M/S EUREKA MEDICARE LIMITED, Yavatmal V. PRINCIPAL C.I.T. -2, Nagpur

ITA 153/NAG/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4493 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 21-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K BARAL
• Keywords: Depreciation; Question of law; Assessment record; Prejudicial to interest; Revenue expenditure; Capital expenditure
• Section: 143(3); 142(1); 115JB; 131; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA , ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI , JUDICIAL MEMBER ITA NO. 153 /NAG. / 2017 ( ASSESSMENT YEAR : 2012 - 13 ) M/S. EUREKA MEDICARE PRIVATE LIMITED C/O. SANJEEVAN HOSPITAL, YAVATMAL RATANLAL PLOT, MAHADEO MANDIR ROAD, NEAR POSTAL GROUND, YAVATMAL PAN AABCE 6829 M APPELLANT V/S PR. COMMISSIONER OF INCOME TAX - 2, SARAD CHEMBER , NAGPUR - 440 001 .... RESPONDENT A S SESSEE BY : SHRI K. P. DEWANI REVENUE BY : SHRI R. K. BARAL DATE OF HEARING 10.05.2018 DATE OF ORDER 01.08. 2018 O R D E R PER SHAMIM YAHYA , A .M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 BY THE PRINCIPAL COMMISSIONER OF INCOME TAX 2, NAGPUR AND PERTAIN S TO ASSESSMENT YEAR 2012 - 13. 2. THE GROUND S RAISED BY THE ASSESSEE ARE REPRODUCED BELOW: 1. THE ORDER PASSED U/S. 263 OF I.T. INCOME TAX ACT, 1961, 1961 IS ILLEGAL, INVALID AND BAD IN LAW. 2. THE ORDER PASSED U/S. 263 HOLDING THAT ASSESSMENT FRAMED BY A.O. IS WITHOUT MAKING INQUIRIES AND IS THEREFORE ERRONEOUS IS UNJUSTIFIED, UNWARRANTED AND BAD IN LAW. 3. THE ORDER PASSED U/S. 143(3) BEING AFTER COMPLETE EXAMINATION AND VERIFICATION CANNOT BE TERMED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 2 ITA NO. 153/NAG./2017 M/S. EUREKA MEDICARE PRIVATE LIMITED 4. THE ASSESSEE HAVING SUBMITTED COMPLETE DETAILS BEFORE HONBLE CIT, HE OUGHT NOT TO HAVE SET ASIDE THE ASSESSMENT DIRECTING THE A.O. TO PASS A FRESH ASSESSMENT ORDER AND VERIFY THE ADMISSIBILITY OF CL AIM OF DEDUCTION U/S. 80IB(11C) OF I.T. INCOME TAX ACT, 1961, 1961. 3. THE ASSESSEE COMPANY IN THIS CASE IS ENGAGED IN PROVIDING MEDICAL FACILITIES TO THE PATIENTS. ON EXAMINATION OF THE RECORDS, THE COMMISSIONER OF INCOME TAX NOTED THAT THE ASSESSEE HAD SHOWN INCOME FROM INTEREST, RENT AND REFERRAL OF RS.5,99,000/ - , RS.2,04,000/ - AND RS.1,00,58,000/ - RESPECTIVELY. IT HAD ALSO RECEIVED INCOME OF RS.2,78,000/ - FROM RUNNING OF NURSING COLLEGE. THE ASSESSEE HAD CLAIMED THESE INCOMES AS EXEMPT U/S. 80IB(11C) O F THE ACT. 4. THE COMMISSIONER OF INCOME TAX WAS OF THE OPINION THAT NO VERIFICATION WAS CARRIED OUT BY THE ASSESSING OFFICER REGARDING THE HUGE AMOUNT OF REFERRAL INCOME. HE OBSERVED THAT IT WAS NOT ON RECORD FROM WHOME AND FOR WHAT PURPOSE REFERRAL INCO ME WAS RECEIVED. HE OPINED THAT IN ABSENCE OF BASIC DETAILS, THE ASSESSING OFFICER COULD NOT HAVE ASCERTAINED WHETHER THE REFERRAL INCOME HAS BEEN DERIVED FROM BUSINESS OF OPERATING AND MAINTAINING HOSPITAL SO AS TO QUALIFY FOR DEDUCTION U/S. 80IB(11C) OF THE INCOME TAX ACT, 1961. THE COMMISSIONER OF INCOME TAX FURTHER OPINED THAT NO VERIFICATION WAS CARRIED OUT BY THE ASSESSING OFFICER WITH REGARD TO THE CLAIM OF RENTAL INCOME RECEIVED FROM MEDICAL STORE, INTEREST INCOME DERIVED FROM FIXED DEPOSIT AND INCO ME DERIVED FROM RUNNING OF NURSING HOME. HE FURTHER OPINED THAT WHETHER THIS INCOME HAS BEEN DERIVED FROM BUSINESS OF OPERATING AND MAINTAINING A HOSPITAL SO AS TO QUALIFY FOR DEDUCTION U/S.80IB(11C) OF THE INCOME TAX ACT, 1961 WERE NOT EXAMINED BY THE ASS ESSING OFFICER. ACCORDINGLY, THE SHOW CAUSE NOTICE IN THIS REGARD WAS ISSUED TO THE ASSESSEE . THE ASSESSEE MADE ELABORATE SUBMISSIONS. IT WAS SUBMITTED THAT THE ASSESSEE HAS DULY 3 ITA NO. 153/NAG./2017 M/S. EUREKA MEDICARE PRIVATE LIMITED SUBMITTED RETURN OF INCOME ALONG WITH ALL THE STATUTORY REPORTS. THE CASE WAS SELECTED FOR THE SCRUTINY AND DETAILED QUESTIONNAIRE WAS ISSUED BY THE ASSESSING OFFICER. THESE WERE DULY ATT ENDED FROM TIME TO TIME AND NECESSARY SUBMISSIONS TO THE SATISFACTION OF THE ASSESSING OFFICER WERE FURNISHED AND PRODUCED FOR VERIFICATION. IT WA S FURTHER SUBMITTED THAT SUMMONS TO THE ASSESSEE U/S. 131 OF THE INCOME TAX ACT, 1961 TO THE ASSESSEE WAS ALSO ATTENDED. HENCE, IT WAS SUBMITTED THAT THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2012 - 13 U/S. 143(3) OF THE INCOME TAX ACT, 1961 WAS PASSED AFTER DUE VERIFICATION OF ALL FACTS. THE ASSESSEE GAVE FURTHER SUBMISSIONS REGARDING THE CORRELATION OF ALL THE INCOMES TO THE RUNNING OF THE HOSPITAL. HOWEVER, THE COMMISSIONER OF INCOME TAX WAS NOT SATISFIED WITHOUT FINDING ANY FAULT IN ASSESSEES ELABORATE SU BMISSIONS. HE REITERATED THAT FROM THE DETAILS AVAILABLE ON RECORDS, IT APPEARED THAT NO VERIFICATION WAS CARRIED OUT. THAT PRIMA FACIE THE CASE RECORD SHOW THAT NO VERIFICATION WAS CARRIED OUT WITH REGARD TO THE CLAIM OF RENTAL INCOME FROM MEDICAL STORE, INTEREST INCOME FROM FIXED DEPOSIT AND INCOME FROM RUNNING OF NURSING HOME. THE COMMISSIONER OF INCOME TAX CONCLUDED AS UNDER: 4.7 THE FAILURE ON PART OF THE ASSESSING OFFICER TO ASCERTAIN WHETHER THE INTEREST, RENTAL INCOME, REFERRAL INCOME AND INCOME FR OM RUNNING A NURSING COLLEGE ARE PERMISSIBLE DEDUCTIONS UNDER SECTION 80IB(11C) OF THE ACT HAS RENDERED THE ASSESSMENT ORDER ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. THE ASSESSMENT ORDER IS THEREFORE SET ASIDE. THE ASSESSING OFFIC ER IS DIRECTED TO PASS A FRESH ASSESSMENT ORDER AFTER VERIFYING THE ADMISSIBILITY OF THE CLAIM OF DEDUCTION U/S. 80IB(11C) OF THE ACT . 5. AGAINST THE ABOVE ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. THE LD. COUNSEL OF THE ASSESSEE OF THE ASSESSEE HAS SUMMARIZED HIS SUBMISSIONS AS UNDER: 4 ITA NO. 153/NAG./2017 M/S. EUREKA MEDICARE PRIVATE LIMITED A) ASSESSEE COMPANY HAS SET UP 100 BEDDED HOSPITAL AT YAVATMAL AND COMPLIED WITH REQUISITE CONDITIONS FOR GRANT OF DEDUCTION U/S 80IB(11C). A.O. AFTER EXAMINING THE RELEVANT RECORD IN DETAIL AND AFTER INSPECTION OF BUSINESS PREMISES HAS ALLOWED THE DEDUCTION U/S 80IB(11C). B) ASSESSEE HAS PAID TAX U/S 115JB @ 20% ON BOOK PROFIT. C) ASSESSEE HAS STAR TED ITS OPERATION IN THE MONTH OF MAY 2008. ASSESSEE IS THUS ELIGIBLE FOR DEDUCTION U/S 80IB(11C) FROM ASSTT. YEAR 2009 - 10 ONWARDS. IN ASSTT. YEAR 2009 - 10 AND 2010 - 11 ASSESSEE HAD NO GROSS INCOME AS A RESULT OF WHICH NO DEDUCTION WAS CLAIMED U/S 80IB(11C). D) ASSESSEE HAS CLAIMED DEDUCTION U/S 80IB(11C) FOR THE FIRST TIME IN ASSTT.YEAR 2011 - 12. REQUISITE CONDITIONS FOR GRANT OF DEDUCTION U/S 80IB(11C) WERE EXAMINED AND ON BEING SATISFIED. A.O. HAD ALLOWED DEDUCTION U/S 80IB(11C) IN ASSESSMENT FRAMED U/S 143(3). A.O. IN THE ASSESSMENT FRAMED HAD EXAMINED THE INCOME FROM ACTIVITY OF NURSING, RENT, REFERRAL AND INTEREST INCOME WHILE ALLOWING DEDUCTION U/S 80IB(11C). I) COMPUTATION OF INCOME & ACK.OF RETURN AND AUDIT REPORT II) FINANCIAL STATEMEN T ASSTT. YEAR 2011 - 12 III) ASSESSMENT ORDER U/S 143(3) OF IT. ACT 1961 FOR FOR ASSTT. YEAR 2011 - 12 IV) NOTICE U/S 142(1) FOR ASSTT. YEAR2011 - 12. V) W/S BEFORE A.O. FOR ASSTT. YEAR 2011 - 12. E) ASSESSMENT FOR ASSTT. YEAR 2011 - 12 HAS ACHIEV ED FINALITY AND HAS NOT BEEN DISTURBED BY REVENUE AUTHORITY TILL DATE. DEDUCTION U/S 80IB(11C) ALLOWED IN THE CASE OF ASSESSEE THUS HAS ACHIEVED FINALITY INCLUDING ON RECEIPTS IN THE NATURE OF REFERRAL INCOME, NURSING RECEIPTS, INTEREST INCOME AND RENTAL I NCOME AS INCOME DERIVED FROM OPERATION AND MAINTENANCE OF HOSPITAL. F) THE REFERRAL INCOME, NURSING RECEIPTS, INTEREST INCOME AND USAGE CHARGES FOR PHARMACY IS INEXTRICABLY LINKED /DIRECT NEXUS WITH THE OPERATIONS AND MAINTENANCE OF HOSPITAL AND ARE BU SINESS RECEIPTS DERIVED FROM OPERATING AND MAINTAINING HOSPITAL. CLAIM IN RESPECT TO AFORESAID INCOME WAS ALREADY ACCEPTED BY REVENUE AUTHORITIES IN THE ASSESSMENT FRAMED FOR ASSTT, YEAR 2011 - 12 AND THERE WAS NO SCOPE FOR A.O. TO TAKE ANY DIFFERENT VIEW IN THE MATTER DURING ASSTT. YEAR 2012 - 13. ASSUMPTION OF JURISDICTION U/S 263 IS BAD IN LAW. G) ISSUE IN DISPUTE IS COVERED IN FAVOUR OF ASSESSEE BY DECISION OF HON'BLE ITAT, NAGPUR BENCH, NAGPUR IN ITA NO.250/NAG/2000 IN THE CASE OF DINSHAW FROZEN FOODS , NAGPUR VIDE ORDER DATED 16/10/2002 BY FOLLOWING DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF PAUL BROS, REPORTED AT 216 ITR 548 (BOM.). RATIO LAID DOWN BY HON'BLE ITAT SQUARELY APPLIES TO THE FACTS IN THE PRESENT CASE. IN VIEW OF ABOVE ORDER PASS ED U/S 263 IS UNSUSTAINABLE. H) ASSTT. YEAR 2012 - 13 IS NOT INITIAL YEAR FOR GRANT OF DEDUCTION U/S 80IB(11C). IT IS SETTLED PROPOSITION OF LAW THE DEDUCTION U/S 80IB(11C) CANNOT BE DISTURBED IF THE INITIAL YEAR FOR GRANT OF DEDUCTION U/S 80IB(11C) IS N OT DISTURBED. ASSESSEE FOR THIS PROPOSITION PLACES RELIANCE ON THE FOLLOWING DECISIONS. I) HON'BLE BOMBAY HIGH COURT ORDER IN ITA NO. 27/2010 IN THE CASE OF SIMPLE FOOD PRODUCTS PVT. LTD. VIDE ORDER DATED 12/07/2017. II) (1995) 216 ITR 0548 (BOM .) CIT VS. PAUL BROTHERS (III) HON'BLE BOMBAY HIGH COURT ORDER IN ITA NO. 59/2004 IN THE CASE OF M/S. DINSHAW FROZEN FOODS VIDE ORDER DATED 21/11/2007. 