JSW ENERGY LTD, MUMBAI V. PR CIT CEN 4, MUMBAI

ITA 3659/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8137 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Assessment Year: 2011-2012
• Appeal Filed On: 19-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ALOK JAIN
• Keywords: Sale consideration of property below Jantri Value; Business income; Transfer pricing; Search and seizure; Opportunity of being heard; Audit objection; Principle of natural justice; Retrospective amendment; Scheme of amalgamation; Reason to believe; Capital expenditure; Borrowed satisfaction
• Section: 143(3); 50C; 153A; 14A; 115JB; 12A; 263; 63; 132; 144; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J , MUMBAI BEFORE SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER AND SHRI MANOJ KUMAR AG G ARWAL, HON'BLE ACCOUNTANT MEMBER ITA NO . 3659 /MUM/201 7 (A.Y: 2011 - 12 ) M/S. JSW ENERGY LTD JS W CENTRE, BANDRA KURLA COMPLEX, BANDRA EAST, MUMBAI 400 020 PAN NO: AAACJ 8109 N V . PR. COMMISSIONER OF INCOME TAX (CENTRAL) - 4, AAYAKAR BHAVAN, M. K. ROAD , MUMBAI - 400 020 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAKESH JOSHI DEPARTMENT BY : SHRI ALOK JAIN DATE OF HEARING : 20.09.2017 DATE OF PRONOUNCEMENT : 15 .12 .2017 O R D E R PER C. N. PRASAD (JM) 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD.PCIT (C ) - 4 , MUMBAI DATED 29.03.2017 FOR THE A .Y. 2011 - 12 . 2. BR IEFLY STATED THE FACTS ARE THAT , T HE ASSESSEE IS A DOMESTIC COMPANY ENGAGED IN THE BUSINESS OF ENERGY GENERATION AND DISTRIBUTION. A SEARCH AND SEIZURE ACTION U/S. 132 OF THE ACT WAS CONDUCTED ON 16.03.2011 ON JSW GROUP. THE ASSESSEE WAS ALSO COVERED IN THE SEARCH ACTION. THE 2 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., PERIOD COVERED IN SEARCH ASSESSMENT WAS ASSESSMENT YEARS 2005 - 06 TO 2011 - 12. ASSESSEE FILED ITS RETURN OF INCOME FOR A . Y 2011 - 12 ON 29/11/2011 DECLARING NIL INCOME CLAIMING DEDUCTION OF U/S 80IA OF THE ACT UNDER NORMAL PROVISIONS AND DECLARED BOOK PROFITS U/S 115JB AT .10 89,39,48,987/ - . THE ASSESSMENT U/S 144C R.W.S. 143(3) OF THE ACT WAS COMPLETED ON 17/04/2014 DETERMINING THE INCOME AT . 79,16,99,428/ - UNDER NORMAL PROVISIONS AND BOOK PROFITS U/S 115JB AT .11 66,18,01,549/ - 3. LATER THE COMPTROLLER AND AUDITOR GENERAL OF INDIA(CAG) HAS RAISED OBJECTION THAT DEDUCTION U/S 80IA IN RESPECT OF POWER PLANT UNIT SBU 2 (2 X 300MW), WHICH WERE EARLIER OWNED BY JSW (VIJAYNAGAR) LTD. AND THEN TRANSFERRED TO ASSESSEE COMPANY AS A RESULT OF MERGER, HAS WRONGLY ALLOWED B Y THE AO WITHOUT CONSI DERING PROVISIONS OF SECTION 80I A(12A) OF THE ACT, COPY OF CAG LE TTER IS PLACED AT PAGE NOS. 85 & 86 OF PAPER BOOK. THE SAID OBJECTION OF THE CAG WAS ACCEPTED BY THE PR. CIT VIDE LETTER DATED 20/06/2016, COPY OF WHICH IS PLACED AT PAGE NOS. 87 & 88 OF THE PAPER BOOK. THE ASSESSEE FILED DETAILED REPLY ON THE SAID OBJECTION OF CAG VIDE LETTER DATED 29/11/2016, COPY OF WHICH IS PLACED AT PAGE NOS. 39 TO 42 OF THE PAPER BOOK. HOWEVER, LD.PCIT HAS NOT CONSIDERED THE SAID SUBMISSIONS OF THE ASSESSEE AND ISSUED NOTICE U/S 263 OF THE ACT DATED 17/02/2017 ON THE FOLLOWING ISSUES: - 3 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., 1. IRREGULAR ALLOWANCE OF DEDUCTION U/S.80IA IN RESPECT OF POWER PLANT UNIT SBU 2 (2 X 300MW), WHICH WERE EARLIER OWNED BY JSW (VIJAYNAGAR) LTD. AND THEN TRANSFERRED TO ASSESSEE COMPANY AS A RESULT OF MERGER. 2. IRREGULAR ALLOWANCE OF DEDUCTION U/S. 80IA IN RESPECT OF THE AMOUNT OF INCOME ENHANCED U/S.92CA OF THE ACT (ON ACCOUNT OF TP ADJUSTMENT. 3. IRREGULAR ALLOWANCE OF DEDUCTION U/S.80IA ON ACCOUNT OF INCREASE IN PROFIT AS A RESULT OF DISALLOWANCE MADE U/S.14A. 4. IRREGULAR ALLOWANCE OF DEDUCTION U/S.80IA IN RESPECT OF INCOME OTHER THAN INCOME DERIVED FROM ELIGIBLE SOURCES. 