M/s. Visakha Container Terminal Pvt. Ltd., Visakhapatnam V. The Pr.CIT, -2, Visakhapatnam

ITA 316/VIZ/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6614 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 26-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T S N MURTHY
• Assessee Lawyers: R VENKATARAMAN
• Keywords: Revision of order; Opportunity of being heard; Non-deduction of tax; Wrong claim; Assessment record
• Section: 143(3); 263

Judgement Text

ITA NO.312 TO 317/VIZAG/2017 VISAKHA CONTAINER TERMINAL PVT. LTD., VSKP 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . ' , % BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./I.T.A.NOS.312 TO 317/VIZAG/2017 ( / ASSESSMENT YEARS: 2004-05 TO 2009-10) VISAKHA CONTAINER TERMINAL PVT. LTD., VISAKHAPATNAM PCIT - 2, VISAKHAPATNAM [PAN NO. AABCV4834B ] ( ' / APPELLANT) ( ()' / RESPONDENT) / APPELLANT BY : SHRI R. VENKATA RAMAN, AR / RESPONDENT BY : SHRI T.S.N. MURTHY, DR / DATE OF HEARING : 05.10.2 017 / DATE OF PRONOUNCEMENT : 11.10.2017 / O R D E R PER BENCH: THESE APPEALS FILED BY THE ASSESSEE ARE DIRECTED AG AINST ORDER OF THE PRINCIPAL COMMISSIONER OF INCOME TAX-2 (PCIT), VISAKHAPATNAM VIDE F.NO.PR.CIT-2/VSP/263/AABCV4834B/2016-17 DATED 24.3 .2015 FOR THE ASSESSMENT YEARS 2004-05 TO 2009-10. ITA NO.312 TO 317/VIZAG/2017 VISAKHA CONTAINER TERMINAL PVT. LTD., VSKP 2 2. THE ASSESSEE-COMPANY (VCTPL) IS A JOINT VENTURE COMPANY WITH M/S. UNITED LINER AGENCIES OF INDIA PVT LTD (U LA) AND M/S. DUBAI PORT WORLD FZE (DPW), ENGAGED IN THE BUSINESS OF OPERATING A CONTAINER TERMINAL AT VISAKHAPATNAM ON BUILD OPER ATE TRANSFER (BOT) BASIS. THE ASSESSEE COMPANY ENTERED INTO AN A GREEMENT WITH THE DPW FOR OBTAINING TECHNICAL EXPERTISE IN THE ES TABLISHMENT, RUNNING AND MAINTENANCE OF THE PROJECT, AS PER WHIC H THE COMPANY DPW HAS TO PROVIDE TECHNICAL KNOW HOW TO THE ASSESS EE-COMPANY FOR 5 YEARS FROM THE DATE OF OPERATION OR THE DATE WHEN THE PROJECT ACHIEVES A THROUGHPUT LEVEL OF 1,00,000 ETUS PER AN NUM - WHICHEVER IS LATER, FOR WHICH THE MANAGEMENT FEE WA S FIXED AT US $ 2,00,000 P.A. FOR THE FIRST 5 YEARS. THE ASSESSEE-C OMPANY CLAIMED BEFORE THE ASSESSING OFFICER (A.O), THAT IT WAS UNA BLE TO PAY MANAGEMENT CONTRACT FEE (MCF) TO DUBAI PORTS WORLD (DPW), DUE TO FINANCIAL CRISIS AND HENCE, ON MUTUAL AGREEMENT BASIS, THE PAYMENT WAS DEFERRED TO FUTURE YEARS. ACCORDINGLY, THE ASSESSEE PAID THE CONSOLIDATED AMOUNT FOR ALL THE 5 YEARS IN THE FINANCIAL YEAR 2009-2010 RELEVANT TO THE ASST. YEAR 2010-2011. SIN CE THE ASSESSEE IS A COMPANY AND HAS BEEN FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING, PROVISION OF MCF PAYABLE ON YEAR-TO-YEA R BASIS WAS MADE IN THE BOOKS OF ACCOUNT. HOWEVER, THE SAID PRO VISION DEBITED TO PROFIT & LOSS ACCOUNT HAS BEEN ADDED BACK TO THE NET PROFIT/LOSS WHILE COMPUTING THE TAXABLE INCOME AND ACCORDINGLY FILED THE RETURN OF INCOME FOR THE ASST. YEAR 2004-05 TO 2009-10. 