5 ITA NO. 153/NAG./2017 M/S. EUREKA MEDICARE PRIVATE LIMITED IV) HON'BLE BOMBAY HIGH COURT ORDER IN ITA NO. 39/2004 IN THE CASE OF M/S. DINSHAW DAIRY FOODS LTD. VIDE ORDER DATED 21/11/2007. RATIO LAID DOWN BY AFORESAID DECISIONS SQUARELY APPLIES TO THE FACTS IN THE CASE OF ASSESSEE. DEDUCTION U/S 80IB(11C) HAVING BEEN ACCEPTED IN ASSTT. YEAR 2011 - 12 IN RESPECT TO REFERRAL INCOME, INTEREST, RENT AND NURSING R ECEIPTS SAME CANNOT BE WITHHELD IN THE YEAR UNDER CONSIDERATION. IN VIEW OF ABOVE, ASSUMPTION OF JURISDICTION U/S 263 BY CIT IS BAD IN LAW. THUS LIABLE TO BE CANCELLED. I) IN ASSTT. YEAR 2012 - 13 A.O. HAS EXAMINED THE DETAILS AS WELL AS ELIGIBILITY OF CLAIM OF DEDUCTION U/S 80IB(11C). A.O. IN FACT HAD ISSUED SUMMON U/S 131 FOR EXAMINING THE ELIGIBILITY CONDITION FOR GRANT OF DEDUCTION U/S 80IB(11C) ON 18/12/2014 DURING THE COURSE OF ASSESSMENT PROCEEDINGS. A.O. HAS CARRIED OUT INSPECTION OF BUSINESS PR EMISES IN ORDER TO EXAMINE AND VERIFY THE CLAIM OF ASSESSEE AND ALLOWED THE DEDUCTION U/S 80IB(11C). J) A.O. IN THE PRESENT ASSESSMENT YEAR AFTER DUE VERIFICATION OF EVIDENCE ON RECORD AND AFTER INSPECTION OF HOSPITAL PREMISES HAD ACCEPTED THE CLAIM OF ASSESSEE IN RESPECT TO QUANTUM OF DEDUCTION U/S 80IB(11C). EVIDENCES ON RECORD THUS CLEARLY DEMONSTRATE THAT THE DEDUCTION U/S 80IB(11C) HAS BEEN GRANTED AFTER VERIFICATION AND EXAMINATION OF THE CLAIM. OBSERVATION OF CIT AS TO NON VERIFICATION OF CLAIM IS FACTUALLY INCORRECT. THE CONCLUSION OF CIT THAT ORDER PASSED BY A.O. IS ERRONEOUS IS ON INCORRECT FACTUAL ASSUMPTION AND IS UNJUSTIFIED. K) INCOME FROM INTEREST, RENT, REFERRAL INCOME AND RECEIPTS FROM NURSING ACTIVITY WERE CONSIDERED AS INCOME IN EXTRICABLY LINKED TO THE ACTIVITY OF OPERATING OF HOSPITAL AND ACCORDINGLY DEDUCTION U/S 80IB(11C) WAS ALLOWED IN THE ASSESSMENT FRAMED U/S 143(3). VIEW ADOPTED BY A.O. FOR ALLOWING DEDUCTION U/S 80IB(11C) IS IN ACCORDANCE WITH LAW AND ONLY POSSIBLE VIEW O F THE MATTER CONSIDERING THE FACT THAT IN ASSTT. YEAR 2011 - 12 SUCH INCOME WAS HELD TO BE INCOME FROM OPERATING AND MAINTAINING OF HOSPITAL, L) ORDER PASSED BY A.O. IS AFTER DUE VERIFICATION AND THUS ORDER CANNOT BE TERMED AS ERRONEOUS AND PREJUDICIAL TO INTEREST OF REVENUE. ORDER PASSED BY A.O. BEING NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE SAME CANNOT BE A SUBJECT MATTER OF EXERCISE OF POWER U/S 263 OF IT. ACT 1961. ORDER PASSED BY CIT U/S 263 BEING NOT IN ACCORDANCE WITH LAW IS LIABLE TO BE CANCELLED. RELIANCE ON: I) 203 ITR 108 (BOM.) CIT VS. GABRIAL INDIA LTD. II) 295 ITR 282 (SC) CIT VS. MAX INDIA LTD. M) ASSESSES HAS RECEIVED INTEREST OF RS.5.99 LACS WHICH IS CREDITED IN PROFIT & LOSS ACCOUNT. INTEREST PAID DEBITED IN PROFIT & LOSS IS RS.40.06 LACS. INTEREST RECEIVED WOULD GO TO REDUCE THE INTEREST PAID AND THERE WOULD BE NO INTEREST INCOME WHICH CAN BE EXCLUDED FOR THE PURPOSE OF DEDUCTION U/S 80IB(11C). RELIANCE PLACED ON THE DE CISION OF HON'BLE ITAT IN CASE OF M/S PLASTIC SURGE INDUSTRIES LTD. IN ITA NO.79/NAG/2010 VIDE ORDER DATED 19/10/2012. AFORESAID DECISION OF HON'BLE ITAT HAS BEEN CHALLENGED BY REVENUE BEFORE HON'BLE BOMBAY HIGH COURT, NAGPUR. HON'BLE BOMBAY HIGH COURT HAS NOT ADMITTED QUESTION OF LAW IN RESPECT AFORESAID ISSUE AS IS EVIDENT FROM ORDER OF BOMBAY HIGH COURT AND MEMO OF APPEAL PLACED IN PAPER BOOK. 6 ITA NO. 153/NAG./2017 M/S. EUREKA MEDICARE PRIVATE LIMITED N) HON'BLE BOMBAY HIGH COURT IN CASE OF SHRI JAGDISHPRASAD M. JOSHI REPORTED AT 318 ITR 420 (BOM.) HAS HELD THAT THE INTEREST RECEIVED WOULD BE ELIGIBLE FOR DEDUCTION U/S 80IA/80IB. DEDUCTION GRANTED BY A.O. IN RESPECT TO INTEREST IS IN ACCORDANCE WITH THE DECISION OF HON'BLE BOMBAY HIGH COURT AND CANNOT BE TERMED AS ERRONEOUS. O) ASSESSEE HOSPITAL REQUIRES SUPPLY OF MEDICINE, PHARMACEUTICAL AND SURGICAL CONSUMABLES FOR TREATMENT OF PATIENTS ADMITTED IN THE HOSPITAL. AS PER CLINICAL ESTABLISHMENT ACT 2010, 100 BEDDED HOSPITAL FALLS UNDER LEVEL - 2 HOSPITAL. AS PER CLINICAL ESTABLISHMENT ACT LEVEL - 2 HOSPITAL IS MANDATORILY REQUIRED TO HAVE PHARMACY. AS STATUTORILY REQUIRED ASSESSEE HOSPITAL HAS PHARMACY DIVISION WHICH CATERS TO SUPPLY OF MEDICAL AND SURGICAL CONSUMABLES REQUIRED BY PATIENTS IN THE HOSPITAL. HOSPITAL IS NOT DEFINED UNDER THE PROVISIONS OF INCOME TAX ACT 1961. THE MEANING PROVIDED UNDER CLINICAL ESTABLISHMENT ACT WOULD BE RELEVANT FOR GIVING MEANING FOR THE PURPOSE OF SEC. 80IB(11C)OFL.T.ACT1961. P) ASSESSES CONSIDERING THE ADMINISTRATIVE CONVENIENCE HAS ENGAGED THE SERVICE OF SHRI RAJKUMAR AGR AWAL TO OPERATE AND MAINTAIN MEDICAL AND PHARMACEUTICAL STORES AT THE PREMISES OF ASSESSEE. ASSESSEE IS RECEIVING REVENUE IN THE SHAPE OF REFERRAL CHARGES IN RESPECT TO VARIOUS SUPPLIES MADE BY HIM TO THE PATIENTS ADMINISTERING TREATMENT AT HOSPITAL PREMIS ES. PRICE AT WHICH MEDICINES AND CONSUMABLES ARE TO BE SOLD IN HOSPITAL IS AS PER DIRECTIVES OF ASSESSEE COMPANY. IT IS WORTHWHILE TO SUBMIT THAT ACTIVITIES OF SHRI RAJKUMAR AGRAWAL ARE RESTRICTED TO MAKE SUPPLIES OF MEDICAL, PHARMACEUTICAL AND SURGICAL CO NSUMABLES WITHIN THE HOSPITAL ITSELF. HE HAS NOT MADE ANY SUPPLIES OUTSIDE THE HOSPITAL. Q) ASSESSEE IN THE PROJECT REPORT SUBMITTED TO BANK FOR OBTAINING TERM LOAN FOR CONSTRUCTION OF HOSPITAL BUILDING HAS CONSIDERED INCOME FROM PHARMACY TO DETERMINE TOTAL PROJECTED REVENUE OF HOSPITAL. PROJECT REPORT SUBMITTED BY ASSESSEE HAS BEEN APPRAISED BY BANK AUTHORITY BEFORE SANCTIONING LOAN. THIS CLEARLY SHOWS THAT INCOME FROM PHARMACY IS INTEGRAL PART OF TOTAL REVENUE OF HOSPITAL. R) ACTIVITIES OF RUNNING PHARMACY IS NOT AN INDEPENDENT ACTIVITY AS SAME IS STATUTORILY REQUIRED FOR SUPPLY OF MEDICINE, PHARMACEUTICAL AND SURGICAL CONSUMABLES REQUIRED FOR TREATMENT OF PATIENTS ADMITTED IN THE HOSPITAL. IT CONSTITUTES AN INTEGRAL PART OF BUSINESS OF OPER ATING AND MAINTAINING HOSPITAL. THUS REVENUE DERIVED IS INEXTRICABLY LINKED/NEXUS WITH THE OPERATING AND MAINTAINING OF HOSPITAL AND IS CLEARLY ELIGIBLE INCOME FROM BUSINESS OF OPERATING AND MAINTAIN OF HOSPITAL. IT IS PART OF SOURCE OF REVENUE DERIVED FRO M PATIENTS ADMITTED IN THE HOSPITAL FOR TREATMENT. REVENUE IS THUS REVENUE FROM OPERATING AND MAINTENANCE OF HOSPITAL. THUS ALLOWANCE OF DEDUCTION U/S 80IB(11C) ON ABOVE UNDISPUTED FACTUAL POSITION ON RECORD CANNOT BE FAULTED. RELIANCE ON: I) ITAT, C HENNAI BENCH IN THE CASE OF FRANCISCAN SISTERS OF ST. JOSEPH SOCIETY VS. JCIT REPORTED AT 152 ITD 485 (CHENNAI) DATED 06/01/2014. S) ASSESSEE HAS ALSO RECEIVED NOMINAL USAGE CHARGES OF RS.2,04,000/ - FROM MEDICAL STORE TOWARDS USE OF HOSPITAL BUILDING IN THE COURSE OF OPERATING AND MAINTENANCE OF HOSPITAL. AMOUNT OF USAGE CHARGES RECEIVED IS MUCH LESS THAN THE DEPRECIATION AND MAINTENANCE OF HOSPITAL BUILDING WHICH HAS BEEN GIVEN TO AFORESAID PERSON FOR WHICH ASSESSEE HAS RECEIVED USAGE CHARGES. NO POSI TIVE INCOME IN RESPECT 7 ITA NO. 153/NAG./2017 M/S. EUREKA MEDICARE PRIVATE LIMITED TO USAGE CHARGES. REVENUE FOR USE OF HOSPITAL PREMISES IS INEXTRICABLY LINKED TO THE ACTIVITY OF OPERATING AND MAINTENANCE OF HOSPITAL AND THUS INCOME DERIVED THERE FROM IS INCOME FROM BUSINESS OF OPERATING AND MAINTENANCE OF HOSPITA L ELIGIBLE FOR DEDUCTION U/S 80IB(11C). RELIANCE ON: I) ITAT, PUNE BENCH 'A', PUNE IN THE CASE OF SAMEER RAJENDRA SHAH VS. JCIT IN ITA N0.1061/PN/2013 ORDER DATED 29/04/2016. II) ITAT ORDER IN I.T.(T.P.)A. NO.799/BANG/2015 IN THE CASE OF M/S. INFOSYS LIMITED VIDE ORDER DATED 10/11/2017. T) ASSESSEE IS OPERATING AND MAINTAINING HOSPITAL IN RURAL AREA. HOSPITAL BEING OF 100 BEDDED RENDERING 24/7 FACILITIES REQUIRES LOT OF HUMAN RESOURCES FOR NURSING PATIENTS TREATED IN THE HOSPITAL. TRAINED NURSES ARE NOT READILY AVAILABLE AND THEREFORE INHOUSE TRAINING OF NURSES IS UNDERTAKEN IN THE HOSPITAL ITSELF WHICH HAS BEEN OBSERVED BY A.O. TO BE NURSING COLLEGE. IN THIS PROCESS ASSESSEE COMPANY HAS RECEIVED RS.11.46 LACS FOR TRAINING PROVIDED TO NURSI NG STAFF. ASSESSEE COMPANY HAS INCURRED DIRECT EXPENSES FOR TRAINING NURSES AT RS.8.68 LACS. ASSESSEE COMPANY HAS ALSO INCURRED INDIRECT EXPENSES FOR PROVIDING TRAINING TO NURSES WHICH ARE PART OF ADMINISTRATIVE AND OTHER EXPENSES. THERE IS NO POSITIVE INC OME WHICH CAN BE EXCLUDED FOR THE PURPOSE OF DEDUCTION U/S 80IB(11C) AFTER CONSIDERING THE SHARE OF INDIRECT EXPENSES. U) ACTIVITY OF TRAINING OF NURSES IS NOT AN INDEPENDENT ACTIVITY. ACTIVITY OF TRAINING NURSES IS UNDERTAKEN TO MEET THE REQUIREMENT O F BUSINESS OF OPERATING AND MAINTAINING HOSPITAL AS TRAINED NURSES ARE EMPLOYED BY HOSPITAL FOR DAY TO DAY OPERATION. IN VIEW OF ABOVE, ACTIVITY OF TRAINING NURSES IS INEXTRICABLY LINKED TO THE ACTIVITY OF OPERATING AND MAINTAINING OF HOSPITAL. THUS INCOME IF ANY WOULD ARISE OUT OF SUCH ACTIVITY WOULD BE ELIGIBLE FOR BENEFIT OF DEDUCTION U/S 80IB(11C). V) ORDER PASSED BY A.O. CANNOT BE TERMED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. IT IS HUMBLY PRAYED TO CANCEL AND SET ASIDE THE ORDER P ASSED BY CIT U/S 263 OF IT. ACT 1961. 7. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDERS OF THE COMMISSIONER OF INCOME TAX . 8. WE HAVE CAREFULLY CONSIDERED THE SUBMISSION AND PERUSED T HE RECORDS. UPON CAREFUL CONSIDERATION, WE NOTE THAT THE COMMISSIONER OF INCOME TAX IN THIS CASE HAS DIRECTED THE ASSESSING OFFICER TO ASCERTAIN WHETHER THE REFERRAL INCOME, INCOME FROM RUNNING A NURSING COLLEGE, INTEREST, RENTAL INCOME FROM MEDICAL STORE ARE TO BE ALLOWED AS DEDUCTION U/S.80I B(11C) OF THE INCOME TAX ACT, 1961. IN THIS REGARD, WE NOTE THAT U/S. 80IB(11C) OF THE ACT, THE DEDUCTION WILL BE AVAILABLE IN CASE OF AN UNDERTAKING WHICH 8 ITA NO. 153/NAG./2017 M/S. EUREKA MEDICARE PRIVATE LIMITED DERIVES PROFITS FROM BUSINESS OF OPERATING AND MAINTAINING THE HOSPITAL LOCATED ANYWHERE IN INDIA. N OW IT IS UNDISPUTED THAT THE ASSESSEE IS IN THE BUSINESS OF OPERATING AND MAINTAINING THE HOSPITAL. IN THIS REGARD, WE NOTE THAT IN THE PRECEDING ASSESSMENT YEAR , I.E., FOR ASSESSMENT YEAR 2011 - 12, UNDER A SCRUTINY ASSESSMENT U/S. 143(3), FOR ALL THE ABOVE MENTIONED ITEMS OF INCOME NOTED , THE ASSESSEE WAS GRANTED DEDUCTION U/S. 80IB(11C). THERE IS NO MENTION ANYWHERE THAT THERE IS ANY CHANGE IN THE FACTS AND CIRCUMSTANCE S OF THE CASE FROM THAT PREVAILING IN THE PREVIOUS ASSESSMENT YEAR. IN THIS REGARD, WE NOTE THAT THE PRESENT ASSESSMENT YEAR 2012 - 13, IS NOT THE INITIAL YEAR FOR GRANT OF DEDUCTION U/S. 80IB(11C). IT IS THE SETTLED PROPOSITION OF LAW THAT THIS DEDUCTION CA NNOT BE DISTURBED IF THE INITIAL YEAR FOR SCRUTINY OF SAID DEDUCTION IS NOT DISTURBED. THIS PROPOSITION DULY FOLLOWS THE EXPOSITION FROM THE FOLLOWING HON'BLE BOMBAY HIGH COURT DECISIONS: I) HON'BLE BOMBAY HIGH COURT ORDER IN ITA NO. 27/2010 IN THE CASE OF SIMPLE FOOD PRODUCTS PVT. LTD. VIDE ORDER DATED 12/07/2017. II) (1995) 216 ITR 0548 (BOM.) CIT VS. PAUL BROTHERS (III) HON'BLE BOMBAY HIGH COURT ORDER IN ITA NO. 59/2004 IN THE CASE OF M/S. DINSHAW FROZEN FOODS VIDE ORDER DATED 21/11/2007 . IV) HON'BLE BOMBAY HIGH COURT ORDER IN ITA NO. 39/2004 IN THE CASE OF M/S. DINSHAW DAIRY FOODS LTD. VIDE ORDER DATED 21/11/2007. 9. IN THIS VIEW OF THE MATTER, IN OUR CONSIDERED OPINION, THE COMMISSIONER OF INCOME TAX ASSUME S JURISDICTION U/S. 263, IS NOT AT ALL SUSTAINABLE IN LAW. 10. WE FURTHER NOTE THAT IN FORMING HIS OPINION THAT THE ASSESSEES CLAIM FOR DEDUCTION NEEDS FURTHER ENQUIRY BY THE ASSESSING OFFICER, THE COMMISSIONER OF INCOME TAX HAS GIVEN A REASONING THAT THE ASSESSING OFFICER HAS NOT MADE NECESSARY ENQUIRY. IN THIS REGARD, WE NOTE THAT IT IS THE CLAIM OF THE ASSESSEE THAT DUE SCRUTINY WAS DONE BY THE ASSESSING OFFICER. THE ASSESSING OFFICER HAD ISSUED NECESSARY QUESTIONNAIRES. HE ALSO 9 ITA NO. 153/NAG./2017 M/S. EUREKA MEDICARE PRIVATE LIMITED ISSUED SUMMONS U/S. 131 OF THE A CT. ALL THESE REQUIREMENTS BY THE ASSESSING OFFICER WERE DULY COMPLIED WITH. IN THIS REGARD, THE COMMISSIONER OF INCOME TAX HAS GIVEN A VERY STRANGE REASONING THAT ACCEPTING THE STATEMENT FILED BY THE ASSESSEE IN THE ABSENCE OF ANY SUPPORTING MATERIAL AND WITHOUT MAKING ANY ENQUIRY, THE ORDER IS ERRONEOUS. THIS PROPOSITION HAS BEEN FO UND BY THE COMMISSIONER OF INCOME TAX TO BE IRRESISTIBLE . IN THIS REGARD, WE FIND THAT IN COMING TO THIS IRRESISTIBLE PROPOSITION, THE COMMISSIONER OF INCOME TAX HAS NOT SPELT OUT ANY COGENT REASON. AS IT IS NOTED THAT THE ITEMS REFERRED BY THE COMMISSIONER OF INCOME TAX ARE THE SAME AS PREVAILING IN THE PREVIOUS ASSESSMENT YEAR ON WHICH DEDUCTION U/S. 80IB(11C) WAS ALLOWED , T HERE IS NOT A WHISPER ANYWHERE THAT THERE IS ANY CHANGE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. HENCE, ON WHAT BASIS THE ASSESSING OFFICER WAS SUPPOSED TO NEGATE THE ASSESSEES CLAIM IS NOT EMANATING FROM AVAILABLE RECORDS. 11. FURTHERMORE, IT IS INTERESTING TO NOTE THAT AS REGARDS THE REFERRAL INCOME RECEIVED BY THE ASSESSEE COMPANY , THE COMMISSIONER OF INCOME TAX HAS OBSERVED THAT IT IS NOT ON RECORD AS FROM WHOM AND FOR WHAT PURPOSE THE REFERRAL INCOME WAS RECEIVED. WE FIND TH AT THIS OBSERVATION OF THE COMMISSIONER OF INCOME TAX REFLECTS THE TOTAL LACK OF APPLICATION OF MIND. WHY AN ASSESSING OFFICER WHILE EXAMINING THE BOOKS OF ACCOUNTS OF A HOSPITAL/MEDICAL FACILITY PROVIDER WOULD KEEP WITH HIMSELF IN THE ASSESSMENT RECORDS T HE DETAILS OF REFERRAL INCOME AS TO FROM WHOM AND FOR WHAT PURPOSE IT WAS R ECEIVED, DEFIES ANY LOGICAL EXPLANATION. REFERRAL INCOME IN CASE OF MEDICAL FACILITY PROVIDER IS A VERY COMMON PHENOMENON. IT IS UNDOUBTEDLY LINKED TO THE BUSINESS OF RUNNING AND OP ERATING MEDICAL FACILITY. OVER AND ABOVE, THE CO - RELATION OF THE INCOME FROM INTEREST , RENT FROM MEDICAL STORE, REFERRAL INCOME AND RECEIPT FROM NURSING ACTIVITY WERE EXPLAINED 10 ITA NO. 153/NAG./2017 M/S. EUREKA MEDICARE PRIVATE LIMITED IN DETAIL BEFORE THE COMMISSIONER OF INCOME TAX AND IT WAS AVERRED THAT THE SAME WERE INEXTRICABLY LINKED TO THE HOSPITAL. IN FACT, THE COMMISSIONER OF INCOME TAX HAS ELABORATED THE SUBMISSIONS OF THE ASSESSEE IN HIS ORDER U/S. 263 ITSELF. HOWEVER, THERE IS NO WHISPER FROM THE COMMISSIONER OF INCOME TAX AS TO WHY THE SAM E WERE NOT ACCEPTABLE. AS REGARDS THE INEXTRICABLY LINKAGE OF THE INTEREST INCOME, THE ASSESSEE HAS QUOTED VARIOUS DECISIONS INCLUDING THE DECISION FROM THE ITAT IN THE CASE OF M/S PLASTIC SURGE INDUSTRIES LTD. (SUPRA) AND THE DECISION OF THE HON'BLE BOMBA Y HIGH COURT IN THE CASE OF SHRI JAGDISHPRASAD M. JOSHI (SUPRA ) , WHEREIN IT WAS HELD THAT INTEREST RECEIVED WOULD BE ELIGIBLE FOR DEDUCTION U/S S . 80IA AND 80IB. AS REGARDS THE RENTAL INCOME FROM MEDICAL STORE, IT HAS BEEN SUBMITTED THAT THE HOSPITAL REQUIR E S SUPPLY OF MEDICINE, PHARMACEUTICAL AND SURGICAL CONSUMABLES FOR TREATMENT OF PATIENTS . AS PER CLINICAL ESTABLISHMENT ACT 2010, UNDER LEVEL - 2 HOSPITAL IS MANDATORILY REQUIRED TO HAVE PHARMACY. IT HAS FURTHER BEEN SUBMITTED THAT THE ASSESSEE CONSIDERING T HE ADMINISTRATIVE CONVENIENCE HAS ENGAGED THE SERVICE OF SHRI RAJKUMAR AGRAWAL TO OPERATE AND MAINTAIN MEDICAL AND PHARMACEUTICAL STORES AT THE PREMISES OF ASSESSEE. THE A SSESSEE IS RECEIVING REVENUE IN THE SHAPE OF REFERRAL CHARGES IN RESPECT TO VARIOUS S UPPLIES MADE BY HIM TO THE PATIENTS ADMINISTERING TREATMENT AT HOSPITAL PREMISES. PRICE AT WHICH MEDICINES AND CONSUMABLES ARE TO BE SOLD IN HOSPITAL IS AS PER DIRE CTIVES OF ASSESSEE COMPANY. IT HAS BEEN SUBMITTED THAT ACTIVITIES OF SHRI RAJKUMAR AGRAWAL A RE RESTRICTED TO MAKE SUPPLIES OF MEDICAL, PHARMACEUTICAL AND SURGICAL CONSUMABLES WITHIN THE HOSPITAL ITSELF. IT HAS FURTHER BEEN SUBMITTED THAT IN T H E PROJECT REPORT SUBMITTED BY THE HOSPITAL TO BANK FOR OBTAINING TERM LOAN INCOME FROM PHARMACY WAS CONSIDERED AN INTEGRAL PART. HENCE, IT HAS BEEN CLAIMED THAT R UNNING PHARMACY IS NOT AN INDEPENDENT ACTIVITY AND THE SAME IS 11 ITA NO. 153/NAG./2017 M/S. EUREKA MEDICARE PRIVATE LIMITED STATUTORILY REQUIRED AND INEXTRICABLY LINKED TO THE OPERATION AND MAINTENANCE OF HOSPITAL. THE ASSESSEE HAS REFERRED TO VARIOUS CAS E LAWS IN THE SUBMISSIONS REFERRED ABOVE WHICH ARE GERMANE. FURTHER, THE ASSESSEE HAS REFERRED TO VARIOUS CASE LAWS AS MENTIONED ABOVE WHERE IT HAS BEEN ACCEPTED THAT RUNNING A HOSPITAL REQUIRES A LOT OF HUMAN RESOURCES FOR NURSING PATIENTS TREATED IN THE HOSPITAL. TRAINED NURSES ARE NOT READILY AVAILABLE AND THEREFORE INHOUSE TRAINING OF NURSES IS UNDERTAKEN IN THE HOSPITAL ITSELF . IN THIS PROCESS, THE ASSESSEE COMPANY HAD RECEIVED RS.11.46 LACS FOR TRAINING PROVIDED TO NURSING STAFF. IT HAS BEEN CLAIMED T HAT THE ASSESSEE HAS INCURRED DIRECT EXPENSES FOR TRAINING NURSES AT RS.8.68 LACS. IT HAS BEEN SUBMITTED THAT THE A SSESSEE COMPANY HAS ALSO INCURRED INDIRECT EXPENSES FOR PROVIDING TRAINING TO NURSES WHICH ARE PART OF ADMINISTRATIVE AND OTHER EXPENSES. HEN CE, IT HAS BEEN SAID THAT ACTUALLY THERE IS NO POSITIVE INCOME IN THIS REGARD. OVERALL IT HAS BEEN CLAIMED THAT THE ACTIVITY OF TRAINING OF NURSES IS NOT AN INDEPENDENT ACTIVITY. 12. WE FIND THAT THE ABOVE SUBMISSIONS AMPLY EXPLAIN THAT THE ITEMS OF RECE IPT MENTIONED AND QUESTIONED BY THE COMMISSIONER OF INCOME TAX ARE INEXTRICABLY LINKED TO THE OPERATING AND MAINTAINING OF THE HOSPITALS. EVEN AT THE COST OF REPETITION , WE MAY ADD THAT THESE ACTIVITIES WERE FOUND TO BE INEXTRICABLY SO LINKED AND THE ASSES SEE WAS ALLOWED DEDUCTION U/S.80IB(11C) IN THE IMMEDIATE PRECEDING YEAR. 13. HENCE , IN THE BACKGROUND OF THE AFORESAID DISCUSSION AND PRECEDENT, WE ARE OF THE CONSIDERED OPINION THAT THE COMMISSIONER OF INCOME TAX WAS NOT AT ALL JUSTIFIED IN ASSUMING JUR ISDICTION U/S. 263 OF THE ACT. WE HOLD THAT THERE WAS NO MATERIAL ON RECORD TO WARRANT ASSUMPTION OF JURISDICTION BY THE COMMISSIONER OF INCOME TAX . IN THIS REGARD, 12 ITA NO. 153/NAG./2017 M/S. EUREKA MEDICARE PRIVATE LIMITED WE PLACE RELIANCE UPON THE EXPOSITION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF C IT VS. GABRIAL INDIA LTD. [1993] 203 ITR 108 (BOM) FOR THE FOLLOWING: THE POWER OF SUO MOTU REVISION UNDER SUB - SECTION (1) IS IN THE NATURE OF SUPERVISORY JURISDICTION AND THE SAME CAN BE EXERCISED ONLY IF THE CIRCUMSTANCES SPECIFIED THEREIN EXIST. TWO CIRCUMSTANCES MUST EXIST TO ENABLE THE COMMISSIONER TO EXERCISE POWER OF REVISION UNDER THIS SUB - SECTION, VIZ., ( I ) THE ORDER IS ERRONEOUS; AND ( II ) BY VIRTUE OF THE ORDER BEING ERRONEOUS PREJUDICE HAS BEEN CAUSED TO THE INTERESTS OF THE REVENUE. IT HAS, THEREFORE, TO BE CONSIDERED FIRSTLY AS TO WHEN AN ORDER CAN BE SAID TO BE ERRONEOUS. ONE FINDS THAT THE EXPRESSIONS 'ERRONEOUS', 'ERRONEOUS ASSESSMENT' AND 'ERRONEOUS JUDGMENT' HAVE BEEN DEFINED IN BLACK'S LAW DICTIONARY. ACCORDING TO THE DEFINITION, 'ERRO NEOUS' MEANS 'INVOLVING ERROR; DEVIATING FROM THE LAW'. 'ERRONEOUS ASSESSMENT' REFERS TO AN ASSESSMENT THAT DEVIATES FROM THE LAW AND IS, THEREFORE, INVALID, AND IS A DEFECT THAT IS JURISDICTIONAL IN ITS NATURE, AND DOES NOT REFER TO THE JUDGMENT OF THE AS SESSING OFFICER IN FIXING THE AMOUNT OF VALUATION OF THE PROPERTY. SIMILARLY, 'ERRONEOUS JUDGMENT' MEANS 'ONE RENDERED ACCORDING TO COURSE AND PRACTICE OF COURT, BUT CONTRARY TO LAW, UPON MISTAKEN VIEW OF LAW, OR UPON ERRONEOUS APPLICATION OF LEGAL PRINCIP LES'. FROM THE AFORESAID DEFINITIONS IT IS CLEAR THAT AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH LAW. IF AN ITO ACTING IN ACCORDANCE WITH LAW MAKES A CERTAIN ASSESSMENT, THE SAME CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISS IONER SIMPLY BECAUSE, ACCORDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY. THIS SECTION DOES NOT VISUALISE A CASE OF SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE ITO, WHO PASSED THE ORDER, UNLESS THE DECISION IS HELD T O BE ERRONEOUS. CASES MAY BE VISUALISED WHERE THE ITO WHILE MAKING AN ASSESSMENT EXAMINES THE ACCOUNTS, MAKES ENQUIRIES, APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME EITHER BY ACCEPTING THE ACCOUNTS OR BY MAKING SOM E ESTIMATE HIMSELF. THE COMMISSIONER, ON PERUSAL OF THE RECORDS, MAY BE OF THE OPINION THAT THE ESTIMATE MADE BY THE OFFICER CONCERNED WAS ON THE LOWER SIDE AND LEFT TO THE COMMISSIONER HE WOULD HAVE ESTIMATED THE INCOME AT A FIGURE HIGHER THAN THE ONE DET ERMINED BY THE ITO. THAT WOULD NOT VEST THE COMMISSIONER WITH POWER TO RE - EXMINE THE ACCOUNTS AND DETERMINE THE INCOME HIMSELF AT A HIGHER FIGURE. IT IS BECAUSE THE ITO HAS EXERCISED THE QUASI - JUDICIAL POWER VESTED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT A CONCLUSION AND SUCH A CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIONER DOES NOT FEEL SATISFIED WITH THE CONCLUSION. 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 THAT BY ITSELF WILL NOT BE ENOUGH TO VEST THE COMMISSIONER WITH THE POWER OF SUO MOTU REVISION BECAUSE THE FIRST REQUIREMENT, VIZ., THAT THE ORDER IS ERRONEOUS, IS ABSENT. SIMILARLY, IF AN ORDER IS ERRONEOUS BUT NOT PRE JUDICIAL TO THE INTERESTS OF THE REVENUE, THEN ALSO THE POWER OF SUO MOTU REVISION CANNOT BE EXERCISED. ANY AND EVERY ERRONEOUS ORDER CANNOT BE THE SUBJECT - MATTER OF REVISON BECAUSE THE SECOND REQUIREMENT ALSO MUST BE FULFILLED. THERE MUST BE SOME PRIMA FA CIE MATERIAL ON RECORD TO SHOW THAT TAX WHICH WAS LAWFULLY EXIGIBLE HAS NOT BEEN 13 ITA NO. 153/NAG./2017 M/S. EUREKA MEDICARE PRIVATE LIMITED IMPOSED OR THAT BY THE APPLICATION OF THE RELEVANT STATUTE ON AN INCORRECT OR INCOMPLETE INTERPRETATION A LESSER TAX THAN WHAT WAS JUST HAS BEEN IMPOSED. THEREFORE, IN ORDER T O EXERCISE POWER UNDER SECTION 263(1) THERE MUST BE MATERIAL BEFORE THE COMMISSIONER TO CONSIDER THAT THE ORDER PASSED BY THE ITO WAS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE AND THAT IT MUST BE AN ORDER WHICH IS NOT IN ACCORD ANCE WITH THE LAW OR WHICH HAS BEEN PASSED BY THE ITO WITHOUT MAKING ANY ENQUIRY IN UNDUE HASTE. AN ORDER CAN BE SAID TO BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE IF IT IS NOT IN ACCORDANCE WITH THE LAW IN CONSEQUENCE WHEREOF THE LAWFUL REVENUE DUE TO THE STATE HAS NOT BEEN REALISED OR CANNOT BE REALISED. THERE MUST BE MATERIAL AVAILABLE ON THE RECORD CALLED FOR BY THE COMMISSIONER TO SATISFY HIM PRIMA FACIE THAT THE AFORESAID TWO REQUISITES ARE PRESENT. IF NOT, HE HAS NO AUTHORITY TO INITIATE PROCEEDI NGS FOR REVISION. EXERCISE OF POWER OF SU MOTU REVISION UNDER SUCH CIRCUMSTANCES WILL AMOUNT TO ARBITRARY EXERCISE OF POWER. IT IS WELL - SETTLED THAT WHEN EXERCISE OF STATUTORY POWER IS DEPENDENT UPON THE EXISTENCE OF CERTAIN OBJECTIVE FACTS, THE AUTHORITY BEFORE EXERCISING SUCH POWER MUST HAVE MATERIALS ON RECORD TO SATISFY IT IN THAT REGARD. IF THE ACTION OF THE AUTHORITY IS CHALLENGED BEFORE THE COURT, IT WOULD BE OPEN TO THE COURTS TO EXAMINE WHETHER THE RELEVANT OBJECTIVES WERE AVAILABLE FROM THE RECORD S CALLED FOR AND EXAMINED BY SUCH AUTHORITY.THE ITO IN THIS CASE HAD MADE ENQUIRIES IN REGARD TO THE NATURE OF THE EXPENDITURE INCURRED BY THE ASSSSEE. THE ASSESSEE HAD GIVEN A DETAILED EXPLANATION IN THAT REGARD BY A LETTER IN WRITING. ALL THESE WERE PART OF THE RECORD OF THE CASE. EVIDENTLY, THE CLAIM WAS ALLOWED BY THE ITO ON BEING SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. THIS DECISION OF THE ITO COULD NOT BE HELD TO BE 'ERRONEOUS' SIMPLY BECAUSE IN HIS ORDER HE DID NOT MAKE AN ELABORATE DISCUSSIO N IN THAT REGARD. MOREOVER, IN THE INSTANT CASE, THE COMMISSIONER HIMSELF, EVEN AFTER INITIATING PROCEEDINGS FOR REVISION AND HEARING THE ASSESSEE, COULD NOT SAY THAT THE ALLOWANCE OF THE CLAIM OF THE ASSESSEE WAS ERRONEOUS AND THAT THE EXPENDITURE WAS NOT REVENUE EXPENDITURE BUT AN EXPENDITURE OF CAPITAL NATURE. HE SIMPLY ASKED THE ITO TO RE - EXAMINE THE MATTER. THAT WAS NOT PERMISSIBLE. HENCE, THE PROVISIONS OF SECTION 263 WERE NOT APPLICABLE TO THE INSTANT CASE AND, THEREFORE, THE COMMISSIONER WAS NOT JUS TIFIED IN SETTING ASIDE THE ASSESSMENT ORDER. 14. WE FURTHER FIND IT OPT TO REFER THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF MAX INDIA LTD. (SUPRA) FOR THE PROPOSITION THAT WHERE TWO VIEWS ARE POSSIBLE AND ITO HAS TAKEN ONE VIEW WHICH THE COM MISSIONER OF INCOME TAX DOES NOT AGREE, IT CANNOT BE TREATED AS ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF REVENUE. 15. ACCORDINGLY, WE QUASH THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX U/S. 263 OF THE INCOME TAX ACT, 1961 . 14 ITA NO. 153/NAG./2017 M/S. EUREKA MEDICARE PRIVATE LIMITED 16. IN THE RESULT, THIS APPEAL BY THE ASSESSEE STANDS ALLOWED. O RDER PRONOUNCED BY LISTING THE RESULT ON THE NOTICE BOARD OF THE BENCH UNDER RULE 34(4) OF THE APPELLATE TRIBUNAL RULES, 1963. SD/ - RAM LAL NEGI JUDICIAL MEMBER SD/ - SHAMIM YAHYA ACCOUNTANT MEMBER DATED : 0 1 . 0 8 . 2 0 1 8 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, NAGPUR CITY CONCERNED; (5) THE DR, ITAT, NAGPUR ; (6) GUARD FILE . // TRUE COPY // BY ORDER ROSHANI , SR. PS ( SR. P.S. / P.S. ) ITAT