4. IN RESPONSE TO THE SAID NOTICE U/S 263 OF THE AC T , COPY OF WHICH IS PLACED AT PAGE NOS. 25 TO 42 OF PAPER BOOK , T HE ASSESSEE FILED DETAILED REPLY . HOWEVER , LD.PCIT DID NOT ACCEPT THE SAID REPLY AND PASSED ORDER U/S 263 OF THE ACT DATED 29/03/2017 SETTING ASIDE THE ASSESSMENT ORDER DATED 17/04/2014 AND DIRECT ED THE AO TO MAKE FURTHER ENQUIRY ON THE ABOVE ISSUES AND PASS A FRESH ORDER. 5. THE ASSESSEE BEING AGGRIEVED BY THE ORDER OF THE LD.PCIT, PREFERRED APPEAL BEFORE US AND ACCORDINGLY THE FOLLOWING ISSUES ARISE FOR ADJUDICATION IN THE PRESENT APPEAL: (I) THE LEARNED (LD.) PRINCIPAL COMMISSIONER OF INCOME TAX (PCIT) ERRED IN FACTS OF THE CASE AND IN LAW, WHILE INITIATING PROCEEDINGS U/S.263 OF THE INCOME TAX ACT (THE ACT) AND PASSING THE ORDER U/S.263 RELYING UPON FACTUALLY INCORRECT REASONS. 4 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., (II) THE LD. PCIT ERRE D IN FACTS AND CIRCUMSTANCES OF THE CASE, IN PASSING THE ORDER U/S.263 OF THE ACT BY IGNORING THE FACT THAT THE ORDER PASSED BY THE LD. ASSESSING OFFICER(AO) U/S.143(3) RWS 144C(3) DATED 17.04.2014 WAS DULY APPROVED BY ADDL. CIT CENTRAL RANGE - 10 U/S.153D O F THE ACT, WHICH HIS BAD IN LAW. (III) THE LD. PCIT ERRED IN FACTS OF THE CASE AND IN LAW BY HOLDING THAT DEDUCTIONS U/S.80IA ON CERTAIN ISSUES AS MENTIONED IN AUDIT OBJECTIONS BY C & AG WERE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE DESPITE THE FACT THAT THESE WERE ALLOWED AFTER DETAILED CONSIDERATION OF ALL THE FACTS IN THE ASSESSMENT ORDER WHICH GOT MERGED WITH THE ORDER OF LD. CIT(A) U/S.250 OF THE ACT DATED 26.12.2016 AS WELL. (IV) THE LD. PCIT ERRED IN FACTS OF THE CASE AS WELL AS IN LAW BY DIRECTIN G THE LEARNED ASSESSING OFFICER THAT THE ASSESSEE WAS NOT ENTITLED TO DEDUCTION U/S. 80IA OF THE ACT IN RESPECT OF POWER PLANT UNIT SBU 2 (2 X 300MW) BASED ON SUBSEQUENT YEAR'S ASSESSMENT ORDER IN THE CASE OF THE ASSESSEE . (V) THE LD. PCIT ERRED IN FACTS OF THE CASE BY DIRECTING THE LD. ASSESSING OFFICER THAT THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S.80IA OF THE ACT IN RESPECT OF AMOUNT OF INCOME ENHANCED U/S.92CA OF THE ACT, IGNORING THE FACT THAT NO SUCH ALLOWANCE WAS GIVE N AT ALL BY LEARNED ASSESSING OFFICER WHILE PASSING THE ORDER U/S.143(3) R.W.S.144C(3) OF THE ACT. (VI) THE LD. PCIT HAS ERRED IN FACTS OF THE CASE AS WELL AS IN LAW BY DIRECTING THE LD. ASSESSING OFFICER THAT THE ASSESSEE WAS NOT ENTITLED TO DEDUCTION U/S. 80 IA OF THE ACT ON ENHANCED ASSESSED INCOME AS A RESULT OF DISALLOWANCE MADE U/S.14A OF THE ACT, 1961, IGNORING THE BINDING CIRCULAR ISSUED BY THE BOARD AND 5 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., SUPERSEDING ORDER OF LD. CIT(A) FOR THE YEAR UNDER CONSIDERATION AND OF HON'BLE ITAT ORDERS FOR THE E ARLIER YEARS FACTS REMAINING SAME. (VII) THE LD. PCIT GROSSLY ERRED IN FACTS OF THE CASE AND IN LAW BY DIRECTING THE LEARNED ASSESSING OFFICER TO RESTRICT THE DEDUCTION U/S.80IA OF THE ACT TO THE EXTENT OF TAXABLE BUSINESS INCOME WRONGLY INTERPRETING PROVISIONS OF SECTION 80A OF THE ACT AND IGNORING THE VARIOUS JUDICIAL PRONOUNCEMENTS IN THIS REGARD, INCLUDING THOSE OF JURISDICTIONAL HIGH COURT. 6. THE LEARNED COUNSEL FOR THE ASSESSEE BEFORE US SUBMITTED THAT LD. PCIT HAS ISSUED NOTICE U/S 263 OF THE ACT ON THE FOL LOWING ISSUES: - A. IRREGULAR ALLOWANCE OF DEDUCTION U/S 80IA ON ENHANCED INCOME DUE TO DISALLOWANCE U/S 14A OF THE ACT; B. IRREGULAR ALLOWANCE OF DEDUCTION U/S 80IA ON ENHANCED INCOME DUE TO DISALLOWANCE U/S 92CA OF THE ACT; C. IRREGULAR ALLOWANCE OF DEDUCTION U/S 80IA IN RESPECT OF INCOME OTHER THAN INCOME DERIVED FROM ELIGIBLE SOURCES; D. IRREGULAR ALLOWANCE OF DEDUCTION U/S 80IA OF POWER PLANT UNIT SBU 2 (2 X 300MW). 7. REGARDING IRREGULAR ALLOWANCE OF DEDUCTION U/S 80IA ON ENHANCED INCOME DUE TO DISALLOWANCE U/S 14A OF THE ACT, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT CERTAIN INTEREST AND OTHER EXPENSES WERE DISALLOWED U/S 14A WHICH WERE DEBITED AGAINST INCOME FROM THE ELIGIBLE UNIT, HENCE ASSESSEE HAS RAI SED THIS ISSUE FIRST TIME IN ASSESSMENT YEAR 6 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., 20 08 - 0 9 BEFORE THE LD.CIT(A) THAT WHATEVER EXPENSES DISALLOWED, WHICH WERE DEBITED AGAINST INCOME FROM ELIGIBLE UNIT, SHOULD RESULTED INTO ENHANCED DEDUCTION U/S 80IA OF THE A CT. LD.CIT(A) IN ASSESSMENT YEAR 2008 - 09 AFTER EXAMINING FACTS ALLOWED THIS GROUND OF ASSESSEE , WHICH WAS ALSO CONFIRMED BY HON'BLE ITAT. COPY OF THE ITAT ORDER IN ITA.NO.463/MUM/2014 DATED 31.07.2015 IS FURNISHED. LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT IN THE CURRENT ASSESSMENT YEAR ALSO THOUGH AO MENTIONED IN THE ORDER T HAT HE IS ALLOWING ENHANCED DEDUCTION U/S 80IA ON ACCOUNT OF DISALLOWANCE U/S 14A, HOWEVER WHILE ALLOWING DEDUCTION IN COMPUTATION, HE HAS ADOPTED FIGURE AS CLAIMED BY THE ASSESSEE IN RETURN OF INCOME. HE SUBMITS THAT ASSESSEE FILED AN APPEAL , RAISING SPE CIFIC GROUND ON THIS PLEA AND THE LD.CIT(A) HAS DEALT WITH THIS GROUND ON PAGE NO. 51 PARA 21 OF HIS ORDER DATED 26/12/2016 AND INVITED US TO THE RELEVANT PORTION OF WHICH IS REPRODUCED HEREUNDER: - 'THUS CONSIDERING THE SUBMISSION OF THE ASSESSEE, THE VIE W OF THE AO IN THE ASSESSMENT ORDER AND MATERIAL ON RECORD, IT IS HELD THAT ANY DISALLOWANCE OF EXPENSES THAT WOULD BE SUSTAINED IN THIS APPEAL, IT WOULD HAVE THE CONSEQUENT EFFECT OF THE SAID DEDUCTION U/S 80IA GOING UP BY THE SOME AMOUNT AS THEREFORE, SUCH ENHANCED PROFIT WOULD BE ELIGIBLE FOR BENEFITS OF SECTION 80IA OF THE ACT AND THUS APPEAL OF THE ASSESSEE ON THIS GROUND IS ALLOWED.' 8. THEREFORE, HE SUBMITS THAT S INCE THE ABOVE ISSUE HAS BE EN ALREADY CONSIDERED BY THE LD. CIT(A), IN VIEW OF THE EXPLANATION (C) TO SUB - SECTION (1) OF SECTION 263 OF THE ACT, LD . PCIT CANNOT EXERCISE JURISDICTION U/S 263 7 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., OF THE ACT. HE PLACED RELIANCE ON THE DECISION OF HON'BLE JURISDICTIONAL HIGH COU RT IN CASE OF RANKA JEWELLERS V. ADDL. CIT [328 ITR 148 ] . 9. REGARDING SECOND ISSUE OF I RREG ULAR ALLOWANCE OF DEDUCTION U/S. 80IA ON ENHANCED INCOME DUE TO DISALLOWANCE U/S 92CA OF THE ACT, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTE D THAT , THE LD.PCIT IN THE ORDER STATED THAT AO SHOULD HAVE REDUCED DEDUCTION U/S 80IA ON ACCOUNT OF ADDITION U/S 92CA OF THE ACT IN VIEW OF SPECIFIC PROVISION OF SECTION 92C(4) OF THE ACT. IN THIS REGARD LEARNED COUNSEL FOR THE ASSESSEE SUBMIT S THAT PROVISO TO SECTION 92C( 4) STATES THAT NO DEDUCTION UNDER CHAPTER VIA SHALL BE ALLOWED ON ENHANCED INCOME DUE TO ARM'S LENGTH ADJUSTMENT U/S 92CA OF THE ACT. IT DOES NOT SAY THAT DEDUCTION CLAIMED BY THE ASSESSEE SHALL BE REDUCED BY THE AMOUNT OF ADDITION MADE U/S 92CA OF THE ACT . HE SUBMITS THAT A S EVIDENT F ROM THE A SSESSMENT ORDER, SINCE AO HAS ALLOWED DEDUCTION U/S 80IA AS CLAIMED BY THE ASSESSEE, QUESTION DOES NOT ARISE TO REDUCE IT FURTHER BY THE AMOUNT OF ADDITION MADE U/S. 92CA OF THE ACT. HE F URTHER SUBMITS THAT IN ANY CA SE THE ISSUE OF ADDITION U/S. 92CA WAS ALSO SUBJECT MATTER OF APPEAL IN THIS YEAR BEFORE LD CIT(A), WHICH HAS BEEN DEALT WITH BY HIM ON PAGE NO. 19 , PARA 10 OF HIS ORDER AND DELETED THE ENTIRE ADDITION. THUS, HE SUBMITS THAT SINCE ISSUE WAS ALSO CONSIDERED AND DECIDED BY THE LD.CIT(A) IN FAVOUR OF THE ASSESSEE, IT CANNOT BE SUBJ ECT MATTER OF JURISDICTION U/S. 263 OF THE ACT AS 8 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., HELD BY JURISDICTIONAL HIGH COURT IN CASE OF RANKA JEWELLERS V. ADDL. CIT [328 ITR 148]. 