2.1. AS FAR AS THE ASST. YEAR 2010-2011 IS CONCERN ED, THE ASSESSEE FILED IT RETURN SHOWING THE INCOME AT NIL AFTER CLAIMING ITA NO.312 TO 317/VIZAG/2017 VISAKHA CONTAINER TERMINAL PVT. LTD., VSKP 3 THE SET OFF OF LOSSES, AND THE ASSESSMENT WAS COMP LETED U/S.143(3) BY MAKING AN ADDITION OF RS.5,27,63,606/- REPRESENT ING MCF PAID TO DPW ON PAYMENT BASIS. THE AO HAS NOT ACCEPTED THE A BOVE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE ADDITION TO NET PROFIT / LOSS WAS MADE IN ORDER TO ARRIVE AT TAXABLE INCOME ON AC COUNT OF NON- FULFILLMENT OF CONTRACTUAL CONDITIONS; BUT SUCH ADD ITION OUGHT TO HAVE BEEN MADE ON ACCOUNT OF NON-DEDUCTION OF TAX A T SOURCE AS PER SECTION 40(A)(I) OF THE ACT. AGGRIEVED WITH THE ABOVE ASSESSMENT, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) CONTENDING THAT THE LIABILITY TO PAY MCF AROSE ONLY AT THE END OF 5 YEARS. THIS CLAIM OF THE ASSESSEE WAS REJECTED BY T HE CIT(A) ON THE GROUND THAT THE MCF IS TO BE PAID TO DPW BY THE ASS ESSEE AT THE END OF EVERY YEAR. THE CIT(A) FURTHER OBSERVED THAT THE ASSESSEE FAILED TO FILE ANY EVIDENCE BEFORE HIM TO SHOW THAT THE PAYMENT WAS MUTUALLY AGREED TO BE DEFERRED. FOR THESE REASONS A ND OTHER REASONS DISCUSSED IN HIS ORDER, THE CIT(A) CONFIRME D THE DISALLOWANCE OF RS.5,27,63,606/- FOR THE ASST.YEAR 2010-2011 WITH A DIRECTON TO THE AO TO CONSIDER THE ALLOWABILITY OF THE ABOVE EXPENDITURE TOWARDS MCF IN THE ASSESSMENT YEARS 200 4-05 TO 2009- 10 IN ACCORDANCE WITH LAW. THE AO HAS PASSED CONSEQ UENTIAL ORDER ON 26-9-2014 FOR THE ASST. YEAR 2004-05 TO 2009-10 BY ALLOWING THE ASSESEE'S CLAIM OF MCF. 3. CONSEQUENT TO THE ORDER OF THE LD. CIT(A), THE A .O. PASSED CONSEQUENTIAL ORDER GIVING EFFECT TO THE ORDER OF T HE LD. CIT(A) AND ALLOWED THE EXPENDITURE RELATABLE TO MANAGEMENT CON SULTANCY FEE IN THE YEARS 2004-05 TO 2009-10 AS UNDER: ITA NO.312 TO 317/VIZAG/2017 VISAKHA CONTAINER TERMINAL PVT. LTD., VSKP 4 A.Y. AMOUNT 2004 - 05 67,43,791 2005 - 06 60,06,750 2006 - 07 90,00,840 2007 - 08 90,82,690 2008 - 09 79,91,285 2009 - 10 24,42,912 4,42,69,268 4. PRINCIPAL CIT, VISAKHAPATNAM HAS TAKEN UP THE C ONSEQUENTIAL ORDER GIVING EFFECT TO THE CIT(A) ORDER DATED 26.9. 2014 U/S 263 OF THE ACT AND HELD THAT THE LD. A.O. MISUNDERSTOOD TH E DIRECTION GIVEN BY THE LD. CIT(A) TO CONSIDER THE ALLOWABILITY OF T HE EXPENDITURE TOWARDS THE MANAGEMENT CONSULTANCY FEE IN THE ASSES SMENT YEARS 2004-05 TO 2009-10.THE LD.CIT(A) HAS GIVEN THE DIRE CTION TO ALLOW THE EXPENDITURE IN ACCORDANCE WITH LAW AND THE AO WITHOUT PROPERLY UNDERSTANDING THE CRUX OF THE DIRECTIONS O F THE CIT(A) AND WITHOUT FINDING OUT WHETHER THE ASSESSEE FULFILLED THE CONDITIONS FOR ALLOWING THE SAID EXPENDITURE OR NOT ALLOWED THE DEDUCTION. THEREFORE THE LD.CIT IN HIS 263 ORDER SET A SIDE TH E CONSEQUENTIAL ORDER AND HELD THAT THE ORDER PASSED BY THE A.O. IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND DIRE CTED THE AO TO EXAMINE THE ASSESSEES CLAIM AFRESH IN ACCORDANCE W ITH LAW. AGAINST THE ORDER U/S 263 DATED 24/03/10 17, THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. APPEARING FOR THE ASSESSEE, THE LD. A.R. ARGUED THAT THE ORDER OF THE LD. CIT(A) IS ERR ONEOUS IN AS MUCH AS TAKING THE REVISION FOR CONSEQUENTIAL ORDER PASSED U/S 251 OF THE ACT. THE AR ARGUED THAT THE CIT HAS NOT VEST ED WITH ANY ITA NO.312 TO 317/VIZAG/2017 VISAKHA CONTAINER TERMINAL PVT. LTD., VSKP 5 POWER TO TAKE UP THE CASE FOR REVISION U/S 263.THE LD. A.R. FURTHER ARGUED THAT THE ASSESSEE HAS DEBITED THE ABOVE EXPE NDITURE IN THE RELEVANT YEAR OF 2004-05 TO 2009-10 AND ADDED BACK TO THE INCOME SINCE THE EXPENDITURE WAS NOT CRYSTALIZED IN VIEW O F THE AGREEMENT REACHED BY THE PAYEE M/S. DUBAI PORT WORLD LIMITED. THE EXPENDITURE WAS CRYSTALISED AS PER THE AGREEMENT EN TERED WITH THE DPW, IN THE A.Y.2010-11 FOR THE PERIOD FROM 2004-0 5 TO 2010-11 AND IT RIGHTLY CLAIMED IN THE ASSESSMENT YEAR 2010- 11. HOWEVER, THE LD. A.O. HAS DISALLOWED THE ENTIRE EXPENDITURE HOLDING THAT THE EXPENDITURE CANNOT BE ALLOWED IN THE YEAR 2010-11 S INCE EACH YEAR IS INDEPENDENT YEAR OF ASSESSMENT BY WHICH THE INCO ME HAS TO BE COMPUTED SEPARATELY TAKING INTO CONSIDERATION OF TH E INCOME AND EXPENDITURE ACCRUED AS PER THE SYSTEM OF ACCOUNTING FOLLOWED. IN APPEAL THE LD.CIT(A) CONFIRMED THE ADDIT ION OF ` 5,27,63,600/- CLAIMED IN THE ASSESSMENT YEAR 2010-1 1 AND DIRECTED THE A.O. TO CONSIDER THE ALLOWABILITY OF EXPENDITUR E TOWARDS MANAGEMENT FEE IN THE ASSESSMENT YEAR 2004-05 TO 20 09-10 IN ACCORDANCE WITH LAW. ACCORDING TO THE DIRECTIONS G IVEN BY THE LD. CIT(A), THE A.O. HAS ALLOWED THE EXPENDITURE AFTER VERIFYING THE RETURNS OF INCOME FILED FOR THE RESPECTIVE ASSESSME NT YEARS. MERELY BECAUSE THERE WAS NO DISCUSSION IN THE CONSEQUENTIA L ORDER IT SHOULD NOT GO AGAINST THE ASSESSE WHEN THE ENTIRE I NFORMATION WAS PLACED BEFORE THE AO. THE RETURNS WERE FILED EVERY YEAR BY THE ASSESSEE AND THE EXPENDITURE WAS DEBITED TO THE PRO FIT & LOSS ACCOUNT AND IT WAS ADDED BACK TO THE INCOME IN THE COMPUTATION STATEMENT WITH A NOTING IN EVERY YEAR. THEREFORE, LD. A.R ARGUED ITA NO.312 TO 317/VIZAG/2017 VISAKHA CONTAINER TERMINAL PVT. LTD., VSKP 6 THAT AFTER DUE VERIFICATION OF THE INCOME TAX RETUR NS FILED BY THE ASSESSEE WITH THE DEPARTMENT, THE A.O. HAS ALLOWED THE EXPENSES IN THE RESPECTIVE YEARS OF 2004-05 TO 2009-10, THEREFO RE, THE CIT COMMITTED AN ERROR IN HOLDING THAT THE A.O. HAS NOT MADE VERIFICATION OF THE DETAILS WHILE GIVING EFFECT TO THE CIT ORDERS. FURTHER, THE LD. A.R. HAS TAKEN OUR ATTENTION TO TH E ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2010-11 PARA NO.4, WH EREIN THE A.O. HAS GIVEN A FINDING THAT THE EXPENDITURE PERTAINING TO THE PARTICULAR PREVIOUS YEAR IS ALLOWABLE IN THAT PREVIOUS YEAR. 6. IN VIEW OF THE ABOVE, LD. A.R. ARGUED THAT THERE IS NO ERROR IN THE ORDER PASSED BY THE A.O. WHICH CALLS FOR REVISION U /S 263 OF THE ACT. THE LD. A.R. FURTHER ARGUED THAT THERE IS NO DOUBT THAT THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND THE E XPENDITURE WAS CRYSTALISED IN THE ASSESSMENT YEAR 2010-11, WHICH W AS CLAIMED AS DEDUCTION. HOWEVER, IN THE EVENT OF DISALLOWANCE O F THE EXPENDITURE RELATING TO THE EARLIER YEARS THE SAME SHOULD BE AL LOWED IN THE RESPECTIVE ASSESSMENT YEARS. THE A.O. HAS NOT DOUBTED THE GEN UINENESS OF THE EXPENDITURE AND IT WAS BONAFIDE. IN CASE OF DENI AL OF THE CLAIM IN THE IN YEAR IN WHICH IT WAS CLAIMED AND ALSO IN THE RES PECTIVE ASSESSMENT YEAR, THE ASSESSEE IS PUT TO DOUBLE JEOPARDY AND FI NANCIAL LOSS. THE ASSESSEE ALSO RELIED ON THE BOARD ADMINISTRATIVE IN STRUCTIONS FOR ALL INCOME TAX OFFICERS WHEREIN THE CBDT DIRECTED AS UN DER: ITA NO.312 TO 317/VIZAG/2017 VISAKHA CONTAINER TERMINAL PVT. LTD., VSKP 7 (3) OFFICERS OF THE DEPARTMENT MUST NOT TAKEN ADVAN TAGE OF IGNORANCE OF AN ASSESSEE AS TO HIS RIGHTS. IT IS ONE OF THEI R DUTIES TO ASSIST THE TAXPAYER IN EVERY REASONABLE WAY, PARTICULARLY IN T HE MATTER OF CLAIMING AND SECURING RELIEFS AND IN THIS REGARD THE OFFICER S SHOULD TAKE THE INITIATIVE IN GUIDING A TAXPAYER WHERE PROCEEDINGS OR OTHER PARTICULARS BEFORE THEM INDICATE THAT SOME REFUND OR RELIEF IS DUE TO HIM. THIS ATTITUDE WOULD, IN THE LONG RUN, BENEFIT THE DEPART MENT FOR IT WOULD INSPIRE CONFIDENCE IN HIM THAT HE MAY BE SURE OF GETTING A SQUARE DEAL FROM THE DEPARTMENT. ALTHOUGH, THEREFORE, THE RESPONSIBILIT Y FOR CLAIMING REFUNDS AND RELIEFS RESTS WITH ASSESSEE ON WHOM IT IS IMPOS ED BY LAW, OFFICERS SHOULD (A) DRAW THEIR ATTENTION TO ANY REFUNDS OR RELIEFS TO WHICH THEY APPEAR TO BE CLEARLY ENTITLED BUT WHICH THEY HAVE O MITTED TO CLAIM FOR SOME REASON OR OTHER: (B) FREELY ADVISE THEM WHEN APPROACHED BY THEM AS TO THEIR RIGHTS AND LIABILITIES AND AS TO THE PROCEDURE TO BE ADOPT ED FOR CLAIMING REFUNDS AND RELIEFS. 7. THE LD. A.R. ARGUED THAT MERELY BECAUSE OF THE IGNORANCE AND THE MISUNDERSTANDING THE ASSESSEE DID NOT CLAIM THE EXPENDITURE IN THE RESPECTIVE YEAR IN WHICH THE EXPENDITURE WAS IN CURRED AND CLAIMED IN THE YEAR 2010-11, THE DEPARTMENT CANNOT TAKE UNDUE ADVANTAGE OF THE ASSESSEES IGNORANCE AND DISALL OW IN BOTH THE YEARS ACCORDINGLY, ARGUED THAT THE ASSESSMENT IS NE ITHER PREJUDICIAL NOR ERRONEOUS, HENCE, THE ORDER U/S 263 OF THE ACT REQUIRED TO BE QUASHED. 8. ON THE OTHER HAND, THE LD. D.R. VEHEMENTLY SUPPO RTED THE ORDER OF THE PRINCIPAL COMMISSIONER OF INCOME TAX. 9. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IN THIS CASE, THE ASSESSEE IS FILING REGULAR INCOME TAX RETURNS ITA NO.312 TO 317/VIZAG/2017 VISAKHA CONTAINER TERMINAL PVT. LTD., VSKP 8 AND CLAIMING THE EXPENDITURE WITH REGARD TO THE MAN AGEMENT CONSULTANCY FEE PAYABLE TO DPW RIGHT FROM ASSESSMEN T YEAR 2004-05 TO 2009-10 AS UNDER: A.Y. AMOUNT 2004 - 05 67,43,791 2005 - 06 60,06,750 2006 - 07 90,00,840 2007 - 08 90,82,690 2008 - 09 79,91,285 2009 - 10 24,42,912 4,42,69, 268 10. THE ABOVE EXPENDITURE WAS DEBITED TO THE PROFI T & LOSS ACCOUNT AND ADDED BACK TO THE RETURN OF INCOME IN T HE RESPECTIVE ASSESSMENT YEARS WITH A NOTING THAT THE EXPENDITUR E WAS ADDED BACK SINCE THE PAYMENT COULD NOT BE MADE AND FINALLY TH E PAYMENT WAS MADE IN THE YEAR 2010-11 AND CLAIMED THE EXPENDITU RE AND OBTAINED A CERTIFICATE FOR NON DEDUCTION OF TAX AT SOURCE U/ S 195(2) OF THE ACT. THIS CLAIM WAS IN ACCORDANCE WITH THE AGREEMENT WIT H THE DPW. EXPENDITURE CLAIMED IN THE ASSESSMENT YEAR 2010-11 WAS THE AGGREGATE EXPENDITURE INCURRED FROM 2004-05 TO ASSE SSMENT YEAR 2010-11 AMOUNTING TO ` 5,27,63,606/-. THE ASSESSING OFFICER DISALLOWED THE ABOVE AMOUNT OF ` 5,27,63,606/- AND ADDED BACK TO THE INCOME AND THE LD. CIT(A) CONFIRMED THE ADDITIO N AND GIVEN A DIRECTION TO THE A.O. TO ALLOW THE EXPENDITURE IN T HE RESPECTIVE ASSESSMENT YEARS IN ACCORDANCE WITH LAW. THE ASSES SEE HAS FILED THE ITA NO.312 TO 317/VIZAG/2017 VISAKHA CONTAINER TERMINAL PVT. LTD., VSKP 9 RETURNS OF INCOME AND THERE WAS NO DISPUTE. THE AS SESSEE HAS CLAIMED THE EXPENDITURE AND ADDED BACK TO THE INCOM E IN THE RESPECTIVE YEARS WITH A CLEAR NOTING AT THE END OF STATEMENT OF COMPUTATION. THE ASSESSMENT RECORDS ARE AVAILABLE TO THE ASSESSING OFFICER AT THE TIME OF GIVING EFFECT TO THE CIT(A) S ORDER. THE A.O. ALSO HAS GIVEN A FINDING IN THE ASSESSMENT ORDER PA SSED U/S 143(3) OF THE ACT IN THE ASSESSMENT YEAR 2010-11 THAT THE ABO VE EXPENSES ARE ALLOWABLE IN THE RESPECTIVE ASSESSMENT YEARS BUT NO T IN THE ASSESSMENT YEAR 2010-11. THEREFORE, MERELY BECAUSE THERE WAS NO DETAILED DISCUSSION BY THE A.O. IN THE CONSEQUENTIA L ORDER, IT IS NOT CORRECT TO HOLD THAT THE A.O. HAS TAKEN THE DECISIO N TO ALLOW THE EXPENDITURE WITHOUT VERIFICATION AND WITH MISUNDERS TANDING. WE ARE OF THE CONSIDERED VIEW THAT THE ENTIRE MATERIAL WAS PLACED BEFORE THE A.O. AND AFTER CONSIDERING THE AVAILABLE MATERIAL, THE A.O. ALLOWED THE DEDUCTION HENCE WE HOLD THAT THE A.O. HAS ALLOW ED THE EXPENDITURE CORRECTLY AS PER LAW. FURTHER, THERE I S NO DISPUTE WITH REGARD TO THE GENUINENESS OF EXPENDITURE. THE ASSE SSEE HAS CLAIMED THE EXPENDITURE IN THE ASSESSMENT YEAR 2010-11, ACC ORDING TO THE ASSESSING OFFICER AND THE LD. CIT(A), THE EXPENDITU RE REQUIRED TO BE ALLOWED IN THE RESPECTIVE ASSESSMENT YEARS. IN THE RESPECTIVE ASSESSMENT YEARS, THE ASSESSEE HAS DEBITED THE EXPE NDITURE AND ITA NO.312 TO 317/VIZAG/2017 VISAKHA CONTAINER TERMINAL PVT. LTD., VSKP 10 ADDED BACK TO THE INCOME. WHILE GIVING EFFECT TO TH E CIT(A) ORDER, THE A.O. HAS ALLOWED THE EXPENSES PERTAINING TO THE RESPECTIVE ASSESSMENT YEARS CORRECTLY. THE A.O. HAS NOT ALLOW ED ANY EXCESS EXPENDITURE OR ANY BOGUS CLAIM. THEREFORE, WE HOLD THAT THE ORDER PASSED BY THE A.O. GIVING EFFECT TO THE CIT(A) ORDE R DATED 26.9.2014 IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTERES T OF THE REVENUE AND ACCORDINGLY WE SET ASIDE THE ORDER PASSED U/S 263 O F THE ACT AND ALLOW THE APPEALS OF THE ASSESSEE. 11. THE NEXT GROUND OF THE ASSESSEE IS INCORRECT A SSUMPTION OF JURISDICTION BY THE CIT U/S 263 AGAINST THE CONSEQU ENTIAL ORDER OF CIT(A). DURING THE APPEAL HEARING, THE LD. A.R. ARG UED THAT THE ASSESSING OFFICER PASSED ORDER GIVING EFFECT TO THE APPELLATE ORDER OF THE LD. CIT(A) U/S 251 OF THE ACT, AND THE PRINCIPAL CI T HAS NO JURISDICTION TO REVISE THE CIT(A)S ORDER. 12. ON THE OTHER HAND, THE LD. D.R. ARGUED THAT AS PER THE PROVISIONS OF SECTION 263, THE PRINCIPAL CIT IS VES TED WITH THE POWERS TO TAKE UP THE ORDERS PASSED BY THE ASSESSING OFFICER FOR REVISION AND TO PASS THE APPROPRIATE ORDERS. THIS IS AN ORDER PASS ED BY THE A.O. GIVING EFFECT TO CIT(A)S ORDER. THEREFORE, THE PRINCIPAL CIT HAS RIGHTLY ASSUMED THE JURISDICTION AND THERE IS NO ERROR IN T HE ORDER PASSED BY THE ITA NO.312 TO 317/VIZAG/2017 VISAKHA CONTAINER TERMINAL PVT. LTD., VSKP 11 PRINCIPAL COMMISSIONER OF INCOME TAX U/S 263 OF THE ACT AND REQUESTED TO UPHOLD THE SAME. 13. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MAT ERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE CIT(A) HAS PASSED THE ORDER U/S 251 OF T HE ACT WITH A DIRECTION TO THE A.O. TO ALLOW THE DEDUCTION IN AC CORDANCE WITH LAW. CONSEQUENT TO THE DIRECTION OF THE CIT(A), THE A.O. HAS PASSED THE CONSEQUENTIAL ORDER, WHICH INVOLVES VERIFICATION AL SO. AS PER THE PROVISIONS OF SECTION 263 OF THE ACT, THE PRINCIPAL CIT IS VESTED WITH THE POWERS TO TAKE UP THE ORDERS PASSED BY THE A.O. FOR REVISION. FOR READY REFERENCE, WE EXTRACT THE SECTION 263(1) OF THE ACT , WHICH READS AS UNDER: 263 REVISION OF ORDERS PREJUDICIAL TO REVENUE (1) THE [PRINCIPAL COMMISSIONER OR] COMMISSIONER MAY CA LL FOR AND EXAMINE THE RECORD OF ANY PROCEEDING UNDER THIS ACT , AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE [ASS ESSING] OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT ERESTS OF THE REVENUE, HE MAY, 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 CIRCUMSTA NCES OF THE CASE JUSTIFY, INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT, OR CANCELLING THE ASSESSMENT AND DIRECTING A FRESH ASS ESSMENT. 14. FROM PERUSAL OF THE SUB SECTION (1) OF SECTION 263 OF THE ACT, THE PRINCIPAL CIT IS ENTITLED TO CALL FOR THE RECOR D AND EXAMINE THE RECORD OF ANY PROCEEDING UNDER THIS ACT IN THE CASE OF ORD ER PASSED BY THE A.O. THUS, THE PRINCIPAL CIT HAS POWER TO EXAMINE WHETHE R THE CONSEQUENTIAL ITA NO.312 TO 317/VIZAG/2017 VISAKHA CONTAINER TERMINAL PVT. LTD., VSKP 12 ORDER PASSED BY THE A.O. IS IN ACCORDANCE WITH THE DIRECTION OF THE CIT(A) OR NOT. THE LD. PRINCIPAL CIT HAS NOT TINKE RED WITH THE ORDER OF CIT(A). THEREFORE, WE HOLD THAT THE PRINCIPAL CIT HAS RIGHTLY ASSUMED THE JURISDICTION AND PASSED THE REVISION ORDERS AND THERE IS NO ERROR IN ASSUMPTION OF JURISDICTION. THE ASSESSEES APPEAL ON THIS GROUND IS DISMISSED. 15. IN THE RESULT, THE APPEALS OF THE ASSESSEE FOR THE AYS 2004-05 TO 2009-10 ARE PARTLY ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 11 TH OCT17. SD/- SD/- ( . ) ( . . ' ) (V. DURGA RAO) (D.S. SUNDER SINGH) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 11.10.2017 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT M/S. VISAKHA CONTAINER TERMINAL PRIVATE LIMITED, OPP. TOWN HALL ROAD, BESIDE FISHING HARBOUR, PORT AREA, VISAKHAPATNAM-530 001 (A.P.) 2. / THE RESPONDENT THE PRINCIPAL COMMISSIONER OF I NCOME TAX-2, 5 TH FLOOR, AAYAKAR BHAVAN, DABAGARDENS, VISAKHAPATNAM. 3. + / THE CIT-2, VISAKHAPATNAM 4. + ( ) / THE CIT (A), VISAKHAPATNAM 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM