CRISIL LTD, MUMBAI V. ADDL CIT 8(1), MUMBAI

ITA 3094/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1273 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 20-05-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 12-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJIT KUMAR SINHA
• Keywords: Gift; Opportunity of being heard; Set aside
• Section: 143(3); 195; 263; 10

Judgement Text

ITA NO. 3094/MUM/09 ASSESSMENT YEAR 2004-05 PAGE 1 OF 11 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI C BENCH, MUMBAI BEFORE SHRI PRAMOD KUMAR (ACCOUNTANT MEMBER) AND SMT ASHA VIJAYRAGHAVAN ( JUDICIAL MEMBER) ITA NO. 3094/MUM/09 ASSESSMENT YEAR 2004-05 CRISIL LIMITED .APPELLANT 121-122, ANDHERI KURLA ROAD, ANDHERI EAST MUMBAI 400 093 PAN : AAACT3151E VS. ADDITIONAL COMMISSIONER OF INCOME TAX RANGE 8 (1), MUMBAI . RESPONDENT APPELLANT BY : SHRI KANCHAN KAUSHAL RESPONDENT BY: SHRI AJIT KUMAR SINHA O R D E R PER PRAMOD KUMAR: 1. THIS IS AN APPEAL FILED BY THE ASSESSEE AND IS D IRECTED AGAINST THE ORDER DATED 30 TH MARCH 2009 PASSED BY THE LEARNED COMMISSIONER UNDE R SECTION 263 OF THE INCOME TAX ACT, 1961. GRIEVANCES RAISED BY THE ASSESSEE ARE AS FOLLOWS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) HAS LEGALLY ERRED IN ASSUMI NG ITA NO. 3094/MUM/09 ASSESSMENT YEAR 2004-05 PAGE 2 OF 11 JURISDICTION U/S 263 OF THE ACT AND THE ORDER PASSE D BY HIM IS BAD IN LAW, ILLEGAL, VOID AND WITHOUT JURISDICTION. 2. WITHOUT PREJUDICE TO GROUND (1) ABOVE, AND ON TH E FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, TH E LEARNED CIT(A) HAS LEGALLY ERRED IN SETTING ASIDE THE ORDER PASSED U/S 143(3) BY THE A.O. WITHOUT CONSIDERING THE SUBMISSI ONS AND DETAILS FILED BY THE APPELLANT. 3. WITHOUT PREJUDICE TO GROUND (1) AND (2) ABOVE, A ND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS LEGALLY ERRED IN HOLDING THAT TH E ACIT HAS NOT APPLIED HIS MIND IN VERIFYING THE CLAIM OF DEDU CTION U/S 10A OF THE ACT MADE BY THE APPELLANT. 4. WITHOUT PREJUDICE TO GROUNDS (1) AND (2) ABOVE A ND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS LEGALLY ERRED IN REJECTING APPEL LANTS CONTENTION THAT REIMBURSEMENT OF EXPENSES CANNOT BE CONSIDERED TO BE A PART OF TOTAL TURNOVER OF THE BU SINESS. 5. WITHOUT PREJUDICE TO GROUND (1), (2) AND (4) ABO VE, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS LEGALLY ERRED IN REJECTING THE P LEA OF THE APPELLANT THAT IF ANY EXPENSES IS REDUCED FROM THE EXPORT TURNOVER, SUCH SUM SHOULD ALSO BE REDUCED FROM THE TOTAL TURNOVER OF THE UNDERTAKING FOR THE PURPOSE OF COMP UTING DEDUCTION UNDER SECTION 10A OF THE ACT. ITA NO. 3094/MUM/09 ASSESSMENT YEAR 