Usha martin Telematics Limited, Kolkata V. CIT, KOLKATA - IV, KOLKATA, Kolkata

ITA 2222/KOL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5011 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 12-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G MALLIKARJUNA
• Keywords: Business expenditure; Difference of opinion; Change of opinion; Revenue expenditure
• Section: 143(3); 115JB; 263; 63; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C, KOLKATA (BEFORE SHRI P. M. JAGTAP, A.M. & SHRI S.S.VISWANET HRA RAVI, J.M.) ITA NO. 2222/KOL/2014 : ASSTT. YEAR : 2010-2011 USHA MARTIN TELEMATICS LTD. PAN: AAACU 3054D VS C.I.T., KOLKATA-IV, KOLKATA (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NAGESHWAR RAO, ADVOCATE RESPONDENT BY : SHRI G. MALLIK ARJUNA, CIT,DR DATE OF HEARING : 27.01.2016 DATE OF PRONOUNCEMENT :26-04-2016 ORDER PER SHRI S.S.VISWANETHRA RAVI, J.M . THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 12.08.2014 PASSED BY THE CIT-IV, KOLKATA FOR THE ASSESSMENT YE AR 2010-11 FRAMED UNDER SECTION 263 OF THE I.T.ACT. 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS: BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE APPELLANT RESPECTFULLY SUBMITS THAT THE LEARNED COMMISSIONER OFINCOME-TAX - N, KOLKATA ['CIT'] HAS ERRED IN INVALIDLY INITIATING THE REVIS IONARY PROCEEDINGS AND PASSING AN ORDER UNDER SECTION 263 OF THE INCOME-TA X ACT, 1961 ('ACT'). IN THIS REGARD, THE APPELLANT RESPECTFULLY CRAVES LEAVE TO PREFER AN APPEAL UNDER SECTION 253 OF THE ACT AGAINST THE ORDER PASSED BY THE LEARNED CIT UNDER SECTION 263 OF ACT, ON THE FOLLOWING GROUNDS: GROUND NO 1 - PROCEEDINGS INITIATED UNDER SECTION 2 63 OF THE ACT ARE BAD IN LAW THE LEARNED CIT HAS ERRED IN INITIATING THE REVISIO NARY PROCEEDINGS UNDER SECTION 263 OF THE ACT AND PASSING AN ORDER THERETO . A) WITHOUT APPRECIATING THE FACT THAT THE CONDITION S LAID DOWN IN SECTION 263 OF THE ACT HAVE NOT BEEN SATISFIED, IE, THE ORDER P ASSED BY THE LEARNED 2 ITA NO.2222/KOL/2014 U SHA MARTIN TELEMATICS LTD. ASSESSMENT YEAR: 2010-11 ASSESSING OFFICER SHOULD BE BOTH ERRONEOUS AND PREJ UDICIAL TO THE INTEREST OF THE REVENUE; B) WITHOUT APPRECIATING THE FACT THAT THE MATERIAL/ INFORMATION IN RELATION TO THE NOTIONAL FOREIGN EXCHANGE GAIN TRANSACTION WAS ALREADY ON RECORD OF THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDE R UNDER SECTION 143(3) OF THE ACT FOR THE SUBJECT YEAR AND REVISIONARY PROCEE DINGS HAVE BEEN INITIATED MERELY ON ACCOUNT OF CHANGE OF OPINION; AND C) WITHOUT GIVING ANY FINDING OR REASONS THAT THE A SSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE FOR TREATING THE NOTIONAL FOREIGN EXCHANGE GAIN AS BEING REVENUE IN NATURE AND ACCORDINGLY TAXABLE IN THE HANDS OF THE APPELLANT. GROUND NO. 2 - TAXABILITY OF NOTIONAL FOREIGN EXCHA NGE GAIN AS BEING ON REVENUE ACCOUNT WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO CONDUCT DENOVO ASSESSMENT PROC EEDINGS, WITHOUT ACCEPTING THE SUBMISSIONS OF THE APPELLANT THAT THE NOTIONAL FOREIGN EXCHANGE GAIN ARISEN TO UMTL ON RE-INSTATEMENT OF LOAN DURIN G THE SUBJECT AY IS ON CAPITAL ACCOUNT, AND ACCORDINGLY NOT LIABLE TO TAX. EACH OF THE ABOVE GROUNDS ARE INDEPENDENT AND WITHO UT PREJUDICE TO ONE ANOTHER. IT IS PRAYED TO YOUR HONOUR THAT THE REVISIONARY PR OCEEDINGS INITIATED BY THE LEARNED CIT UNDER SECTION 263 OF THE ACT BEING BAD IN LAW SHOULD BE DELETED. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, TO AME ND OR TO DELETE ANY OR ALL OF THE ABOVE GROUNDS OF APPEAL, AT OR PRIOR TO HEARING OF THE APPEAL, SO AS TO ENABLE THE HONOURABLE INCOME-TAX APPELLATE TRIBUNAL TO DECIDE THE APPEAL ACCORDING TO LAW . 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A COMPANY AND ENGAGED IN FINANCIAL SERVICES. THE ASSESSEE FILED ITS RETURN O F INCOME DECLARING RS.2,30,873/- AS TOTAL INCOME. UNDER SCRUTINY, THE ASSESSEE HAVING R ECEIPT OF NOTICE UNDER SECTION 143(2) OF THE ACT FILED ALL THE DETAILS AS REQUIRED THEREIN. THE AO ACCEPTED THE RETURN OF INCOME AS FILED ABOVE AND AN ASSESSMENT ORDER DA TED 22.11.2012 WAS PASSED UNDER SECTION 143(3) OF THE ACT. 3 ITA NO.2222/KOL/2014 U SHA MARTIN TELEMATICS LTD. ASSESSMENT YEAR: 2010-11 4. THE CIT-IV, EXERCISING REVISIONARY POWERS AS CON TEMPLATED UNDER SECTION 263 OF THE ACT, FOUND THAT THE ASSESSEE GOT FOREIGN EXC HANGE GAIN OF RS.31,16,05,186/- AGAINST THE INTEREST FREE LOAN OF USD 5,00,00,000/ - AVAILED FROM ASIAN TELECOMMUNICATION INVESTMENTS (MAURITIUS) LTD. 5. CIT-IV FOUND THAT THE ASSESSEE DEDUCTED THE FORE IGN EXCHANGE GAIN FROM THE NET PROFIT UNDER THE NORMAL PROVISIONS OF THE ACT A ND THE SAME WAS NOT REDUCED FROM NET PROFIT WHILE COMPUTING THE INCOME UNDER BOOK PR OFIT UNDER SECTION 115JB OF THE ACT. CIT-IV WAS OF THE VIEW THAT THE FLUCTUATION IN FOREIGN EXCHANGE IS REVENUE GAIN AND THE ASSESSEE IS NOT ENTITLED TO ADJUST THE SAME IN COMPUTING THE TOTAL INCOME UNDER THE NORMAL PROVISIONS OF THE ACT. ACCORDINGLY , CIT-IV SET ASIDE THE ASSESSMENT ORDER DATED 27.11.2012 AND DIRECTED THE AO TO EXAMINE THE ENTIRE CASE DE NOVO TO WORK OUT TAXABLE INCOME AS PER LAW. 6. THE QUESTION THAT AROSE FOR CONSIDERATION BEFORE US, WHETHER THE CIT-IV PROPERLY EXERCISED HIS JURISDICTION IN SETTING ASID E THE ASSESSMENT ORDER WITHOUT THERE BEING ANY FINDING AS REQUIRED UNDER SECTION 263 OF THE ACT. 7. HEARD BOTH THE SIDES AND PERUSED THE MATERIALS A VAILABLE ON RECORD. THE LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE CIT-I V DID NOT GIVE HIS OPINION ON THE ORDER PASSED BY THE AO WAS ERRONEOUS IN SO FAR IT I S PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE LD. COUNSEL FOR THE ASSESSEE RELIED ON CASE LAWS IN SUPPORT OF HIS CONTENTIONS. THE LD. DR RELIED ON THE ORDER OF THE CIT. A READING OF THE ORDER OF CIT-IV SUGGESTS THAT HE OPINED THE FLUCTUATION IN F OREIGN EXCHANGE RESULTING INTO GAIN IS A REVENUE ITEM AND NO ADJUSTMENT IS AVAILAB LE ON SUCH GAIN IN COMPUTING THE TOTAL INCOME UNDER NORMAL PROVISIONS OF THE ACT. TH E AO, IN HIS ORDER, CLEARLY STATED THAT THE CASE ON HAND WAS SELECTED FOR SCRUTINY AND NOTICES UNDER SECTION 143(2) OF THE ACT WERE ISSUED AND SERVED ON THE ASSESSEE. THE ASSESSEE FILED ALL DETAILS AS 4 ITA NO.2222/KOL/2014 U SHA MARTIN TELEMATICS LTD. ASSESSMENT YEAR: 2010-11 REQUIRED UNDER SCRUTINY ON VARIOUS DATES AND THE CA SE WAS DISCUSSED AND HEARD AND ENDED UP WITH AN ORDER UNDER SECTION 143(3) OF THE ACT. IT IS FOUND THAT IT IS NOT THE FINDING OF THE CIT-IV THAT THE AO DID NOT CONDUCT T HE ASSESSMENT PROCEEDINGS IN ACCORDANCE WITH PROCEDURE ESTABLISHED UNDER THE ACT . THE FINDING OF THE CIT-IV REFERS THAT THE ASSESSMENT REQUIRES RECONSIDERATION WITH A DIRECTION TO AO TO EXAMINE THE CASE DE NOVO. THE CIT-IV FAILED TO POINT OUT AS TO WHAT ERROR WAS COMMITTED BY THE AO IN ACCEPTING THE FOREIGN EXCHANGE GAIN DEDUC TIBLE FROM THE NET PROFIT WHILE COMPUTING TOTAL INCOME UNDER THE NORMAL PROVISIONS OF THE ACT. 8. A PERUSAL OF THE ORDER OF CIT GOES TO ESTABLISH THAT IN RESPONSE TO THE NOTICE UNDER SECTION 263 OF THE ACT, THE AR REPRESENTING T HE ASSESSEE APPEARED AND FILED THE WRITTEN SUBMISSIONS STATING THAT THE LOAN AVAIL ED IN FOREIGN CURRENCY IS PART OF ITS FIXAL CAPITAL AND NOTIONAL FOREIGN EXCHANGE GAIN TH EREON ON CAPITAL IS NOT CHARGEABLE TO TAX. HAVING DISCUSSED AND HEARD THE CASE, THE CI T-IV DID NOT POINT OUT ANY ERROR IN ASSESSMENT ORDER, THAT THE DEDUCTION OF FOREIGN EXCHANGE GAIN FROM NORMAL PROVISIONS OF THE ACT IS ERRONEOUS, EXCEPT STATING THAT IT REQUIRES RECONSIDERATION, THAT FINDING IN OUR OPINION IS NOT TENABLE. 9. THE CASE LAW RELIED ON BY THE LD. COUNSEL FOR AS SESSEE IN THE CASE OF COMMISSIONER OF INCOME TAX VS. GABRIAL INDIA LTD OF HONBLE HIGH COURT OF BOMBAY REPORTED IN 203 ITR 1089 (BOM) WHERE A REFERENCE MADE BY THE TRIBUNAL AS TO 'WHETHER, ON THE FACTS A ND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN SETTING ASIDE T HE ORDER PASSED BY THE CIT UNDER S. 263 OF THE ACT ?' THE FACTS INVOLVED THEREIN THAT T HE ASSESSMENT OF 1973-74, WHERE THE ASSESSEE-COMPANY HAD CLAIMED DEDUCTION OF A SUM OF RS. 99,326 DESCRIBING IT AS `PLANT RELAYOUT EXPENSES'. IT WAS EXPLAINED BY THE ASSESSEE THAT IT INCURRED IN CONNECTION WITH THE MERGER OF TWO EXISTING PLANTS F OR THE MANUFACTURING OF SHOCK ABSORBER WHICH WERE LOCATED SIDE BY SIDE AT ITS FAC TORY AT MULUND. ACCORDING TO THE ASSESSEE, IT WAS A BUSINESS EXPENDITURE ALLOWABLE A S DEDUCTION IN COMPUTATION OF HIS 5 ITA NO.2222/KOL/2014 U SHA MARTIN TELEMATICS LTD. ASSESSMENT YEAR: 2010-11 INCOME. THE ITO ACCEPTED THE EXPLANATION OF THE ASS ESSEE AND ALLOWED THE DEDUCTION AS CLAIMED BY IT. THE CIT WAS OF THE VIEW THAT THE ITO HAD ALLOWED THE SAME ON THE PRESUMPTION THAT IT WAS REVENUE EXPENDITURE AND COM MISSIONER OPINED THAT THE EXPENDITURE WAS IN THE NATURE OF CAPITAL EXPENDITUR E WITH OUT GIVING ANY SPECIFIC FINDING REGARDING THE ORDER OF AO IS TO HOW IT WAS ERRONEOUS IN SO FAR AS THE PREJUDICIAL TO THE REVENUE. THE HONBLE HIGH COURT SUPRA HELD AS FOLLOWS. 15. WE MAY NOW EXAMINE THE FACTS OF THE PRESENT CASE I N THE LIGHT OF THE POWERS OF THE COMMISSIONER SET OUT ABOVE. THE ITO I N THIS CASE HAD MADE ENQUIRIES IN REGARD TO THE NATURE OF THE EXPENDITUR E INCURRED BY THE ASSESSEE. THE ASSESSEE HAD GIVEN DETAILED EXPLANATION IN THAT REGARD BY A LETTER IN WRITING. ALL THESE ARE PART OF THE RECORD OF THE CA SE. EVIDENTLY, THE CLAIM WAS ALLOWED BY THE ITO ON BEING SATISFIED WITH THE EXPL ANATION OF THE ASSESSEE. SUCH DECISION OF THE ITO CANNOT BE HELD TO BE 'ERRO NEOUS'SIMPLY BECAUSE IN HIS ORDER HE DID NOT MAKE AN ELABORATE DISCUSSION I N 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 ERRONEOU S AND THAT THE EXPENDITURE WAS NOT REVENUE EXPENDITURE BUT AN EXPENDITURE OF C APITAL NATURE. HE SIMPLY ASKED THE ITO TO RE-EXAMINE THE MATTER. THAT, IN OU R OPINION, IS NOT PERMISSIBLE . FURTHER, INQUIRY AND/OR FRESH DETERMINATION CAN B E DIRECTED BY THE COMMISSIONER ONLY AFTER COMING TO A CONCLUSION THAT THE EARLIER FINDING OF THE ITO WAS ERRONEOUS AND PREJUDICIAL TO THE INTERE ST OF THE REVENUE. WITHOUT DOING SO, HE DOES NOT GET THE POWER TO SET ASIDE TH E ASSESSMENT. IN THE INSTANT CASE, THE COMMISSIONER DID SO AND IT IS FOR THAT RE ASON THAT THE TRIBUNAL DISAPPROVED HIS ACTION AND SET ASIDE HIS ORDER. WE DO NOT FIND ANY INFIRMITY IN THE ABOVE CONCLUSION OF THE TRIBUNAL. 10. IN THE PRESENT CASE ALSO, AS DISCUSSED ABOVE TH E CIT HAVING WRITTEN SUBMISSIONS FILED BY ASSESSEE ON FILE AND HEARD THE CASE IN DETAIL DID NOT POINT OUT ANY ERROR IN THE ASSESSMENT ORDER AND ONLY STATED T HAT THE CASE REQUIRES RECONSIDERATION. IN OUR OPINION, THE FACTS CONTAINE D IN THE AFORESAID DECISION ARE SIMILAR AND RELYING ON THE SAME WE HOLD THAT THE OR DER OF THE CIT-IV IS BAD UNDER LAW AND CONSEQUENTLY IT IS SET ASIDE. 6 ITA NO.2222/KOL/2014 U SHA MARTIN TELEMATICS LTD. ASSESSMENT YEAR: 2010-11 11. FURTHER ON SIMILAR FACTS THE HONBLE HIGH COURT OF ALLAHABAD IN THE CASE OF COMMISSIONER OF INCOME TAX VS. GOYAL PRIVAT E FAMILY SPECIFIC TRUST REPORTED IN 171 ITR 0698 WHERE THE HONBLE HIGH COURT RENDERED OPINION WHETHER, ON THE FACTS AND IN VIEW OF THE LEGAL POSITION THE TRIBUNAL COULD BE SAID TO BE LEGALLY CORRECT IN SETTING ASID E THE ORDER PASSED UNDER S. 263 BY THE CIT? THE FACTS ARE THAT THE ASSESSEE, GOYAL PRI VATE FAMILY SPECIFIC TRUST FOR THE BENEFIT OF THE BENEFICIARIES. THE ASSESSEE FILED RE TURNS CLAIMING INCOME IN THE HANDS OF THE TRUST IS EXEMPT AND TAXABLE IN THE HANDS OF BENEFICIARIES. THE ITO COMPLETED THE ASSESSMENTS. CIT, NOT BEING SATISFIED WITH THE EXPLANATION OF THE ASSESSEE UNDER SECTION 263 PROCEEDINGS, THE CIT SET ASIDE THE ASSE SSMENT ORDERS FOR BOTH THE YEARS DIRECTING THE ITO TO MAKE THE ASSESSMENTS DE NOVO. ON APPEAL, THE TRIBUNAL SET ASIDE THE ORDER OF THE CIT. THE HONBLE HIGH COURT OBSERVED AS UNDER: 6. THERE IS NO FINDING BY THE CIT THAT THE ITO REAC HED AN ERRONEOUS CONCLUSION AND THAT, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CONCLUSION WOULD HAVE BEEN DIFFERENT. THE ORDERS OF THE ITO MAY BE BRIEF AND CRYPTIC, BUT THAT BY ITSELF IS NOT SUFFICIENT REASO N TO BRAND THE ASSESSMENT ORDERS AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. WRITING AN ORDER IN DETAIL MAY BE A LEGAL REQUIREMENT, BUT THE ORDER NOT FULFILLING THIS REQUIREMENT, CANNOT BE SAID TO BE ERRONEOUS AND PRE JUDICIAL TO THE INTEREST OF THE REVENUE. IT WAS FOR THE CIT TO POINT OUT AS TO WHAT ERROR WAS COMMITTED BY THE ITO IN HAVING REACHED THE CONCLUSION THAT TH E INCOME OF THE TRUST WAS EXEMPT IN ITS HANDS AND WAS ASSESSABLE ONLY IN THE HANDS OF THE BENEFICIARIES. THE COMMISSIONER HAVING FAILED TO POINT OUT ANY ERR OR, NO ERROR CAN BE INFERRED FROM THE ORDERS OF THE ITO FOR THE SIMPLE REASON THAT THEY ARE BEREFT OF DETAILS. IF THE ORDER IS NOT ERRONEOUS, THEN IT CANNOT BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. THERE IS NOTHING TO SHOW IN THE ORDER OF THE CIT T HAT THE ITO WOULD HAVE REACHED A DIFFERENT CONCLUSION H AD HE PASSED A DETAILED ORDER. SO, THE CONCLUSION OF THE CIT THAT THE ORDER S OF THE ITO ARE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE ARE BASED MERELY ON SUSPICION AND SURMISES IN THE ABSENCE OF ANY ENQUIRY HAVING B EEN MADE BY HIM. 7 ITA NO.2222/KOL/2014 U SHA MARTIN TELEMATICS LTD. ASSESSMENT YEAR: 2010-11 12. IN THE PRESENT CASE ALSO, AS DISCUSSED ABOVE TH E CIT HAVING REACHED THE CONCLUSION THAT THE ASSESSEE IS NOT ENTITLED TO ADJ UST FOREIGN EXCHANGE GAIN WHILE COMPUTING THE TOTAL INCOME AND DID NOT MENTION ANYT HING IN HIS ORDER THAT THE ORDER OF AO SUFFERED ANY ERROR AND IT IS PREJUDICIAL TO T HE INTEREST OF REVENUE, EXCEPT MENTIONING THE CASE REQUIRES RECONSIDERATION. IN OU R OPINION, THE FACTS CONTAINED IN THE AFORESAID DECISION ARE SIMILAR AND APPLICABLE T O THE CASE ON HAND AND RELYING ON THE SAME WE HOLD THAT THE ORDER OF THE CIT IS BAD U NDER LAW AND CONSEQUENTLY IT IS SET ASIDE. 13. THE HONBLE HIGH COURT OF PUNJAB & HARYANA IN T HE CASE OF COMMISSIONER OF INCOME TAX VS. R.K. METAL WORKS REP ORTED IN 112 ITR 0445 A QUESTION HAS BEEN REFERRED 'WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS RIGHT I N SETTING ASIDE THE ORDER PASSED BY THE CIT UNDER S. 263 OF THE ACT'. THE CIT NOTICED T HAT THE ASSESSMENT OF THE ASSESSEE FOR THE YEAR 1968-69 'WAS ERRONEOUS AND PR EJUDICIAL TO THE INTERESTS OF THE REVENUE INASMUCH AS HE DID NOT DISALLOW THE INTERES T ATTRIBUTABLE TO THAT PART OF THE CAPITAL BORROWED BY THE FIRM, WHICH WAS NOT UTILISE D FOR THE PURPOSES OF THE FIRM'S BUSINESS AND ADVANCED INDIRECTLY TO TWO PARTNERS, S ARVASHRI JUGAL KISHORE AND ROSHAN LAL, AS INVESTMENT IN THE PROPERTIES'. THE C IT HELD THAT THE ORDER OF THE ITO WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF T HE REVENUE AND DIRECTED THE ITO TO REFRAME THE ASSESSMENT. THE TRIBUNAL OBSERVED THAT THE CIT HAD NOT GIVEN ANY REASONS TO JUSTIFY HIS SATISFACTION THAT THE ORDER PASSED BY THE ITO WAS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. WHILE DEALING WITH TH E ISSUE THE THE HONBLE HIGH COURT OPINED AS HEREIN BELOW: 2. A PERUSAL OF THE ORDER OF THE CIT CLEARLY SHOWS THAT THE CRITICISM OF THE TRIBUNAL IS WELL-FOUNDED. THERE IS NO INDICATION IN THE ORDER OF THE CIT AS TO THE BASIS ON WHICH HE CAME TO THE PRIMA FACIE CONCL USION THAT THE CAPITAL BORROWED BY THE FIRM WAS UTILISED FOR PURPOSES OTHE R THAN THAT OF THE FIRM'S BUSINESS. WHEN THE ASSESSEE FILED A DETAILED WRITTE N STATEMENT BEFORE HIM, THE 8 ITA NO.2222/KOL/2014 U SHA MARTIN TELEMATICS LTD. ASSESSMENT YEAR: 2010-11 CIT DID NOT DEAL WITH ANY OF THE POINTS RAISED IN T HE STATEMENT. HE THOUGHT THAT THE BEST COURSE IN THE CIRCUMSTANCES WAS TO RE MAND THE MATTER TO THE ITO FOR CONSIDERATION OF THE POINTS RAISED IN THE ASSES SEE'S WRITTEN STATEMENT. THAT CERTAINLY WAS NOT THE PROPER COURSE TO BE ADOPTED B Y HIM. IT WAS NECESSARY FOR THE CIT TO STATE IN WHAT MANNER HE CONSIDERED THAT THE ORDER OF THE ITO WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE AND WHAT THE BASIS WAS FOR SUCH A CONCLUSION. AFTER INDICATING HIS REASONS FOR SUCH A CONCLUSION , IT WOULD CERTAINLY HAVE BEEN OPEN TO HIM TO REMAND THE MATTER TO THE ITO FOR SUCH OTHER INVESTIGATION OR ENQUIRY AS MIGHT BE NEC ESSARY. BUT THAT WAS NOT THE COURSE WHICH THE CIT PURSUED. THE TRIBUNAL WAS, THEREFORE, JUSTIFIED IN SETTING ASIDE THE ORDER OF THE CIT. THE LEARNED COU NSEL FOR THE REVENUE URGED THAT, WHILE SETTING ASIDE THE ORDER OF THE CIT, THE TRIBUNAL HAD PURPORTED TO RESTORE THE ORDER PASSED BY THE ITO AND THIS MEANT THAT THE CIT WAS PRECLUDED FROM TAKING UP THE MATTER AGAIN. WE DO NO T WANT TO EXPRESS ANY OPINION ON THIS QUESTION, SINCE OUR JURISDICTION IS CONFINED ONLY TO ANSWERING THE QUESTION REFERRED TO US. THE QUESTION REFERRED TO US IS ANSWERED IN THE AFFIRMATIVE. THERE WILL BE NO ORDER AS TO COSTS. 14. IN THE PRESENT CASE ALSO, IN RESPONSE TO THE NO TICE U/S 263 OF THE ACT, THE ASSESSEE RAISED HIS CONTENTIONS BY WAY OF A WRITTEN SUBMISSIONS, HAVING ACKNOWLEDGING THE SAME ON FILE, WITH OUT ANSWERING CONTENTIOUS ISSUES THEREIN CAME TO A CONCLUSION THAT THE ORDER OF AO IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE FACTS IN THE AFORESAID CASE ALSO A RE SIMILAR TO THE FACTS CASE ON HAND AND THE LAW LAID DOWN BY THE HONBLE HIGH COURT IS CLEARLY APPLICABLE TO THE CASE ON HAND. 15. THE HONBLE HIGH COURT OF PUNJAB & HARYANA IN T HE CASE OF COMMISSIONER OF INCOME TAX VS. KANDA RICE MILLS REP ORTED IN 178 ITR 0446 THE FACTS OF THE CASE ARE THAT THE CIT FOU ND THAT THE BUSINESS LOSS OF RS. 30,000 WAS DETERMINED, AFTER ADJUSTING DEDUCTIONS U NDER S. 80J OF THE ACT AND WAS ALLOWED TO BE CARRIED FORWARD. BY ORDER THE ASSESSM ENT MADE BY THE ITO WAS SET ASIDE WITH A DIRECTION TO MAKE FRESH ASSESSMENT ON RE-EXAMINING THE POINTS CONTAINED IN PARAS 7 TO 10 OF HIS ORDER. THE TRIBUN AL, CHANDIGARH BENCH, CAME TO THE 9 ITA NO.2222/KOL/2014 U SHA MARTIN TELEMATICS LTD. ASSESSMENT YEAR: 2010-11 CONCLUSION THAT NO FIRM CONCLUSIONS WERE ARRIVED AT BY THE CIT IN DECISIONAL JURISDICTION AND THE ORDER OF THE CIT WAS SET ASIDE . ON THESE FACTS, THE TRIBUNAL HAS REFERRED THE QUESTION FOR THE OPINION OF THE HONBL E HIGH COURT AT THE INSTANCE OF THE REVENUE THAT 'WHETHER, ON THE FACTS AND IN THE CIRC UMSTANCES OF THE CASE, THE TRIBUNAL IS RIGHT IN LAW IN VACATING THE ORDER OF T HE CIT (A), LUDHIANA, PASSED UNDER S. 263 OF THE IT ACT, 1961? THE HONBLE HIGH COURT ANSWERED ABOVE QUESTION AS UNDER: 7. A READING OF THE ENTIRE ORDER OF THE CIT CLEARLY GOES TO SHOW THAT HE DID NOT FURNISH HIS OPINION OR CONSIDER THE CITED CASES OR THE ARGUMENT RAISED AND MERELY OBSERVED THAT THESE WERE THE POINTS WHICH DE SERVED CONSIDERATION AND AFTER SETTING ASIDE THE ORDER OF THE ITO, ISSUED A DIRECTION FOR MAKING ASSESSMENT AFRESH. THIS IS NOT PERMISSIBLE UNDER TH E PROVISIONS CONTAINED IN S. 263 OF THE ACT. THE CIT HAD TO COME TO A FIRM DECIS ION THAT THE ORDER OF THE ITO WAS ERRONEOUS AND WAS PREJUDICIAL TO THE INTERE STS OF THE REVENUE. SINCE NO DECISION ABOUT THE ERRONEOUS NATURE OF THE ORDER WAS FIRMLY TAKEN, THE TRIBUNAL WAS RIGHT IN VACATING THE ORDER . ACCORDINGLY, WE ANSWER THE QUESTION IN FAVOUR OF THE ASSESSEE, THAT IS, IN THE AFFIRMAT IVE, WITH NO ORDER AS TO COSTS. 16. ON THE CASE ON HAND, THE ORDER OF THE CIT DOES NOT SHOW ANY FIRM REASONS AS REQUIRED UNDER SECTION 263 OF THE ACT TO DECLARE TH E ASSESSMENT ORDER WAS ERRONEOUS AND WAS PREJUDICIAL TO THE INTERESTS OF THE REVENUE , AS OBSERVED ABOVE A DIRECTION WAS GIVEN TO AO TO WORK OUT THE TAXABLE INCOME AS P ER LAW. IN OUR VIEW IT IS AGAINST THE ESTABLISHED PRINCIPLES OF LAW. THEREFORE, APPLY ING THE RATIO OF AFORESAID DECISION, WE HOLD THAT THE ORDER DT:12-08-2014 PASSED BY THE CIT-IV IS BAD UNDER LAW WHICH IS LIABLE TO BE SET ASIDE. 17. IN THE LIGHT OF ABOVE, RESPECTABLY FOLLOWING TH E SAME, WE ALLOW THE GROUND NO-1 RAISED BY THE ASSESSEE AND IN VIEW OF THE DECI SION ON GROUND NO-1 AS ABOVE AND GROUND NO-2 NEEDS NO ADJUDICATION AND HENCE , THERE FORE IT IS DISMISSED. 10 ITA NO.2222/KOL/2014 U SHA MARTIN TELEMATICS LTD. ASSESSMENT YEAR: 2010-11 18. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH APRIL, 2016. SD/- SD/- ( P.M.JAGTAP) (S.S.VISWANETHRA RAVI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 26/04/2016 TALUKDAR/SR.PS COPY OF ORDER FORWARDED TO: 1 USHA MARTIN TELEMATICS LTD., 8 TH FLOOR, RDB BOULEVARD, PLOT K-1, BLOCK-EP & GP, SECTOR-V, SALT LAKE CITY, KOLKATA 700 091 2 CIT, KOLKATA-IV, KOLKATA 3 THE CIT(A), 4 5 CIT, 5. D.R. TRUE COPY, BY ORDER, ASSTT. REGISTRAR , ITAT, KOLKATA