Zuari Maroc Phosphates Ltd., Goa V. Dy. Commissioner, Circle-2., Panaji

ITA 158/PAN/2014

• Counselvise Citation: 15824114 RSA 2014
• Duration Of Justice: 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 25-09-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 06-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJUNATH I PUJARI LD
• Keywords: Business income; Business expenditure; Opportunity of being heard; Earning of tax free income; Period of limitation; Tax effect; Reason to believe
• Section: 143(3); 263; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P.K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 1 58 / PNJ/201 4 : (ASST. YEAR : 2009 - 10 ) ZUARI MA ROC PHOSPHATES LTD , JAIKISAAN BHAWAN, ZUARINAGAR, GOA - 403726. PAN : AAACZ 1716D . (APPELLANT) VS. THE COMMISSIONER OF INCOME - TAX, PANAJI - GOA. (RESPONDENT) A PPELLANT BY : SHRI SALIL KAPOOR, ADV. RE SPONDENT BY : SHRI MANJUNATH I. PUJARI, LD. D.R. DATE OF HEARING : 11/ 1 2 /201 4 DATE OF PRONOUNCEMENT : 11 /0 2 /201 5 O R D E R PER P.K. BANSAL THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) , PANAJI, DT D . 06 .0 3 .201 4 FOR ASSESSMENT YEAR 2009 - 10 BY TAKING THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL: - 1 . THE COMMISSIONER OF INCOME - T AX , PANAJI GOA ( HEREINAFTER REFERRED TO AS THE ( CIT ) ERRED IN INVOKING JURISDICTION UNDER SECTION 263 OF THE INCOME TAX ACT , 1961 (ACT), WITHOUT APPRECIATING THAT THE ASSESSMENT ORDER UNDER SECTION 143(3) PASSED BY THE ASSESSING OFFICER (AO) WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE . 2 . THE CIT ERRED IN DIRECTING THE AO TO DECIDE WHETHER THE EXPENSES, AGGREGATING TO RS.1,78,57,950/ - ARE AL LOWAB LE AS BUSINESS EXPLANATION / CONTENTION OF THE APPELLANT, VERIFYING THE MEMORANDUM AND ARTICLES OF ASSOCIATION OF THE COMPANY AND NATURE OF RECEIPTS AND EXPENSES, IGNORING THE FACT THAT AO MADE DETAILED INQUIRIES DURING THE COURSE OF THE ASSESSMENT PR OCEEDINGS 2 ITA NO. 1 58 /PNJ/201 4 (ASST. YEAR : 2009 - 10 ) AND ONLY AFTER DUE SATISFACTION TO THE ENQUIRIES, ALLOWED VARIOUS EXPENSES WHILE COMPUTING THE INCOME FROM BUSINESS OR PROFESSION. 3 . WITHOUT PREJUDICE TO THE ABOVE , IN AN UNLIKELY SITUATION OF UPHOLDING THE DISALLOWANCE OF EXPENSES ON THE ALLEGED GROUND THAT THE EXPENDITURE IS NOT INCURRED FOR THE PURPOSE OF BUSINESS, AS THERE IS NO BUSINESS ACTIVITY BUT ONLY INVESTMENT ACTIVITY DURING THE YEAR UNDER CONSIDERATION, THE APPELLANT HUMBLY SUBMITS THAT EXPENDITURE SHOULD BE ALLOWED TO THE EXTEN T THEY ARE VERY BASIC AND NECESSARY EXPENDITURE TO MAINTAIN CORPORATE FORM / STRUCTURE OF THE APPELLANT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN DECLARING TOTAL LOSS AT RS. 1,80,88,960 / - . THE ASSESSMENT U/S 143(3) WAS PASSED ON 30.9.2011 AT A LOSS OF RS.1,78,57,950/ - . ON A PROPOSAL BEING RECEIVED FROM THE ASSESSING OFFICER THE CIT CALLED FOR THE RECORD AND ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE IN ACCORDANCE WITH THE PROVISIONS OF SECTION 263 WHICH READ AS UNDER : - 2. IN THIS CASE, IN THE AY 2009 - 10, YOU HAVE EARNED RS. 23,10,010/ - AS INTEREST ON FIXED DEPOSITS. ALL EXPENSES CHARGED TO THE PROFIT AND LOSS ACCOUNT IS ATTRIBUTABLE TO INVESTMENT IN SHARES PARADEEP PHOSPHATES LTD (PPL) AMOUNTING RS. 294,50,00,000/ - . THE INCOME ARISES FROM THE INVESTMENT IS CLAIMED TO BE EXEMPT U/S 10 OF INCOME TAX ACT 1961. THUS, ALL ADMINISTRATIVE EXPENSES INCURRED ARE ATTRIBUTABLE TO THAT INCOME AND ACCORDINGLY REQUIRED TO BE DISALLOWED. UNDER THE PROVISIONS OF THE INCOME - TAX ACT, 1961 , ANY EXPENDITURE EXCLUSIVELY INCURRED FOR THE PURPOSE OF THE BUSINESS IS AN ALLOWABLE DEDUCTION. SINCE THE EXPENDITURE IS NOT INCURRED OF FOR THE PURPOSE OF BUSINESS, AS THERE IS NO BUSINESS ACTIVITY BUT ONLY INVESTMENT ACTIVITY, THE EXPENDITURE IS NOT AN ALLOWABLE EXPENDITURE. FAILURE TO DO SO HAS RESULTED IN IRREGULAR ALLOWANCE OF LOSS ALLOWED TO CARRY FORWARD OF RS. 1,78,57,950 (AS PER ORDER U/S 154 DATED 30.03.2012) INVOLVING NOTIONAL TAX EFFECT OF RS.60,69,917 (33.99% OF RS.1,78,57,950). 3. IN VI EW OF THE ABOVE ACTS, IT IS CLEAR THAT THE ASSESSMENT ORDER U/S 143(3) DATED 30.09.2011 & SUBSEQUENT ORDER U/S 154, 3 ITA NO. 1 58 /PNJ/201 4 (ASST. YEAR : 2009 - 10 ) DATED 30.03.2012 FOR AY 2009 - 10 ARE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. SINCE THE ASSESSING OFFICER HAS NOT LOOKED INT O THIS ASPECT WHILE COMPLETING THE ASSESSMENT, I PROPOSE TO PASS APPROPRIATE ORDER U/S 263 OF THE INCOME - TAX 1961 IN YOUR CASE FOR ASST. YEAR 2009 - 10. YOU ARE HEREBY PROVIDED AN OPPORTUNITY OF BEING HEARD IN THE MATTER ON 27 - 12 - 2013 AT 3.30 P.M. 3. THE ASSESSEE VIDE WRITTEN SUBMISSION DATED 16.01.2014 CHALLENGED THE VALIDITY OF NOTICE U/S 263 AND RELIED ON THE FOLLOWING CASES: - (1) MALABAR INDUSTRIAL CO. LTD. [(2000) 243 ITR 83] (SC) (2) CIT VS VIKAS POLYMERS [(2012) 341 ITR 537 (DELHI)] (3) S.MURUGAN VS.ITO[(2012)135 ITD 527(CHENNAITRIBUNAL] (SC) (4) GABRIEL INDIA LTD. [(1993) 203 ITR 108 (BOM)] (5) HERO BRIGGS & STRATTON AUTO LTD VS CIT [(2007) 161 TAXMAN 127 (DELHI TRIBUNAL)] (SC) (6) PRATAP FOOTWEAR VS ACIT [(2003) 1 SOT 638 (JABALPUR TRIBUNAL (SC). 4. IT WAS SUBMITTED THAT THE ASSESSING OFFICER HAS ASKED FOR VARIOUS DETAILS / INFORMATION AND DOCUMENTS VIDE VARIOUS NOTICES DATED 24.8.2010 AND 13.6.2011 WHICH WERE DULY FURNISHED. THE AS SESSEE HAS DULY SUBMITTED THE NOTE IN RESPECT OF EXPENSES CLAIMED BY HIM UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION AMOUNTING TO RS. 1808896000/ - . THE ASSESSING OFFICER CONCLUDED THAT THESE EXPENSES HAVE BEEN INCURRED TO KEEP THE COMPANY IN OPE RATION AND AFTER ELABORATE DISCUSSION IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER ALLOWED THE SAID EXPENDITURE WHICH APPEARS TO BE ONE OF THE POSSIBLE VIEW IN LAW. THUS THE ASSESSMENT WAS COMPLETED AFTER CONSIDERING ALL FACTS AND INFORMATION. THIS IS N OT A CASE OF LACK OF INQUIRY. THERE IS NO REQUIREMENT TO PASS A DETAIL ASSESSMENT ORDER. THE CIT CANNOT RE - EXAMINE AND SUBSTITUTE HIS JUDGEMENT IN PLACE OF ASSESSING OFFICER. 4 ITA NO. 1 58 /PNJ/201 4 (ASST. YEAR : 2009 - 10 ) 5. THE CIT AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE SET ASIDE THE A SSESSMENT ORDER PASSED U/S 143(3) R.W. ORDER U/S 154 AND DIRECTED THE ASSESSING OFFICER TO PASS ORDER AFTER GIVING THE ASSESSEE REASONABLE OPPORTUNITY OF BEING HEARD BY HOLDING AS UNDER : - 10. AFTER CONSIDERING OVERALL FACTS OF THE CASE, I AM OF THE OPINION THAT THE AO HAS NOT PROPERLY EXAMINED THE ISSUE THAT WHEN THERE IS NO BUSINESS ACTIVITY WHETHER THE EXPENSES ARE LEGALLY ALLOWABLE AS DEDUCTION IN THE ASSESSMENT ? THE INTEREST INCOME HAS BEEN ASS ESSED BY THE AO AS INCOME FROM OTHER SOURCES. THAT BEING SO, THERE IS NO BUSINESS INCOME AND AS A MATTER OF PRINCIPLE, THE EXPENSES ARE THEN NOT ALLOWABLE. THEREFORE, PRIMA - FACIE, THE ORDER U/S 143(3) IS FOUND TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERES T OF REVENUE. I THEREFORE SET ASIDE THE ASSESSMENT ORDER FOR THE ASST. YEAR 2009 - 10 PASSED BY THE AO U/S 143(3) OF THE IT ACT, 1961 ON 30.09.2011 READ WITH ORDER U/S 154 DATED 30.03.2012. THE AO IS SUGGESTED TO CALL FOR AND EXAMINE ASSESSEES EXPLANATION / CONTENTION, VERIFY THE MEMORANDUM AND ARTICLES OF ASSOCIATION OF THE COMPANY, NATURE OF RECEIPTS AND EXPENSES AND FINALLY DECIDE WHETHER THE EXPENSES DEBITED INTO P&L ACCOUNT ARE ALLOWABLE AS BUSINESS EXPENDITURE OR NOT. ACCORDINGLY, THE AO IS DIRECTE D TO PASS FRESH ORDER AFTER GIVING THE ASSESSEE REASONABLE OPPORTUNITY OF BEING HEARD. THE AO SHOULD VERIFY THE CLAIM OF THE ASSESSEE IN RESPECT OF ALLOWABILITY OF EXPENDITURE AND ALSO CARRY FORWARD OF THE LOSS OF RS.17857950/ - AS PER LAW. 6. WE HEAR D RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THOSE SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE HAVE ALSO GONE THROUGH THE CASE LAWS AS CITED BEFORE US. BEFORE DECIDING THE ISSUE, IT IS NECESSARY TO REFER TO THE PROVISIONS OF SECTION 263, WHICH I S REPRODUCED 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 INSOFAR AS IT IS PREJUDICIAL TO THE INTERES TS OF THE REVENUE, HE MAY, 5 ITA NO. 1 58 /PNJ/201 4 (ASST. YEAR : 2009 - 10 ) 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 OF THE CASE JUSTIFY, INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT, OR CANCELLING THE ASSESSMENT 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 DAY OF JUNE, 1988 BY THE ASSESSING OFFICER SHALL INCLUDE - (I) AN ORDER OF ASSESSMENT MADE BY THE ASSISTANT COMMISSIONER OR DEPUTY DIRECTOR OR THE INCOME - TAX OFFICER ON THE BASIS OF THE DIRECTIONS ISSUED BY THE JOINT COMMISSIONER UNDER SECTION 144A; (II) AN ORDER MADE BY THE JOINT COMMISSIONER IN EXERCISE OF THE POWER 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 BOAR D OR BY THE CHIEF COMMISSIONER OR DIRECTOR GENERAL OR COMMISSIONER AUTHORISED BY THE BOARD IN THIS BEHALF UNDER SECTION 120; (B) 'RECORD' SHALL INCLUDE AND SHALL BE DEEMED ALWAYS TO HAVE INCLUDED ALL RECORDS RELATING TO ANY PROCEEDING UNDER THIS ACT AVAILA BLE AT THE TIME OF EXAMINATION BY THE COMMISSIONER; (C) WHERE ANY ORDER REFERRED TO IN THIS SUB - SECTION AND PASSED BY THE ASSESSING OFFICER HAD BEEN THE SUBJECT MATTER OF ANY APPEAL FILED ON OR BEFORE OR AFTER THE 1ST DAY OF JUNE, 1988, THE POWERS OF THE C OMMISSIONER UNDER THIS SUB - SECTION SHALL EXTEND AND 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) AFTER THE EXPIRY OF TWO YEARS FROM THE END O F THE FINANCIAL YEAR IN WHICH THE ORDER SOUGHT TO BE REVISED WAS PASSED. (3) NOTWITHSTANDING ANYTHING CONTAINED IN SUB - SECTION (2), AN ORDER IN REVISION UNDER THIS SECTION MAY BE PASSED AT ANY 6 ITA NO. 1 58 /PNJ/201 4 (ASST. YEAR : 2009 - 10 ) TIME IN THE CASE OF AN ORDER WHICH HAS BEEN PASSED IN CONSEQUE NCE OF OR TO GIVE EFFECT TO, ANY FINDING OR DIRECTION CONTAINED IN AN ORDER OF THE APPELLATE TRIBUNAL, THE HIGH COURT OR THE SUPREME COURT. EXPLANATION. - IN COMPUTING THE PERIOD OF LIMITATION FOR THE PURPOSES OF SUB - SECTION (2), THE TIME TAKEN IN GIVING AN OPPORTUNITY 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 ORDER OR INJUNCTION OF ANY COURT SHALL BE EXCLUDED. 7. FROM THE PERUSAL OF THE AFORESAID SECTION, IT IS APPARENT THAT THERE ARE FOUR MAIN FEATURES OF THE POWER OF REVISION TO BE EXERCISED U/S 263 BY THE COMMISSIONER OF INCOME - TAX. FIRSTLY, THE COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORDS OF ANY PROCEEDING S UNDER THE ACT AND FOR THIS PURPOSE HE NEED NOT TO SHOW ANY REASON OR RECORD ANY REASON TO BELIEVE. IT IS A PART OF HIS ADMINISTRATIVE POWER TO CALL FOR THE RECORD AND EXAMINE THEM RELATING TO ANY ASSESSEE. SECONDLY HE MAY CONSIDER ANY ORDER PASSED BY TH E ASSESSING OFFICER AS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THIS CONSIDERATION HAVING REGARD TO THE LANGUAGE OF SECTION 263 APPARENTLY IS A CONSIDERATION WHICH HE EXERCISES BY CALLING FOR AND EXAMINING THE RECORDS AVAILABLE AT T HIS STAGE. THERE IS NO QUESTION OF THE ASSESSEE TO APPEAR AND MAKE SUBMISSION. THIRDLY, IF AFTER CALLING FOR AND EXAMINING THE RECORDS THE COMMISSIONER CONSIDERS THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR IT IS PREJUDICIAL TO THE INTER EST OF THE REVENUE, HE IS BOUND TO GIVE AN OPPORTUNITY TO THE ASSESSEE OF BEING HEARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH ENQUIRY AS HE MAY DEEM FIT, PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE MAY JUSTIFY INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT OR CANCELING ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. THIS EMPOWERS THE C.I.T. TO CAUSE OR MAKE SUCH ENQUIRIES AS HE 7 ITA NO. 1 58 /PNJ/201 4 (ASST. YEAR : 2009 - 10 ) DEEMS NECESSARY. FOURTHLY THE C.I.T. U/S 263 CAN ENHANCE OR MODIFY THE ASSESSMENT. 8. IT IS A SETTLED LA W THAT FOR INVOKING THE PROVISIONS OF SECTION 263 THE CIT MUST SATISFY BOTH THE CONDITIONS THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND ALSO THAT IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. IF ONE OF THE CONDITIONS IS ABSENT, THE O RDER PASSED BY THE CIT BY INVOKING THE PROVISIONS OF SECTION 263 WILL NOT BE LEGAL. THE TERM ERRONEOUS HAS NOT BEEN DEFINED UNDER THE INCOME - TAX ACT BUT IT IS WELL SETTLED THAT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER C ANNOT BE SAID TO BE AN ERROR. AN ORDER CAN BE SAID TO BE ERRONEOUS IF THERE IS AN INCORRECT ASSUMPTION OF FACT OR INCORRECT APPLICATION OF LAW IN THE ORDER PASSED BY THE ASSESSING OFFICER. IF THE ASSESSING OFFICER AFTER MAKING THE ENQUIRIES AND EXAMINING T HE RECORDS, TAKEN ONE OF THE POSSIBLE VIEWS, IT CANNOT BE SAID THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS. 9. IT IS ALSO APPARENTLY CLEAR THAT THE POWER OF THE CIT ARE THREE FOLD. ONE, PRIOR TO THE INITIATION OF THE PROCEEDINGS U/S 263. SECOND, AT THE TIME OF INITIATION OF THE PROCEEDINGS. THIRD, THE FINAL OUTCOME AFTER THE INITIATION OF THE PROCEEDING. POWER OF THE CIT PRIOR TO THE INITIATION INCLUDES CALL FOR AND EXAMINE THE RECORDS OF ANY PROCEEDINGS UNDER THIS ACT. THE WORD RECORD IS VERY IMPORTANT, BECAUSE ON THE BASIS OF THE RECORD OF THE PROCEEDINGS THE CIT WILL FORM AN OPINION THAT THE ORDER PASSED IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND ONCE HE FORMS AN OPINION, HE HAS TO GIVE AN OPPORTUNITY TO THE ASSESSEE OF BEING HEARD AND AFTER MAKING OR CAUSING THE ENQUIRY HE CAN PASS AN ORDER. MOREOVER THE INQUIRY IS CONDUCTED ONCE THE CIT FORMS AN OPINION ON THE BASIS OF RECORD THAT THE ORDER PASSED IS ERRONEOUS AND 8 ITA NO. 1 58 /PNJ/201 4 (ASST. YEAR : 2009 - 10 ) PREJUDICIAL TO THE INTEREST OF REVENUE. THE WORD RECORD HAS BEEN DEFINED UNDER EXPLANATION (B) OF SECTION 263 TO MEAN THAT THE RECORD SHALL INCLUDE AND SHALL BE DEEMED ALWAYS TO HAVE INCLUDED ALL RECORDS RELATING TO ANY PROCEEDING UNDER THIS ACT AVAILABLE AT THE TIME OF EXAMINATION BY THE C OMMISSIONER. THE EXAMINATION OF THE RECORD IS TO BE CARRIED BY THE COMMISSIONER PRIOR TO THE FORMING AN OPINION THAT THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. ONCE THE RECORD IS EXAMINED AND THE CIT ON THE BASIS OF EXAMINATION OF THE RECORD FORMS AN OPINION THAT THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, HE IS EMPOWERED AFTER GIVING THE OPPORTUNITY TO THE ASSESSEE, TO MAKE SUCH ENQUIRY AS HE MAY DEEM NECESSARY. THEREFORE, THE ENQUIRY TO BE CONDUCTED BY THE CIT IS AN ACT ONCE THE CIT ARRIVES AT A CONCLUSION THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AFTER EXAMINING THE RECORD. THUS ENQUIRY PRECEDES THE RECORD AND THE MATERIAL COLLECTED DUR ING THE COURSE OF THE ENQUIRY CANNOT BE THE PART OF THE RECORD OF THE PROCEEDINGS WHEN THE CIT FORMS AN OPINION THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. WE NOTED THAT IN THIS CASE WHILE MA KING THE ASSESSMENT UNDER SCRUTINY, THE ASSESSING OFFICER ISSUED NOTICE U/S 143(2). IN REPLY THERETO, ONE SHRI B.V. PATIL, DGM ACCOUNTS ATTENDED BEFORE THE ASSESSING OFFICER. HE WAS ASKED TO FILE CERTAIN DETAILS TO PROVE THE RETURNED INCOME. THE ASSESSE E VIDE QUESTIONNAIRE DATED 13.6.2011 MADE THE SUBMISSION ON 19.8.2011 IN RESPECT OF DISALLOWANCE OF THE EXPENSES RELATING TO THE EXEMPT INCOME , QUERY WAS RAISED AT POINT NO.11. THE ASSESSEE SUBMITTED ABOUT THE LEGI TIMACY OF THE EXPENSES CLAIM AS WELL AS AB OUT THE REMUNERATION OF THE DIRECTOR OF SUBSIDIARY COMPANY AMOUNTING TO RS.134.08 LAKHS . THE NATURE OF THE EXPENSES CLAIMED BY THE ASSESSEE AND THE EXPENSES WERE NOT ALLOWED AGAINST THE INTEREST ON FIXED DEPOSITS AMOUNTING TO RS.2 , 31 , 010/ - .THE ASSESSING OF FICER AT PAGE 2 OF THE ORDER HAS CLEARLY STATED THAT THE ASSESSEE IS ENGAGED TO CARRY ON THE BUSINESS AS INVESTMENT COMPANY AND TO ACQUIRE, HOLD AND OTHERWISE DEAL IN 9 ITA NO. 1 58 /PNJ/201 4 (ASST. YEAR : 2009 - 10 ) SHARES, STOCKS, DEBENTURES, BONDS AND OTHER SECURITIES. THE ASSESSEE HAS NOT EARNED INCOM E BEING EXEMPT. THE EXPENSES INCURRED BY THE ASSESSEE WERE DULY EXPLAINED RELATING TO THE BUSINESS OF THE ASSESSEE. THE ASSESSING OFFICER DULY TREATED ALL THE EXPENSES TO BE THE BUSINESS EXPENDITURE AND THUS COMPUTED THE LOSS. IT IS NOT A CASE WHERE THE EX PENSES ALLOWED BY THE ASSESSING OFFICER WERE ATTRIBUTABLE TO THE INCOME ARISES FROM THE INVESTMENT. JURISDICTION U/S 263 HAS BEEN EXERCISED ON THE BASIS THAT ALL EXPENSES CHARGED TO THE PROFIT AND LOSS ACCOUNT IS ATTRIBUTABLE TO THE INVESTMENT IN SHARES. ONCE THE ASSESSING OFFICER HAS EXAMINED THE NATURE OF ALL THE EXPENSES AND GIVEN THE FINDING THAT THE EXPENSES RELATES TO THE BUSINESS. IT CANNOT BE SAID THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS. IT IS NOT A CASE OF LACK OF INQUIRY AND ALSO NOT A CASE WHERE THE ASSESSING OFFICER HAS TAKEN A VIEW WHICH IS UNSUSTAINABLE IN LAW. EVEN WE NOTED IN THE ORDER PASSED U/S 263 , THE CIT HAS NOT GIVEN SPECIFIC FINDING THAT THE ORDER PASSED IS ERRONEOUS BUT STATED THAT THE ORDER PASSED IS PRIMA FAC IE FOUND TO BE ERRONEOUS. EVEN WE MAY MENTION THAT WHERE THERE ARE TWO VIEWS POSSIBLE AS TO THE INTERPRETATION OF ANY TRANSACTION AND THE ASSESSING OFFICER HAS TAKEN ONE OF THE VIEW FAVOURABLE TO THE ASSESSEE, THE ORDER CANNOT BE SAID TO BE ERRONEOUS UNLE SS THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAINABLE IN LAW. SAME VIEW HAS BEEN TAKEN BY HON'BLE SUPREME COURT IN CASE OF MALABAR INDUSTRIAL CO. LTD. VS. COMMISSIONER OF INCOME - TAX 243 ITR 83. WE NOTED ON THE BASIS OF THE EVIDENCE AND THE FACTS O N RECORD AND THE ORDER OF CIT PASSED U/S 263, THE ASSESSING OFFICER DULY INQUIRED OF ABOUT THE ALLOWABILITY OF THE EXPENDITURE AND HE ALLOWED ALL THE EXPENDITURE UNDER THE HEAD INCOME FROM BUSINESS BY TAKING A VIEW THAT THE EXPENDITURE INCURRED FOR THE PURPOSE OF CARRYING ON THE BUSINESS . ON THIS BASIS ITSELF, IN OUR OPINION, THE ORDER PASSED BY THE CIT DOES NOT HAVE ANY LEG TO STAND AND IS LIABLE TO BE ANNULLED. SECTION 263 DOES NOT EMPOWER THE C IT TO THRUST UPON HIS VIEW ON THE ASSESSING OFFICER. REVISION U/S 263 IS POSSIBLE ONLY IF BOTH THE CONDITIONS I.E. THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND IT IS PREJUDICIAL TO THE 10 ITA NO. 1 58 /PNJ/201 4 (ASST. YEAR : 2009 - 10 ) INTEREST OF THE REVENUE, ARE SATISFIED. WHEN THE ASSESS ING OFFICER HAS TAKEN ONE OF THE POSSIBLE VIEWS, THE ORDER PASSED BY THE ASSESSING OFFICER CANNO T BE REGARDED TO BE ERRONEOUS. THUS, IN OUR OPINION, UNDER THE FACTS AND CIRCUMSTANCES OF THIS CASE, THE CIT HAS NOT CORRECTLY EXERCIS E D HIS JURISDICTION AND H AD ACTED BEYOND THE POWER AS LA ID DOWN U/S 263 OF THE ACT. WE, THEREFORE, QUASH THE ORDER PASSED U/S 263 AND ALLOW THE APPEAL OF THE ASSESSEE. 10 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. 11. ORDER PRONOUNCED IN THE OPEN COURT ON 11 .02.2015 . SD/ - (D.T.GARASIA) JUDICIAL MEMBER SD/ - (P.K. BANSAL) ACCOUNTANT MEMBER PLACE : PANAJI - GOA DATED : 11 /0 2 /201 5 * A * COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT CONCERNED (4) CIT(A) CONCERNED (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER ASSISTANT REGISTRAR ITAT, PANAJI BENCH, PANAJI