2004-05 PAGE 3 OF 11 2. BRIEFLY STATED, THE RELEVANT MATERIAL FACTS ARE AS FOLLOWS. THE ASSESSEE IS MAINLY ENGAGED IN THE BUSINESS OF RENDERING RATI NG, ADVISORY, AND RESEARCH AND INFORMATION SERVICES, AND THE ASSESSEE ALSO HAS A UNIT REGISTERED UNDER THE SOFTWARE TECHNOLOGY PARK SCHEM E WHICH IS GRANTED APPROVAL FOR DEVELOPMENT AND EXPORT OF COMPUTER SO FTWARE, INFORMATION TECHNOLOGY AND ENABLED SERVICES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER TOOK NOTE OF THE FACT THAT THE ASSESSEE HAS ENTERED INTO AN AGREEMENT FOR THE DATA COLLECTI ON SERVICES, AND TO BUILD A SIMILAR DATABASE AS PER THE SPECIFICATIONS OF STANDARD & POORS RATING SERVICES IN USA. HE ALSO TOOK NOTE OF THE A SSESSEES CONTENTION THAT THE ASSESSEE GATHERS STANDARD & POORS RATING SERV ICES DATA, STANDARDIZES, ORGANIZES, NORMALIZES, ANALYZES AND RETRANSMITS THE DATA IN S & PS TRANSMISSION FORMAT. THE ASSESSING OFFICER UPHELD THE CLAIM FOR DEDUCTION UNDER SECTION 10 A IN RESPECT OF THIS UNIT AND ALS O OBSERVED THAT THE SCOPE OF SERVICES INCLUDE DATA COLLECTION AND FORMA TTING SERVICES OF COLLATERALIZED RATING OBLIGATION TO SUPPORT RATING ASSIGNMENTS, SURVEILLANCE, RESEARCH AND PUBLISHING AND THAT DA TA ELEMENTS ARE SPECIFIED AND IT INCLUDES ANY INFORMATION THAT IS G ENERALLY OR FREQUENTLY INCLUDED IN THE PERFORMANCE REPORTS, CALCULATED FRO M INFORMATION COLLECTED FROM ANOTHER SOURCE WHICH IS REQUIRED TO BE PROCESS ED FURTHER AS PER THE SPECIFICATIONS AND REQUIRED TO BE FURNISHED INTO TH E STANDARD CSV AND XMN FILES. AS TO THE NATURE OF WORK CARRIED OUT I N 10A UNIT, THE ASSESSING OFFICER CONCLUDED BY OBSERVING THAT AS PER THE AGR EEMENT, THE ASSESSEE HAS TO BUILD A SINGLE DATABASE AND TO DELIVER THE D ATA INTO S & P TRANSMISSION FORMAT WHICH REQUIRES STANDARDIZING, ORGANIZING, NORMALIZING ACCORDING TO THE SPECIFICATIONS, AND RE TRANSMITTING THE DATA TO S& P IN S&PS STRUCTURE FINANCE SURVEILLANCE SYSTEM . THE DEDUCTION OF RS 1,42,06,867 WAS THUS ALLOWED AFTER SOME MINOR ADJUS TMENT IN THE QUANTUM. ITA NO. 3094/MUM/09 ASSESSMENT YEAR 2004-05 PAGE 4 OF 11 3. THE MATTER, HOWEVER, DID NOT REST THERE. ON 6 TH MARCH,2009, LEARNED COMMISSIONER ISSUED A NOTICE UNDER SECTION 263, IN RESPECT OF THE ABOVE ASSESSMENT, POINTING OUT TO THE ASSESSEE THAT IT I S SEEN THAT YOU HAVE NOT MADE ANY DEDUCTION ON ACCOUNT OF EXPENDITURE INCURR ED IN FOREIGN EXCHANGE IN CONNECTION WITH THE NEW UNDERTAKING E VEN THOUGH THERE WAS AN EXPENDITURE ON TRAVEL AMOUNTING TO RS 63,29,556, EXPENSES ON PROFESSIONAL FEES AMOUNTING TO RS 44,69,236 AND EXP ENSES ON OTHER MATTERS AMOUNTING TO RS 21,99,838. THE ASSESSEE WAS REQUIRED TO PRODUCE DETAILS OF EXPORT RELATED EXPENSES INCURRED BY THE ASSESSEE, OR RECEIVED IN CONVERTIBLE FOREIGN EXCHANGE, IN RESPECT OF FREIGHT , TRAVEL, PROFESSIONAL FEES, TELECOMMUNICATION CHARGES, INSURANCE ATTRIBUT ABLE TO THE DELIVERY OF THE ARTICLES OR THINGS OR COMPUTER SOFTWARE OUTSIDE INDIA, EXPENSES, IF ANY, INCURRED IN FOREIGN EXCHANGE IN PROVIDING TECHNICAL SERVICES OUTSIDE INDIA, ONSITE DEVELOPMENT OF SOFTWARE OUTSIDE INDIA, AND O THER MATTERS. THE ASSESSEE WAS ALSO CALLED UPON TO SHOW CAUSE AS TO W HY ADJUSTMENT IN EXPORT TURNOVER SHOULD NOT BE MADE, AND REWORKING O F DEDUCTION ADMISSIBLE UNDER SECTION 10A SHOULD NOT BE CARRIED OUT AND AS TO WHY THE ASSESSMENT MADE BY THE ASSESSING OFFICER SH OULD NOT BE SET ASIDE TO THAT EXTENT . THE DETAILS OF EXPENSES INCURRED IN FOREIGN EXCHANGE WERE DULY FILED BEFORE THE COMMISSIONER, B UT THE COMMISSION WANTED TO PERUSE THE EVIDENCE TO SHOW AS TO WHICH EXPENSES PERTAINED TO WHICH UNIT. HOWEVER, WHEN ASSESSEE WANTED FURTHER TIME TO COMPILE THE SAID INFORMATION, THE ASSESSEE WAS DECLINED FURTHER TIME ON THE GROUND THAT PROCEEDINGS UNDER SECTION 263 WERE GETTING BA RRED BY LIMITATION. 4. ON THESE FACTS, LEARNED COMMISSIONER OBSERVED T HAT THE FACT REMAINS THAT THE ASSESSING OFFICER HAS NOT ABSOLUTE LY APPLIED HIS MIND ON THE ISSUE NOR ANY ENQUIRY HAS BEEN MADE BY THE ASSESSING OFFICER TO ASCERTAIN THE NATURE OF EXPENSES INCURRE D IN FOREIGN EXCHANGE AND THE RELEVANCE OF SUCH EXPENSE IN ENABL ING DELIVERY OF ARTICLES OR THINGS OR COMPUTER SOFTWARE OUTSIDE IND IA OR IN PROVIDING ITA NO. 3094/MUM/09 ASSESSMENT YEAR 2004-05 PAGE 5 OF 11 TECHNICAL SERVICES OUTSIDE INDIA . LEARNED COMMISSIONER THEN REFERRED TO HONBLE SUPREME COURTS JUDGMENTS IN THE CASES O F RAMPYARI DEVI SAROGI VS CIT (67 ITR 84) AND TARA DEVI AGARWAL VS CIT (88 ITR 323) IN SUPPORT OF THE PROPOSITION THAT THE ASSESSMENT MAD E BY THE ASSESSING OFFICER WOULD BE ERRONEOUS MERELY ON THE GROUND OF NOT MAKING ENQUIRIES WHICH WERE REQUIRED TO BE MADE IN THE FACTS AND CIR CUMSTANCES OF THE CASE AND THE WHEN THE ASSESSING OFFICER HAS ACCEPTED THE CLAIM OF THE ASSESSEE IN A STEREO TYPED MANNER. LEARNED COMMISSIONER AL SO REFERRED TO THE DEFINITION OF EXPORT TURNOVER UNDER SECTION 10A WHI CH INTER ALIA PROVIDE FOR EXCLUSION OF FREIGHT, TELECOMMUNICATION CHARGES OR INSURANCE ATTRIBUTABLE TO DELIVERY OF ARTICLES OR THINGS OR C OMPUTER SOFTWARE OUTSIDE INDIA, OR EXPENSE, IF ANY, INCURRED IN FORE IGN EXCHANGE IN PROVIDING THE TECHNICAL SERVICES OUTSIDE INDIA . HE THUS HELD THAT THE ASSESSMENT MADE BY THE ASSESSING OFFICER IS PREJUDICIAL TO THE INTEREST OF THE REVENUE BECAUSE OF NON EXCLUSION OF PARTICUL ARS OF SUCH EXPENSES RELATING TO ELIGIBLE UNITS UNDER SECTION 1 0A FROM EXPORT TURNOVER HAS RESULTED IN EXCESSIVE DEDUCTION . BEFORE PARTING WITH THE MATTER, LEARNED COMMISSIONER ALSO DEALT WITH ASSESS EES ARGUMENT THAT REIMBURSEMENT OF EXPENSES INCURRED ON BEHALF OF THE FOREIGN BUYER DOES NOT INVOLVE ANY ELEMENT OF PROFIT AND REJECTED THE SAME ON THE GROUND THAT WHAT IS TERMED AS REIMBURSEMENT IS NOTHING BUT PART OF SALE PROCEEDS WHICH IS LIABLE TO BE INCLUDED IN TOTAL TURNOVER. L EARNED COMMISSIONER SUMMED UP THE ABOVE ANALYSIS BY OBSERVING AS FOLLOW S: IN VIEW OF THE ABOVE DISCUSSIONS, THE ASSESSMENT BE ING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE, IS SET ASIDE TO THE EXTENT OF EXPENSES INCURRED IN FOREIGN EXCHANGE AND ATTRIBUTABLE TO UNITS FOR WHICH SECTION 10A CLAIM I S MADE, WITH DIRECTIONS TO VERIFY THE NATURE OF SUCH EXPENSES AN D TO CORRELATE SUCH EXPENSES WITH VARIOUS UNITS AND THEN REWORK TH E EXPORT TURNOVER AND TOTAL TURNOVER FOR COMPUTING DEDUCTION UNDER ITA NO. 3094/MUM/09 ASSESSMENT YEAR 2004-05 PAGE 6 OF 11 SECTION 10A. THE ASSESSING OFFICER SHALL AFFORD REA SONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE P ASSING THE FRESH ORDER. 5. THE ASSESSEE IS AGGRIEVED OF THE ORDER SO PASSED BY THE LEARNED COMMISSIONER, AND IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CASE AS A LSO THE APPLICABLE LEGAL POSITION. 7. WE HAVE NOTED THAT THE JUSTIFICATION FOR ASSUMPT ION OF JURISDICTION UNDER SECTION 263 HAS BEEN THAT THE ASSESSING OFFIC ER DID NOT APPLY HIS MIND TO ASCERTAIN THE NATURE OF EXPENSES INCURRED IN FOREIGN EXCHANGE AND THE RELEVANCE OF SUCH EXPENSE IN ENABLING DELIV ERY OF ARTICLES OR THINGS OR COMPUTER SOFTWARE OUTSIDE INDIA OR IN PROVIDING TECHNICAL SERVICES OUTSIDE INDIA AND THE LEARNED COMMISSIONER HAS REL IED UPON HONBLE SUPREME COURTS JUDGMENTS IN THE CASES OF RAMPYARI DEVI SAROGI (SUPRA) OF TARA DEVI AGARWAL (SUPRA) FOR THE SAID PURPOSE. 8. IN TARA DEVI AGARWALS CASE (SUPRA), AS NOTED BY THE HONBLE SUPREME COURT IN THE ORDER ITSELF, IN WHICH THE ITO, WHILE REMARKING THAT THE SOURCE OF INCOME OF THE ASSESSEE DURING THE ACCOUNT ING YEAR WAS INCOME FROM SPECULATION AND INTEREST ON INVESTMENTS STATED THAT NEITHER THE ASSESSEE WAS ABLE TO PRODUCE DETAILS AN D VOUCHERS OF TRANSACTIONS MADE DURING THE ACCOUNTING YEAR NOR WA S THERE ANY EVIDENCE REGARDING THE INTEREST RECEIVED BY HER FRO M VARIOUS PARTIES ON HER INVESTMENTS AND YET NOTWITHSTANDING THESE DEFECTS, HE DID NOT INVESTIGATE INTO THE VARIOUS SOURCES . THE SITUATION THUS WAS THAT THERE WAS EVERYTHING CALLING FOR A FURTHER ENQUIRY AND YET THE ASSESSING OFFICERS INERTIA PREVENTED FROM PROBING FURTHER. ITA NO. 3094/MUM/09 ASSESSMENT YEAR 2004-05 PAGE 7 OF 11 9. SIMILAR WAS THE POSITION IN THE CASE OF RAMPYARI DEVI SAROGI (SUPRA), AS EVIDENT FROM THE FOLLOWING EXTRACTS FROM THE ORD ER OF HONBLE SUPREME COURT, : THERE WAS AMPLE MATERIAL TO SHOW THAT THE ITO MADE THE ASSESSMENTS IN UNDUE HURRY. THE ASSESSEE WAS A NEW ASSESSEE AND FILED VOLUNTARY RETURNS IN RESPECT OF A NUMBER OF Y EARS, I.E., FROM ASST. YRS. 1952-53 TO 1960-61. THE RETURN FOR THE A SST. YR. 1953-54 IS UNDATED. THE RETURNS FOR THE ASST. YRS. 1952-53 AND 1954-55 TO 1957-58 ARE DT. 21ST MARCH, 1961, AND THOSE FOR THE ASST. YRS. 1958-59 TO 1960-61 ARE DT. 26TH APRIL, 1961. ON 21S T MARCH, 1961, THE ASSESSEE MADE A DECLARATION GIVING THE FACTS RE GARDING INITIAL CAPITAL, THE ORNAMENTS AND PRESENTS RECEIVED AT THE TIME OF MARRIAGE, OTHER GIFTS RECEIVED FROM HER FATHER-IN-L AW, ETC., WHICH SHOULD HAVE PUT ANY ITO ON HIS GUARD. BUT THE ITO W ITHOUT MAKING ANY ENQUIRIES TO SATISFY HIMSELF PASSED THE ASSESSM ENT ORDER ON 30TH MARCH, 1961, FOR THE ASST. YRS. 1952-53 TO 195 7-58, AND ON 26TH APRIL, 1961, FOR THE ASST. YRS. 1958-59 TO 196 0-61. NO BANK ACCOUNT OR ANY PROPER BOOKS OF ACCOUNT WERE MAINTAI NED BY THE ASSESSEE OR PRODUCED BEFORE THE ITO. A SHORT STEREO TYPED ASSESSMENT ORDER WAS MADE FOR EACH ASSESSMENT YEAR. AS A SAMPLE, THE CIT HAS REPRODUCED THE ASSESSMENT ORDER FOR THE ASST. YR. 1952-53 IN HIS ORDER. PROFIT FROM SPECULATION W AS SHOWN AS RS. 3,085 AND INTEREST RS. 600, AND RS. 500 WAS ADDED F OR WANT OF BOOKS OF ACCOUNT AND EVIDENCE. NO EVIDENCE WHATSOEV ER WAS PRODUCED IN RESPECT OF THE MONEYLENDING BUSINESS DO NE AND INTEREST INCOME SHOWN TO HAVE BEEN RECEIVED BY THE ASSESSEE. NO NAMES WERE GIVEN AS TO THE PARTIES TO WHOM THE LOAN S WERE ADVANCED, WITH AMOUNTS AND RATE OF INTEREST AND AS TO WHEN THE INTEREST INCOME WAS RECEIVED. ITA NO. 3094/MUM/09 ASSESSMENT YEAR 2004-05 PAGE 8 OF 11 10. IN BOTH THE JUDICIAL PRECEDENTS RELIED UPON BY THE LEARNED COMMISSIONER, FACTS AND CIRCUMSTANCES DID WARRANT F URTHER INQUIRY BUT THE ASSESSING OFFICER DID NOT CONDUCT THE SAME. THE RE CAN BE NO QUARREL WITH THE PROPOSITION THAT WHEN AN ASSESSING OFFICER REMAINS PASSIVE ON THE FACTS WHICH CALL FOR FURTHER ENQUIRY, SUCH AN I NERTIA ON THE PART OF THE ASSESSING OFFICER DOES VITIATE THE ASSESSMENT ORDER AND RENDERS IT ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE, BUT THEN IT DOES NOT MEAN THAT THE ASSESSING OFFICERS NOT PUTTING E VERYTHING STATED IN THE INCOME TEST RETURN TO THE RIGOROUS TESTS OF INVESTI GATION, NO MATTER HOW DESIRABLE IT MUST BE FROM THE POINT OF VIEW OF A CI RCUMSPECT REVENUE OFFICER, CAN RENDER THE ASSESSMENT ORDER ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE TEST MUST LIE IN WHETH ER THE FACTS STATED IN THE RETURN AND THE DOCUMENT WOULD PROVOKE DOUBT IN A RE ASONABLE MIND AND WHETHER A REASONABLE PERSON MUST HAVE EXAMINED THE MATTER FURTHER. THE QUESTION THEN ARISES WHETHER NOT EXAMINING THE FOREIGN EXCHANGE EXPENSES, FROM THE POINT OF VIEW OF THEIR RELEVANCE IN DELIVERY OF SOFTWARE OUTSIDE INDIA, WOULD LEAD TO THE ORDER BEING ERRONE OUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE CLAIM OF THE ASSE SSEE HAS BEEN THAT THE REIMBURSEMENTS HAVE BEEN MADE ON ACTUAL BASIS, WITH OUT ANY INVOLVEMENT OF PROFIT ELEMENT, AND EVEN THE COMMISSIONER HAS NO T DISPUTED THE SAME. THE COMMISSIONERS GRIEVANCE HAS BEEN THAT EVEN F T HERE IS A REIMBURSEMENT ELEMENT, WITHOUT INVOLVEMENT OF PROFI T, STILL ADJUSTMENTS HAVE TO BE MADE TO THE EXPORT TURNOVER. IN VIEW OF THE UNDISPUTED REIMBURSEMENT ASPECT, IT IS NOT REALLY NECESSARY TO DOUBT THAT EVEN OTHER FOREIGN EXCHANGE EXPENSES MUST INVOLVE SOME EXPENSE S IN CONNECTION WITH DELIVERY OF SOFTWARE. IT IS ALSO IMPORTANT TO NOTE THAT THE NATURE OF SERVICES ARE NOT SUCH THAT THERE HAS TO ESSENTIALLY EXPENSES ON SITE OR IN DELIVERY, AS THE SERVICES ARE BEING RENDERED IN THE INDIAN UNIT AND THE OUTPUT IS BEING MERELY TRANSMITTED TO THE S & PS F ACILITY IN USA. ALL THESE FACTS ARE NOT SUCH THAT THEY CALL FOR, PROVOKE OR R EASONABLY TRIGGER FURTHER ITA NO. 3094/MUM/09 ASSESSMENT YEAR 2004-05 PAGE 9 OF 11 ENQUIRY. CARRYING OUT FURTHER PROBE INTO THE NATURE OF EXPENSES, NO MATTER HOW DESIRABLE, IS NOT AN ESSENTIAL COROLLARY TO THE FACTS PRESENTED TO THE ASSESSING OFFICER. LEARNED COMMISSIONERS RELIANCE ON HONBLE SUPREME COURTS JUDGMENT IN THE CASE OF TARA DEVI AGARWAL ( SUPRA) AND RAMPYARI DEVI SAROGI (SUPRA) IS OF NO AVAIL. THE ONLY OTHER ISSUE RAISED BY THE COMMISSIONER IS THAT PERHAPS SOME OF THE EXPENSES R ELATED TO DELIVERY OF SOFTWARE HAVE NOT BEEN REDUCED FROM THE AMOUNT OF T OTAL TURNOVER. THIS KIND OF TENTATIVE SUSPICIONS LURKING IN THE MIND OF A CIT CANNOT BE SAID TO REASONS GOOD ENOUGH TO EXERCISE REVISION POWERS. AS HELD BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GABRIAL IN DIA LTD. 203 ITR 108 (BOM) IN THE GARB OF EXERCISING POWERS UNDER S. 263 'CIT CANNOT INITIATE PROCEEDINGS WITH A VIEW TO START FISHING AND ROVING ENQUIRIES IN MATTERS OR ORDERS WHICH ARE ALREADY CONCLUDED' AND THAT 'AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH THE LAW'. AS HELD BY THE HONBLE PUNJAB & HARYANA HIGH COURT, IN THE CASE OF CIT VS. R.K. METAL WORKS (1978) 112 ITR 445 (P&H), THE CIT MUST GIVE REASONS AND BASIS FOR HIS CONCLUSION THAT THE ORDER SOUGHT TO B E REVISED IS ERRONEOUS. THERE IS NO FINDING WHATSOEVER AS TO HOW IS IT ERRO NEOUS IN LAW. AS FOR THE LEARNED DEPARTMENTAL REPRESENTATIVES SUGGESTION TH AT NO HARM IS CAUSED TO THE ASSESSEE BECAUSE THE MATTER IS ONLY BEING RE STORED TO THE FILE FOR FRESH ADJUDICATION IN ACCORDANCE WITH THE LAW, WE C AN DO NO BETTER THAN TO QUOTE FROM HONBLE BOMBAY HIGH COURTS OBSERVATI ON, IN THIS VERY CASE, TO THE EFFECT THAT, 'SUCH ACTION (OF EXERCISING REV ISION POWERS) WILL BE AGAINST THE WELL-ACCEPTED POLICY OF LAW THAT THERE MUST BE A POINT OF FINALITY IN ALL LEGAL PROCEEDINGS, STALE ISSUES SHO ULD NOT BE RE-ACTIVATED BEYOND A PARTICULAR STAGE AND THE LAPSE OF TIME MUS T INDUCE, REPOSE IN, AND SET AT REST JUDICIAL AND QUASI JUDICIAL CONTROV ERSIES AS IT MUST IN OTHER SPHERES OF ACTIVITY'. THE POWER OF REVISION, THEREF ORE, CANNOT BE MADE IN A ROUTINE AND MECHANICAL MANNER. IN ANY EVENT, WE H AVE NOTED THAT A COORDINATE BENCH OF THE TRIBUNAL, IN THE CASE OF SI EMENS INFORMATION SYSTEMS LTD VS ADDL CIT (2010 TIOL ITAT MUM), HAS, ON MATERIALLY ITA NO. 3094/MUM/09 ASSESSMENT YEAR 2004-05 PAGE 10 OF 11 IDENTICAL FACTS AND BY FOLLOWING SPECIAL BENCH DECI SION IN THE CASE OF ITO VS SAK SOFT LIMITED (121 TTJ 865) , HAS QUASHED THE REVISION PROCEEDINGS. KEEPING IN VIEW ALL THESE DISCUSSIONS, AS ALSO BEAR ING IN MIND ENTIRETY OF THE CASE, WE DEEM IT FIT AND PROPER TO UPHOLD THE G RIEVANCE OF THE ASSESSEE AND QUASH THE IMPUGNED REVISION ORDER AS DEVOID OF JURISDICTION. THE ASSESSEE GETS THE RELIEF ACCORDINGLY. 11. IN THE RESULT, THE APPEAL IS ALLOWED. PRONOUNCE D IN THE OPEN COURT TODAY ON 25 TH DAY OF JUNE, 2010. SD/XX SD/XX (ASHA VIJAYRAGHAVAN) (PRAMOD KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; 25 TH DAY OF JUNE, 2010. COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT , MUMBAI 4. THE COMMISSIONER (APPEALS) , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE - C BENCH, MUMBAI 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR PRADEEP J. CHOWDHURY INCOME TAX APPELLATE TRIBUNAL SR. PRIVATE SECRETARY MUMBAI BENCHES, MUMBAI ITA NO. 3094/MUM/09 ASSESSMENT YEAR 2004-05 PAGE 11 OF 11 DATE INITIAL 1. DRAFT DICTATED ON 21.6.2010 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 22.6.2010 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 22.6.2010 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 22.6.2010 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 22.6.2010 SR.PS/PS 6. DATE OF PRONOUNCEMENT 25.6.2010 SR.PS 7. FILE SENT TO THE BENCH CLERK 28.6.2010 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER