING WHICH ANY PROCEEDING UNDER THIS SECTION IS STAYED BY AN O RDER OR INJUNCTION OF ANY COURT SHALL BE EXCLUDED. 9. FROM A READING OF SUB-SECTION (1) OF SECTION 263 , IT IS CLEAR THAT THE POWER OF SUO MOTU REVISION CAN BE EXERCISED BY THE COMMISSIONER ONLY IF ON EXAMINATION OF THE RECORDS OF ANY PROCEEDINGS UNDER THIS ACT, HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE INCOME-TAX OFF ICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENU E. IT IS NOT AN ARBITRARY OR UNCHARTERED POWER. IT CAN BE EXERCISED ONLY ON FULF ILLMENT OF THE REQUIREMENTS ITA NO.140 /AGRA/2013 A.Y. 2008-09 11 LAID DOWN IN SUB-SECTION (1). THE CONSIDERATION OF THE COMMISSIONER AS TO WHETHER AN ORDER IS ERRONEOUS IN SO FAR AS IT IS PR EJUDICIAL TO THE INTERESTS OF THE REVENUE, MUST BE BASED ON MATERIALS ON THE RECORD O F THE PROCEEDINGS CALLED FOR BY HIM. IF THERE ARE NO MATERIALS ON RECORD ON THE BASIS OF WHICH IT CAN BE SAID THAT THE COMMISSIONER ACTING IN A REASONABLE M ANNER COULD HAVE COME TO SUCH A CONCLUSION, THE VERY INITIATION OF PROCEEDIN GS BY HIM WILL BE ILLEGAL AND WITHOUT JURISDICTION. THE POWER OF SUO MOTU REVISIO N UNDER SUB-SECTION (1) IS IN THE NATURE OF SUPERVISORY JURISDICTION AND THE S AME CAN BE EXERCISED ONLY IF THE CIRCUMSTANCES SPECIFIED THEREIN EXIST. TWO CIRC UMSTANCES MUST EXIST TO ENABLE THE COMMISSIONER TO EXERCISE POWER OF REVISI ON UNDER THIS SUBSECTION, VIZ.(1) THE ORDER IS ERRONEOUS; (2) BY VIRTUE OF TH E ORDER BEING ERRONEOUS PREJUDICE HAS BEEN CAUSED TO THE INTERESTS OF THE R EVENUE. IT HAS, THEREFORE, TO BE CONSIDERED FIRSTLY AS TO WHEN AN ORDER CAN BE SA ID TO BE ERRONEOUS. WE FIND THAT THE EXPRESSIONS ERRONEOUS, ERRONEOUS ASSESS MENT AND ERRONEOUS JUDGMENT HAVE BEEN DEFINED IN BLACK'S LAW DICTIONA RY. ACCORDING TO THE DEFINITION, ERRONEOUS MEANS INVOLVING ERROR; DEV IATING FROM THE LAW. ERRONEOUS ASSESSMENT REFERS TO AN ASSESSMENT THAT DEVIATES FROM THE LAW AND IS, THEREFORE, INVALID, AND IS DEFECT THAT IS JURIS DICTIONAL IN ITS NATURE, SIMILARLY, ERRONEOUS JUDGMENT MEANS ONE RENDERED ACCORDING T O COURSE AND PRACTICE OF COURT, BUT CONTRARY TO LAW, UPON MISTAKEN VIEW OF L AW, OR UPON ERRONEOUS APPLICATION OF LEGAL PRINCIPLES. ITA NO.140 /AGRA/2013 A.Y. 2008-09 12 10. AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS I T IS NOT IN ACCORDANCE WITH LAW. IF AN INCOME TAX OFFICER ACTING IN ACCORD ANCE WITH LAW MAKES AN ASSESSMENT, THE SAME CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE, ACCORDING TO HIM, THE A.O. SHOULD M AKE THOROUGH ENQUIRY AND ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY. TH IS SECTION DOES NOT VISUALISE A CASE OF SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE INCOME-TAX OFFICER, WHO PASSED THE ORDER, UN LESS THE DECISION IS HELD TO BE ERRONEOUS. CASES MAY BE VISUALISED WHERE THE INC OME-TAX OFFICER WHILE MAKING AN ASSESSMENT EXAMINES THE ACCOUNTS, MAKES E NQUIRIES, APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME EITHER BY ACCEPTING THE ACCOUNTS OR BY MAKING SOME CHANGES. THE COMMISSIONER, ON PERUSAL OF THE RECORDS, MAY BE OF THE DIFFERENT OPINION THAN THE OPINION OF THE INCOME-TAX OFFICER. THAT WOULD N OT VEST THE COMMISSIONER WITH POWER TO RE-EXAMINE THE ACCOUNTS AND EXPRESS D IFFERENT OPINION. IT IS BECAUSE THE INCOME-TAX OFFICER HAS EXERCISED THE QU ASI-JUDICIAL POWER VESTED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT A CONC LUSION AND SUCH A CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIONER DOES NOT FEEL SATISFIED WITH THE CONCL USION. IT MAY BE SAID IN SUCH A CASE THAT IN THE OPINION OF THE COMMISSIONER THE ORDER IN QUESTION IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. BUT TH AT BY ITSELF WILL NOT BE ITA NO.140 /AGRA/2013 A.Y. 2008-09 13 ENOUGH TO VEST THE COMMISSIONER WITH THE POWER OF S UO MOTU REVISION BECAUSE THE FIRST REQUIREMENT, VIZ., THAT THE ORDER IS ERRONEOUS, IS ABSENT. 11. TO KNOW THE SCOPE AND SCHEME OF THE REVISION UN DER SECTION 263 OF THE ACT BY COMMISSIONER WE WOULD LIKE TO REFER ONE JUDG MENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GRASIM INDUSTRIES LTD. VS. CIT[2010] 321 ITR 92 (BOMB) WHEREIN THE COURT HAS HELD AS UNDER:- (PAGE 99 TO 101) 11. SECTION 263 OF THE INCOME-TAX ACT, 1961 EMPOW ERS THE COMMISSIONER TO CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDINGS UNDER THE ACT AND, IF HE CONSIDERS THAT ANY ORDER P ASSED THEREIN, BY THE ASSESSING OFFICER IS ERRONEOUS INSOFAR AS IT IS PRE JUDICIAL TO THE INTERESTS OF THE REVENUE, TO PASS AN ORDER UPON HEARING THE A SSESSEE AND AFTER AN ENQUIRY AS IS NECESSARY, ENHANCING OR MODIFYING THE ASSESSMENT OR CANCELLING THE ASSESSMENT AND DIRECTING A FRESH ASS ESSMENT. THE KEY WORDS THAT ARE USED BY SECTION 263 ARE THAT THE ORD ER MUST BE CONSIDERED BY THE COMMISSIONER TO BE 'ERRONEOUS INS OFAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE'. THIS PROVISION HAS BEEN INTERPRETED BY THE SUPREME COURT IN SEVERAL JUDGMEN TS TO WHICH IT IS NOW NECESSARY TO TURN. IN MALABAR INDUSTRIAL CO. LT D. V. CIT [2000] 243 ITR 831, THE SUPREME COURT HELD THAT THE PROVIS ION 'CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE O R ERROR COMMITTED BY THE ASSESSING OFFICER' AND 'IT IS ONLY WHEN AN ORDE R IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED'. THE SUPREME COURT H ELD THAT AN INCORRECT ASSUMPTION OF FACT OR AN INCORRECT APPLICATION OF L AW, WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. AN ORDER PASSED IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APP LICATION OF MIND, WOULD BE AN ORDER FALLING IN THAT CATEGORY. THE EXPRESSIO N 'PREJUDICIAL TO THE INTERESTS OF THE REVENUE', THE SUPREME COURT HELD, IT IS OF WIDE IMPORT AND IS NOT CONFINED TO A LOSS OF TAX. WHAT IS PREJU DICIAL TO THE INTEREST OF THE REVENUE IS EXPLAINED IN THE JUDGMENT OF THE SUP REME COURT : '. . . 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 ITA NO.140 /AGRA/2013 A.Y. 2008-09 14 THE REVENUE. FOR EXAMPLE, WHEN AN INCOME-TAX OFFICE R ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULT ED IN LOSS OF REVENUE; OR WHERE TWO VIEWS ARE POSSIBLE AND THE IN COME-TAX OFFICER 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 INCOME -TAX OFFICER IS UNSUSTAINABLE IN LAW. . . .' (P. 88) THE PRINCIPLE WHICH HAS BEEN LAID DOWN IN MALABAR I NDUSTRIAL CO. LTD.S CASE (SUPRA) HAS BEEN FOLLOWED AND EXPLAINED IN A SUBSEQUENT JUDGMENT OF THE SUPREME COURT IN CIT V. MAX INDIA L TD. [2007] 295 ITR 2822 WHILE INTERPRETING THE PROVISIONS OF SECTI ON 80HHC(3), THE SUPREME COURT NOTED THAT THE STATUTORY PROVISION HA D BEEN AMENDED ELEVEN TIMES AND DIFFERENT VIEWS EXISTED ON THE DAY WHEN THE COMMISSIONER PASSED HIS ORDER UNDER SECTION 263. TH E COURT OBSERVED THAT 'THE MECHANICS OF THE SECTION HAVE BECOME SO C OMPLICATED OVER THE YEARS THAT TWO VIEWS WERE INHERENTLY POSSIBLE'. CON SEQUENTLY, THE SUBSEQUENT AMENDMENT TO THE STATUTORY PROVISION, EV EN THOUGH IT WAS RETROSPECTIVE, WOULD NOT ATTRACT THE PROVISIONS OF SECTION 263 PARTICULARLY WHEN THE PROVISION OF LAW, AS IT STOOD , ON THE DATE WHEN THE COMMISSIONER PASSED THE ORDER UNDER SECTION 263, WO ULD HAVE TO BE TAKEN INTO ACCOUNT. 12. IN CIT V. GABRIEL INDIA LTD. [1993] 203 ITR 108 1 A DIVISION BENCH OF THIS COURT OBSERVED THAT SECTION 263 DOES NOT CO NFER AN ARBITRARY OR UNCHARTED POWER ON THE COMMISSIONER. IN CONSIDERING AS TO WHETHER AN ORDER IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, THE COMMISSIONER MUST BE GUIDED BY THE MAT ERIAL ON THE RECORD. THE POWER OF SUO MOTU REVISION UNDER SECTIO N 263(1), IS IN THE NATURE OF SUPERVISORY JURISDICTION. TWO CIRCUMSTANC ES MUST EXIST IN ORDER TO ENABLE THE COMMISSIONER TO EXERCISE THE PO WER, NAMELY, (I) THE ORDER MUST BE ERRONEOUS; AND (II) BY VIRTUE OF THE ORDER BEING ERRONEOUS, PREJUDICE MUST HAVE BEEN CAUSED TO THE I NTERESTS OF THE REVENUE. SECTION 263 DOES NOT EMPOWER THE COMMISSIO NER TO SUBSTITUTE HIS JUDGMENT FOR THAT OF THE ASSESSING OFFICER, UNL ESS THE DECISION IS HELD TO BE ERRONEOUS. BOTH THE CONDITIONS FOR THE EXERCI SE OF THE POWER MUST BE FULFILLED. THE ORDER, IN OTHER WORDS, SOUGHT TO BE REVISED, MUST BE ERRONEOUS AND MUST BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE . 12. FROM ABOVE DISCUSSIONS WE FIND THAT AN ORDER CA NNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH LAW. IF AN INCOME TAX OFFICER ITA NO.140 /AGRA/2013 A.Y. 2008-09 15 ACTING IN ACCORDANCE WITH LAW MAKES AN ASSESSMENT, THE SAME CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BEC AUSE, ACCORDING TO CIT, THE A.O. SHOULD MAKE THOROUGH ENQUIRY AND ORDER SHO ULD HAVE BEEN WRITTEN MORE ELABORATELY. THIS SECTION DOES NOT VISUALISE A CASE OF SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE INCOME -TAX OFFICER, WHO PASSED THE ORDER, UNLESS THE DECISION IS HELD TO BE ERRONE OUS. CASES MAY BE VISUALISED WHERE THE INCOME-TAX OFFICER WHILE MAKING AN ASSESS MENT EXAMINES THE ACCOUNTS, MAKES ENQUIRIES, APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME EITHER BY ACCEPT ING THE ACCOUNTS OR BY MAKING SOME CHANGES. THE COMMISSIONER, ON PERUSAL O F THE RECORDS, MAY BE OF THE DIFFERENT OPINION THAN THE OPINION OF THE IN COME-TAX OFFICER. THAT WOULD NOT VEST THE COMMISSIONER WITH POWER TO RE-EX AMINE THE ACCOUNTS AND EXPRESS DIFFERENT OPINION. IT IS BECAUSE THE INCOME -TAX OFFICER HAS EXERCISED THE QUASI-JUDICIAL POWER VESTED IN HIM IN ACCORDANC E WITH LAW AND ARRIVED AT A CONCLUSION AND SUCH A CONCLUSION CANNOT BE TERMED T O BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIONER DOES NOT FEEL SATISFIED WI TH THE CONCLUSION. IT MAY BE SAID IN SUCH A CASE THAT IN THE OPINION OF THE C OMMISSIONER THE ORDER IN QUESTION IS PREJUDICIAL TO THE INTERESTS OF THE REV ENUE. BUT THAT BY ITSELF WILL NOT BE ENOUGH TO VEST THE COMMISSIONER WITH THE POW ER OF SUO MOTU REVISION BECAUSE THE FIRST REQUIREMENT, VIZ., THAT THE ORDER IS ERRONEOUS, IS ABSENT. ITA NO.140 /AGRA/2013 A.Y. 2008-09 16 13. THE ADMITTED FACTS OF THE CASE ARE THAT THE A.O . WHILE MAKING ORIGINAL ASSESSMENT HAS ISSUED A QUERY LETTER DATED 01.11.20 10 WHEREIN CLAUSE 6 OF THE LETTER ASKED ASSESSEE TO JUSTIFY THE EXEMPTION CLAI MED UNDER SECTION 80IA OF THE ACT. THE ASSESSEE FURNISHED THE REPLY TO THE LE TTER THE A.O. IN ORIGINAL ASSESSMENT NOTED THE CONTENTION WHICH HAS BEEN REPR ODUCED ABOVE IN LD. A.R. SUBMISSION THE A.O. NOTED THAT THE ASSESSEE HAS ENG AGED IN ROAD CONSTRUCTION WORK DURING THE YEAR UNDER CONSIDERATION. THE ASSES SEE HAS CLAIMED UNDER SECTION 80IA OF THE ACT. THE REPLY OF THE ASSESSEE PLACED ON RECORD. THE A.O. FOUND THE ASSESSEE HAS FULFILLED ALL CONDITIONS AS PER PRESCRIBED UNDER SECTION 80IA(4) OF THE ACT FOR WHICH THE ASSESSEE IS ELIGIB LE FOR THE DEDUCTION OF ITS PROFIT EARNED FROM THE CONSTRUCTION ACTIVITIES. THE ASSESSEE RECEIVED TOTAL CONTRACT RECEIPT OF RS.5,15,41,796/- DURING THE YEA R. HE FURTHER NOTED THAT THESE RECEIPTS INCLUDES A SUM OF RS.21,54,000/- REC EIVED FROM M/S DEEP VIJAY BUILDERS ON WHICH DEDUCTION U/S 80IA OF THE ACT WAS NOT ALLOWABLE. THUS, A.O. FURTHER NOTED THAT THE ASSESSEE DID NOT FURNIS H SEPARATE CALCULATION OF PROFIT FROM THIS ACTIVITY HENCE THE A.O. ESTIMATED THE AMOUNT OF PROFIT APPLYING 5% AND CALCULATED RS.1,07,250/- AND TREATE D AS INCOME FROM THE CONTRACT WITH M/S. DEEP JAI BUILDERS AND DEDUCTION UNDER SECTION 80IA WAS NOT ALLOWED. FURTHER, THE A.O. WHILE CALCULATING I NTEREST INCOME UNDER SECTION 80IA DISALLOWED THE INTEREST INCOME OF RS.1 0,67,923/- AS IT IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA OF THE AC T. THE A.O. HELD THAT ITA NO.140 /AGRA/2013 A.Y. 2008-09 17 INTEREST INCOME WAS NOT CONSIDERED BY THE A.O. WHIL E ALLOWING DEDUCTION UNDER SECTION 80IA OF THE ACT. THE A.O. ACCORDINGLY MADE COMPUTATION OF TOTAL INCOME WHICH IS REPRODUCED AS ABOVE. 14. THE CIT WHILE EXERCISING POWER UNDER SECTION 26 3 OF THE ACT HAS FORMED AN OPINION CONSIDERING THE EXPLANATION BELOW TO SECTION 80IA AND WAS OF THE OPINION THAT THE ASSESSEE IS NOT ELIGIBLE FO R DEDUCTION UNDER SECTION 80IA. IT IS ALSO RELEVANT TO NOTE THAT ACCORDING TO CIT, THE A.O. DID NOT CARRY OUT ADEQUATE ENQUIRIES FOR THE PURPOSE OF INVOKING SECTION 263. IT IS NECESSARY TO HOLD BY THE CIT THAT THE ASSESSMENT OR DER PASSED BY THE A.O. WAS ERRONEOUS AND PREJUDICE TO THE INTEREST OF THE REVE NUE. MERELY EXPRESSING OPINION BY THE CIT DOES NOT AMOUNT TO HOLD THAT THE ORDER OF THE A.O. IS ERRONEOUS. IN ORIGINAL ASSESSMENT THE A.O. HAS EXA MINED THE ISSUE BY RAISING QUERY LETTER AND AFTER RECORDING CLEAR FACTS IN THE ORDER PARTLY ALLOWED THE ISSUE UNDER SECTION 80IA. THE A.O. DISALLOWED AND AFTER A PPLYING MIND FOUND THAT THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION UNDER S ECTION 80IA IN RESPECT OF INCOME FROM THE CONTRACT WITH M/S DEEP JAI BUILDERS AND INTEREST INCOME. CONSCIOUS DECISION OF THE A.O. IS A JUDICIAL DECISI ON. THE ACTION OF THE A.O. IS IN ACCORDANCE WITH LAW WHILE MAKING THE ASSESSMENT AND SUCH ACTION OF THE A.O. AS IN ACCORDANCE WITH LAW CANNOT BE PROVIDED A S ERRONEOUS BY THE CIT SIMPLY BECAUSE ACCORDING TO HIM THE A.O. SHOULD MAD E ADEQUATE INQUIRY AND ITA NO.140 /AGRA/2013 A.Y. 2008-09 18 ORDERS SHOULD HAVE BEEN WRITTEN MORE LEGIBLY. THE ORDER OF THE A.O. HAS BEEN CHALLENGED BEFORE THE CIT THOUGH ONLY ON THE ISSUE OF WHETHER INTEREST INCOME IS ALLOWABLE FOR DEDUCTION U/S 80IA OR NOT. THE CIT ALLOWED THE GROUNDS OF THE ASSESSEE FOR OTHER WORDS. THE CIT HENCE CONFIRM ED THE ORDER OF THE A.O. THAT THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION U/S 80 IA OF THE ACT EXCEPT ON INTEREST INCOME AND WHICH HAS ALSO BEEN DECIDED IN FAVOUR OF THE ASSESSEE. IT IS NOT SIMPLY THE PRIMA FACIE CASE THAT THE ASSESSE E WAS NOT ELIGIBLE FOR DEDUCTION U/S 80IA AS THE CIT HIMSELF HAS CONSIDERE D AND DESCRIBED VARIOUS CASE LAWS CITED BY THE ASSESSEE. IN OTHER WORDS, WH ETHER UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSEE WAS ELIGIBL E FOR DEDUCTION UNDER SECTION 80IA OR NOT IS A CONTROVERSIAL ISSUE AND ON THE ISSUE THERE ARE TWO OPINIONS AND IF THE A.O. HAS TAKEN ONE THEN THE ORD ER OF THE A.O. CANNOT BE CITED TO BE ERRONEOUS ORDER. 15. SIMILAR IS THE POSITION IN RESPECT OF UNSECURED LOAN AND DEPOSITS. THE A.O. HAS MADE SPECIFIC QUERIES. THE ASSESSEE SUBMI TTED THAT THE RELEVANT RECORDS THE A.O. VERIFYING THE SAME AND CAME TO THE CONCLUSION THAT THE LOAN AND ADVANCES SHOWN BY THE ASSESSEE WAS IN ACCORDANC E WITH LAW. WHEN THE A.O. IS SATISFIED THEN IT IS NOT NECESSARY TO DISCU SS SUCH MATTER IN THE ORDER. THE ASSESSEE HAS ESTABLISHED THAT THE ASSESSEE HAS FURNISHED RELEVANT DOCUMENTS IN REPLY TO THE QUERIES RAISED BY THE ASS ESSEE. THE VIEW TAKEN BY ITA NO.140 /AGRA/2013 A.Y. 2008-09 19 THE A.O. IS AFTER CONSIDERING THE MATERIAL AND SUBM ISSION OF THE ASSESSEE. THE ORDER OF THE A.O. CANNOT BE SAID TO BE ERRONEOUS. CIT MERELY WANT FURTHER VERIFICATION OR ACCORDING TO HIM ADEQUATE VERIFICAT ION. SUCH VERIFICATION DOES NOT COVER TO EXERCISE THE POWER UNDER SECTION 263 O F THE ACT. 16. IN THE LIGHT OF ABOVE DISCUSSION, WE FIND THAT THE ORDER OF A.O. IS NOT ERRONEOUS AND THIS BASIC CONDITION FOR INVOKING SEC TION 263 OF THE ACT HAS NOT BEEN SATISFIED. THEREFORE, THE ORDER OF THE CIT IS NOT IN ACCORDANCE WITH LAW. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT. 17. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT ME MBER AMIT/ COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, AGRA TRUE COPY