10. REGARDING THIRD ISSUE OF I RREGULAR ALLOWANCE OF DEDUCTION U/S 80IA IN RESPECT OF INCOME OTHER THAN INCOM E DERIVED FROM ELIGIBLE SOURCES, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD.PCIT HAS STATED THAT AO SHOULD HAVE RESTRICTED DEDUCTION U/S 80IA TO THE EXTENT OF BUSINESS INCOME OF THE ASSESSEE AND WHEREAS AO HAS ALLOWED DEDUCTION U/S 80IA TO THE EXTENT OF GROSS TOTAL INCOME WHICH IS NOT IN CONSONANCE WITH PROVISIONS OF SECTION 80A OF THE ACT. IN THIS REGARD LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT ASSESSEE HAS THREE UNITS OUT OF W HICH TWO UNITS ARE ELIGIBLE FOR DEDUCTION U/S 80IA AND ONE UNIT HAS COMPLETED 10 YEARS HENCE NOW NOT ELIGIBLE FOR 80IA . THERE WERE PROFITS IN ELIGIBLE UNITS AND LOSSES IN INELIGIBLE UNIT, DUE TO WHICH BUSINESS INCOME OF THE ASSESSEE IS LOWER THAN PROFITS O F ELIGIBLE UNITS. SINCE SECTION 80A OF THE ACT LIMITS DEDUCTION UNDER CHAPTER VI - A TO THE EXTENT OF GROSS TOTAL INCOME OF THE ASSESSEE, DEDUCTION U/S 80IA WAS CLAIMED TO THAT EXTENT AND ALLOWED BY THE AO. I N OTHER WORDS, HE SUBMITS THAT , LOSS OF INELIGIBL E UNITS WAS NOT SET OFF AGAINST PROFITS OF ELIGIBLE UNIT. HE SUBMIT TED THAT IT IS SETTLED POSITION OF LAW THAT SUCH LOSSES OF INELIGIBLE UNITS ARE NOT TO BE SET OFF FROM THE PROFITS OF ELIGIBLE UNIT TO CLAIM DEDUCTION U/S. 80IA OF THE ACT. LEARNED COUNSE L FOR THE ASSESSEE SUBMITS THAT HON'BLE BOMBAY HIGH COURT IN 9 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., CASE S OF CIT V. TRIODAS LABORATORIES LTD (328 ITR 448) AND CIT V. ESKAY KNIT INDIA LTD. (ITA 184 OF 2007) DATED 25.03.2010 HAS HELD THAT DEDUCTION UNDER CHAPTER VI - A IS AVAILABLE TO THE EXTENT OF GROSS TOTAL INCOME OF THE ASSESSEE WITHOUT SETTING OF L OSSES OF ANY INELIGIBLE UNITS . THEREFORE, HE SUBMITS THAT S INCE AO HAS TAKEN A VIEW, APPROVED BY HON'BLE JURISDICTIONAL HIGH COURT, SUCH ORDER OF AO CANNOT BE TERMED AS ERRONEOUS . HE PLACED RELIANCE ON THE HON'BLE JURISDICTIONAL HIGH COURT DECISION IN CAS E OF CIT V. GABRIEL INDIA LTD [203 ITR 108] . FURTHER HE SUBMITS THAT, IF AO HAS TAKEN A POSSIBLE VIEW, SUCH ORDER CANNOT BE SUBJECT MATTER OF SECTION 263 OF THE ACT AS HELD BY HON'BLE SUPREME COURT IN CASE OF CIT V. MAX INDIA LTD. [295 ITR 282] . THEREFORE, HE SUBMITS THAT , THIS ISSUE IS ALSO BEYOND THE JURISDICTION OF LD PC IT U/S 263 OF THE ACT. 11. A S FAR AS FORTH ISSUE REGARDING I RREGULAR ALLOWANCE OF DEDUCTION U/S . 80IA OF POWER PLANT UNIT SBU 2 (2 X 300MW) IS CONCERNED , THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT, THE LD.PCIT STATED THAT THE POWER PLANT UNIT SBU 2 (2 X 300MW) WAS OWNED BY JSW (VIJAYANAGAR) LTD. AND THE SAME WAS LATER TRANSFERRED TO THE ASSESSEE COMPANY (JSW ENERGY LTD.) AS A RESULT OF MERGER AS PER THE SCHEME OF AMALGA MATION BEING EFFECTIVE FROM 11 TH DECEMBER 2008 AND THE APPOINTED DATE OF MERGER IS 1 ST APRIL 2008. IN VIEW OF THE SPECIFIC PROVISION OF SECTION 80IA(12A) OF THE ACT, DEDUCTION U/S 80IA IS NOT AVAILABLE TO UNITS WHICH 10 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., WERE TRANSFERRED UNDER DEMERGER OR AMALGAMATION AFTER 1.4.2007. HE SUBMITS THAT THIS OBSERVATION OF LD.PCIT WAS BASED ON AUDIT OBJECTION RAISED BY CAG. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT I N THE OBJECTION CAG STATED THAT LEGISLATURE WAS INTENT TO GIVE DEDUCTION TO THE PERSON WHO TOOK RISK OF INVESTMENT HENCE UNIT TRANS FERRED IN MERGER AND AMALGAMATION ARE NOT ELIGIBLE FOR DEDUCTION U/S 80IA OF THE ACT. 12. IN THIS REGARD HE SUBMIT S THAT , JSW ENERGY VIJAYNAGAR LTD.(JSWEVL), A SUBSIDIARY OF THE COMPANY WAS IN THE PROCESS OF SETTING UP 2 X 300 MW POWER PLANTS AT VIJAYANAGAR AT AN ESTIMATED COST OF RS.1,860 CRORES (THESE 2 POWER GENERATING UNDERTAKINGS REFERRED TO AS SBU 2 ). AS ON 31.03.2008 THE POWER PLANTS WERE ONLY UNDER CONSTRUCTION STAGE WITH A CWIP OF RS.1,129.16 CRORES. THE ASSESSEE COMPANY WAS HOLDING 74% OF THE TOTAL EQUITY OF JSWEVL AS ON 31.3.2007. HE SUBMITS THAT A SCHEME OF COMPANY ARRANGEMENT WAS APPROVED BY THE HON'BLE BOMBAY HIGH COURT VIDE ITS ORDER DATED 10.12.2008, JSWE VL GOT MERGED WITH ASSESSEE COMPANY W.E.F. 01.04.2008. HE SUBMITS THAT POST - M ERGER, THE DEVELOPMENT OF SBU 2 (2 X 300MW) POWER PLANTS WAS TAKEN UP BY JSWEL THE ASSESSEE , AND A FURTHER AMOUNT OF RS.686.58 CRORES WAS SPENT BY THE COMPANY TO SET UP THE POWER PLANT. LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT F IRST UNIT OF SBU 2 (1 X 300MW) GOT COMMISSIONING APPROVAL FROM GOVERNMENT OF KARNATAKA , ELECTRICAL INSPECTORATE (CEIG) 11 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., BY ITS LETT ER DATED 18.07.2009 AND THE SECOND UNIT (1 X 300MW) GOT SUCH CEIG APPROVAL BY ITS LETTER DATED 19.09.2009 ISSUED IN THE NAME OF JSWEL THE ASSESSEE COM PANY . HE SUBMITS THAT T HE COMPANY BY ITS LETTER DATED 23.11.2009 INTIMATED TO THE CHIEF ENGINEER, OPERATION & PERFORMANCE DIVISION CENTRAL ELECTRICITY AUTHORITY OF COMMISSIONING OF COMMERCIAL OPERATION OF UNIT 1 (1 X 300 MW) ON 01.07.2009 AND THAT OF UNIT 2 (1 X 300MW) ON 01 .09.2009. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT COPIES OF ALL THE ABOVE ENCLOSURES ARE PART OF LETTER SUBMITTED BY THE COMPANY DATED 29.11.2016 TO LD.PCIT. LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT TO CONFIR M THE DATE OF COMMENCEMENT OF THE POWER PLANTS OF SBU 2 , WHICH HAS BEEN ACQUIRED BY JSWEL THE ASSESSEE , AT THE CAPITAL WORK IN PROGRESS [ CWIP ] STAGE AND FINALLY SET UP BY THE COMPANY AT TORANGALU, VIJAYANAGAR, COPY OF REPORT ISSUED BY THE GOVERNMENT OF IND IA, MINISTRY OF POWER FOR APRIL 2010 IS PLACED AT PAGE NOS. 48 TO 69 OF PAPER BOOK. THEREFORE LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT THERE WAS NO ELIGIBLE UNDERTAKING AS REFERRED TO IN SECTION 80IA(12) AND 80IA(12) OF THE ACT EXISTING AT ALL AS ON THE DATE OF MERGER I.E. 01.04.2008 WHICH GOT TRANSFERRED FROM THE AMALGAMATING COMPANY (I.E. JSWEVL) TO THE AMALGAMATED COMPANY (I.E. JSWEL) THE ASSESSEE . 12 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., 13. THE LEARNED COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO THE CIRCULAR NO. 3/2008 EXPLAINING AMENDMENT TO SECTION 80IA(12A) OF THE ACT WHICH STATES AS UNDER: - 'SUB - SECTION (12) OF SECTION 80 - IA PROVIDES THAT WHERE ANY UNDERTAKING OF AN INDIAN COMPANY WHICH IS ENTITLED TO THE DEDUCTION UNDER THE SAID SECTION IS TRANSFERRED BEFORE THE EXPIRY OF THE PERIOD SPECIFIED THEREIN , TO ANOTHER INDIAN COMPANY IN A SCHEME OF AMALGAMATION OR DEMERGER, THE PROVISIONS OF THE SAID SECTION 80 - IA SHALL APPLY TO THE AMALGAMATED OR THE RESULTING COMPANY AS THEY WOULD HAVE APPLIED TO THE AMALGAMATING OR THE DEMERGED COMPANY IF THE AMALGAMATION OR DEMERGER HAD NOT TAKEN PLACE. THE MAIN INTENTION IN PROVIDING BENEFIT UNDER SECTION 80 - IA HAD BEEN TO PROVIDE INCENTIVE TO THOSE WHO HAD TAKEN INITIAL INVESTMENT AND ENTREPRENEUR RISK. HENCE, IT WAS FELT THAT THERE WAS NO JUSTIFICATION FOR PASSING ON THE BENEFIT TO SOMEONE WHO HAD NOT TAKEN TH ESE RISKS AND HAD ONLY ACQUIRED THE ELIGIBLE UNDERTAKING MUCH LATER WHEN THE RISKS HAD REDUCED. HENCE, A NEW SUBSECTION (12A) HAS BEEN INSERTED IN SECTION 80 - IA SO AS TO PROVIDE THAT THE PROVISIONS OF SUB - SECTION (12) SHALL NOT APPLY TO ANY UNDERTAKING OR ENTERPRISE WHICH IS TRANSFERRED IN A SCHEME OF AMALGAMATION OR DEMERGER AFTER 31.3.2007. THUS, IF AN UNDERTAKING OR AN ENTERPRISE IS TRANSFERRED IN A SCHEME OF AMALGAMATION OR DEMERGER AFTER 31.3.2007, THE BENEFIT OF DEDUCTION UNDER SECTION 80 - IA WILL NOT BE AVAILABLE TO THE AMALGAMATED OR DEMERGED UNDERTAKING OR ENTERPRISE. THE CONTENT OF THIS CIRCULAR WILL SUPERCEDE WHATEVER CONTRARY HAS BEEN STATED, ON THIS ISSUE, IN ANY OTHER CIRCULAR, ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES EARLIER.' 14. REFERRING TO THE SAID CIRCULAR LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT F ROM READING OF THE ABOVE INTENTION OF LEGISLATURE , IT IS VERY CLEAR THAT THEY HAVE USED THE WORDS BEFORE EXPIRY OF THE PERIOD SPECIFIED THEREIN, WHICH MEANS THAT THE ELIGIBLE UNITS SHOULD STA RT CLAIMING DEDUCTION U/S 80IA AND IN BETWEEN IF UNITS WERE TRANSFERRED TO OTHER COMPANY UNDER DEMERGER OR AMALGAMATION ROUTE, IN THAT CASE SUCH TRANSFEREE COMPANY SHALL NOT BE ABLE TO CLAIM DEDUCTION FOR UNEXPIRED PERIOD. LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT T HE IMPUGNED UNDERTAKING SBU 2 13 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., (2 X 300 MW) POWER PLANT WAS SET UP AND COMMISSIONED/BEGAN GENERATION OF POWER BY JSWEL IN JULY 2009 AND SEPTEMBER 2009. THEREFORE, AT THE TIME OF SUCH TRANSFER SBU 2 WERE NOT AN ELIGIBLE UNITS CLAIMING DEDUCTION U/S 80IA OF THE ACT. HE SUBMITS THAT T HE CLAIM U/S.80IA(4) OF THE ACT IN RESPECT OF PROFITS OF THIS ELIGIBLE UNDERTAKING WAS STARTED FROM ASSESSMENT YEAR 2010 - 11 AND ONWARDS IN THE HANDS OF JSWEL THE ASSESSEE AND IS PROPER AND WITHOUT ANY RESTRICTIONS PLACED BY THE LAW. LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITS THAT IN THE ABOVE CIRCULAR , INTENTION OF THE LEGISLATURE WAS TO GIVE INCENTIVE TO TH OSE WHO TOOK RISK OF INVESTMENT AND IN ASSESSEES CASE MAJOR INV ESTMENT WAS DONE BY ASSESSEE THROUGH SUBSIDIARY COMPANY, HENCE RISK WAS TAKEN BY THE ASSESSEE COMPANY, HENCE ASSESSEE ALSO SATISFIES THIS CRITERIA OF LEGISLATIVE INTENT . 15. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE CLAIM FOR DEDUCTION U/S.80IA OF THE ACT IN RESPECT OF AFORESAID SBU 2 (2 X 300 MW), IS BEING MADE SINCE A.Y. 2010 - 11 AND THE CLAIMS WERE EXAMINED THOROUGHLY DURING SCRUTINY PROCEEDINGS AFTER SEARCH U/S. 132 OF THE ACT BY CALLING VARIOUS DETAILS/ DOCUMENTS, EXPLANATIO NS REGARDING ELIGIBILITY AND QUANTUM OF DEDUCTION AND T HE ASSESSMENT ORDER AS PASSED U/S.143(3) R.W.S. 153 A OF THE ACT AFTER DUE SCRUTINY AND EXAMI NING ALL RELEVANT FACTS AND LAW AND CLAIM MADE U/S.80IA OF THE ACT FOR THE SAID 14 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., DEDUCTION HAS BEEN ALLOWED. LEARNED COUNSEL FOR THE ASSESSEE PLACES RELIANCE ON THE JUDGMENT OF THE HON'BLE DELHI HIGH COURT IN T HIS REGARD IN THE CASE OF CIT V. ESCORTS LTD. [ 338 ITR 435 ] WHEREIN IT HAS BEEN HELD THAT THE DEPARTMENT IS NOT ENTITLED TO REOPEN AN ASSESSMENT BASED ON A FRESH INFERENCE OF TRANSACTIONS ACCEPTED BY THE REVENUE FOR PRECEDING YEARS ON THE PRETEXT OF DUBBING THEM AS ERRONEOUS. 16. RELIANCE IS ALSO PLACED ON THE DECISION OF HON'BLE DE LHI HIGH COURT IN CASE OF CIT V. TATA COMMU NICATION INTERNET SERVICES LTD [ 204 TAXMAN 606 ] WHERE IT WAS HELD THAT ELIGIBILITY OF DEDUCTION U/S 80IA CAN BE EXAMINED ONLY IN FIRST YEAR AND IN SUBSEQUENT YEARS IT CANNOT BE DISTURBED UNLESS THERE IS CHANGE IN FACTS OF THE CASE 17. HE F URTHER SUBMITS THAT THE HON' BLE JURISDICTIONAL BOMBAY HIGH COURT IN THE CASE OF PRU DENTIAL ASSURANCE CO. LIMITED V . DIT (IT) [324 ITR 381 ] HELD THAT ASSESSMENT ORDER FOLLOWING BINDING PRECEDENT IS NOT AMENABLE TO REVISION U/S.263 OF THE ACT. LEARNED COUNSEL FOR THE ASSESSEE SUBMITS T HAT I N THIS CASE, IT WAS HELD THAT THE AAR RULING WAS BINDING DESPITE CONTRARY RULINGS ON THE SUBJECT. 18. THEREFORE, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT THE SAID DEDUCTION U/S. 80IA HAS BEEN ALLOWED AFTER DUE EXAMINATION OF THE RELEVANT FACTS AND CIRCUMSTANCES OF THE CASE FIRST TIME IN ASSESSMENT YEAR 15 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., 2010 - 11 AND H ENCE, IT WOULD NOT BE POSSIBLE TO BE REVISED U/S.263 OF THE ACT IN SUBSEQUENT YEARS. 19. THE LEARNED COUNSEL FOR THE ASSESSE E FURTHER SUBMITS THAT LD PCIT HAS INITIATED PROCEEDINGS U/S 263 ON THIS ISSUE ON THE BASIS OF AUDIT OBJECTIONS RAISED BY CAG . LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT A S PER THE PROVISIONS OF SECTION 263 IT IS THE COMMISSIONER OF INCOME TAX WHO HAS TO EXAMINE THE RECORDS AND THEREAFTER FORM AN INDEPENDENT OPINION THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. HE SUBMITS THAT I N THE PRESENT CASE IT MAY BE NOTED THAT THE PR. COMMI SSIONER OF INCOME TAX HAS NOT EXERCISED HIS INDEPENDENT JUDGMENT FOR INVOKING REVISIONAL POWERS. LEARNED COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN T HE CASE OF VINAY PRATAP THACKER V. CIT IN ITA.NO.2939/MUM/ 201 1 DECIDED ON 27 - 02 - 2013 20. LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITS THAT THE SIMILAR VIEW HAS BEEN TAKEN BY THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF SPA N OVERSEAS LTD V. CIT IN ITA.NO . 1223/PN/2013 DATED 21.12.2015. LEARNED COUNSEL FOR THE ASSESSEE REFERRING TO THIS JUDGEMENT OF THE TRIBUNAL SUBMITS THAT THE TRIBUNAL HELD THAT IN VIEW OF THE FACT THAT THE LEARNED COMMISSIONER OF INCOME TAX HAS INVOKED THE PROVISIONS OF 16 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., SECTION 263 WITH OUT APPLYING HIS OWN INDEPENDENT JUDGEMENT AND MERELY AT THE BEHEST OF PROPOSAL FORWARDED BY THE DCIT IS AGAINST THE SPIRIT OF THE ACT. THEREFORE , THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT THE REVISION MADE BY THE LD.PCIT U/S. 263 BE QUASHED FOR T HE VARIOUS PROPOSITIONS CANVASED BEFORE US. 21. THEREFORE, LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT, IN VIEW OF AB OVE FACTS IT IS CLEAR THAT LD AO HAS TAKEN A POSSIBLE VIEW , THEREFORE, SUCH ORDER CANNOT BE SUBJECT MATTER OF REVISION U/S 263 OF THE ACT AS HELD BY THE APEX COURT IN CASE OF MAX INDIA LTD. (SUPRA). FURTHER IN ALL THE FOU R ISSUES VIEW TAKEN BY THE LD AO IS SUPPORTED WITH DECISION S OF JUDICIARY, HENCE SUCH VIEW CA NNOT BE TREATED AS ERRONEOUS. THEREFORE, HE SUBMITS THAT EVEN IF THE VIEW OF A O IS PREJUDICIAL TO THE INTERESTS OF REVENUE IT CANNOT BE REVISED U/S 263 IN ABSENCE OF ERRONEOUS VIEW AS HELD BY APEX COURT IN CASE OF MALABAR INDUSTRIAL CO. LTD V. CIT [243 IT R 83] . 22. LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT THE CONTENTIONS RAISED BY THE ASSESSEE IN REPLY TO SHOW CAUSE NOTICE HAVE NOT BEEN DEALT WITH AND THE LD.PCIT RELIED ONLY ON THE FINDINGS IN THE ASSESSMENT ORDER OF THE ASSESSMENT YEAR 2012 - 13 WHERE THE SIMILAR CLAIM WAS DENIED BY THE ASSESSING OFFICER. LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITS THAT EXCEPT STATING THAT ASSESSING OFFICER HAS EXAMINED THE I SSUE OF CLAIM 17 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., FOR DEDUCTION U/S. 80IA WHILE SCRUTINIZING T HE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2012 - 13 AND DISALLOWED THE CLAIM AND DRP ALSO DIRECTED TO DISALLOW THE CLAIM AND NO PROPER ENQUIRES WERE MADE BY THE ASSESSING OFFICER DURING THIS YEA R, LD.PCIT DID NOT EXAMINE THE ISSUE INDEPENDENTLY TO COME TO THE CONCLUSION AS TO HOW THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT , LD.PCIT HAS NOT MADE ANY SORT OF ENQUIRIES AND HE RESTED HIS DECISION ONLY ON THE BASIS OF ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2012 - 13 AND WITHOUT MAKING ANY INDEPENDENT ENQUIRY. LEARNED COUNSEL FOR THE ASSESSEE PLACING RELIANCE ON THE HON'BLE DELHI HIGH COURT IN THE CASE O F PCIT V. DELHI AIRPORT METRO EXPRESS PVT. LTD. IN ITA.NO.705 OF 2017 DATED 05. 0 9.2017 SUBMITTED THAT IT HAS BEEN HELD IN THIS CASE THAT IF THE LD.PCIT IS OF THE VIEW THAT ASSESSING OFFICER DID NOT UNDERTAKE ENQUIRY IT BECOMES INCUMBENT ON THE LD.PCIT TO CONDUCT SUCH ENQUIRY. THEREFORE LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT IN THE ABSENCE OF ANY ENQUIRY MADE BY THE LD.PCIT , REVISION MADE U/S. 263 SIMPLY STATING THAT ASSESSING OFFICER HAS MADE ENQUIRIES IN THE SUBSEQUENT ASSESSMENT YEAR AND DENIED THE CLAIM OF THE ASSESSEE AND NO ENQUIRY MADE IN THIS YEAR BY THE ASSESSING OFFICER WILL NOT GIVE RAISE TO REVISION U/S. 263 OF THE 18 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., ACT, WHE RE IN FACT TH E ASSESSING OFFICER HAS MADE ALL ENQUIRIES AND ALLOWED THE CLAIM IN ASSESSMENT YEAR 2010 - 11. 23. LD.CIT(DR) SUBMITS THAT ANY ORDER PASSED UNDER THE ACT BY THE ASSESSING OFFICER CAN BE REVISED BY THE LD.PCIT, IF IT IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE IN THE OPINION OF THE LD.PCIT. LD.CIT(DR) SUBMITS THAT THE LD.PCIT HAS INDEPEN DENT LY APPLIED HIS MIND TO THE ISSUE AND FOUND THAT THE EXCESS DEDUCTION U/S. 80IA OF THE ACT HAS BEEN ALLOWED TO THE ASSESSEE AND SIMILARLY THERE HAS BEEN EXCESS DEDUCTION U/S. 80IA OF THE ACT IN RESPECT OF ENHANCED INCOME ON ACCOUNT OF DEDUCTION U/S. 14A AND ON ACCOUNT OF TP ADJUSTMENT AND ALSO EXCESS DEDUCTION WAS ALLOWED U/S. 80IA ON OTHER INCOME AND SINCE THE ASSESSING OFFICER FAILED TO MAKE ENQUIRIES THE LD.P CIT AFTER INDEPENDENT APPLICATION OF MIND PASSED ORDER U/S. 263 OF THE ACT HOLDING THAT THE ORDER PASSED BY THE ASSESSING OFFICER IN ALLOWING THE EXCESS DEDUCTION U/S. 80IA OF THE ACT IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE . LD.CIT( DR ) FURTHER SUBMITS THAT IN VIEW OF THE EXPLANATION 2 TO SECTION 263 OF THE ACT, SINCE ASSESSING OFFICER FAILED TO MAKE ENQUIRIES THE ORDER IS DEEMED TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE . LD.CIT(DR) STRONGLY PLACED RELIANCE ON THE FOLLOWING DECISIONS AND SUBMITTED THAT THE REVISION ORDER PASSED BY THE LD.PCIT IS IN ACCORDANCE WITH THE LAW. 19 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., (I) SUBHLAKSHMI VINIJYA (P). LTD V. CIT - 1 , 155 ITD 17 (KOLKATA - TRIB.) (II) CIT V. AMITABH BACHAN, 384 ITR 200 (SC) (III) MANMOHAK PROPERTIES (P) LTD. V. CIT, 152 IT D 606 ( MUMBAI ) (IV) CIT V. INFOSYS TECHNOLOGIES LTD., 341 ITR 293 ( KAR ) (V) M/S. CROMPTON GREAVES V. CIT IN ITA.NO. 1994 /MUM/ 2013 AND 2836 /MUM/ 2014 DATED 01.02.2016 (VI) H O RIZON INVESTMENT CO. LTD. V. CIT IN ITA.NO. 1593 /MUM/2013 DATED 27.06.2014. (VII) CIT V. SOUTH INDIA SHIPPING CORPN. LTD., 233 ITR 546 ( MAD. ) (VIII) RAJMANDIR ESTATES PRIVATE LIMITED V. PCIT IN ITA.NO. 113 OF 16 DATED 13.05.2016 [KOLKATA - HIGH COURT ] 24. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE CASE LAWS R ELIED ON. A SEARCH AND SEIZURE ACTION U/S. 132 OF THE ACT WAS CONDUCTED ON 16.03.2011 ON JSW GROUP. THE ASSESSEE WAS ALSO COVERED IN THE SEARCH ACTION. THE PERIOD COVERED IN SEARCH ASSESSMENT WAS ASSESSMENT YEARS 2005 - 06 TO 2011 - 12. THE ASSESSMENT FOR THE ASSESSMENT YEAR 2010 - 11 WAS COMPLETED U/S. 153A OF THE ACT. HOWEVER THE ASSESSMENT FOR THE CURRENT ASSESSMENT YEA R I.E. 2011 - 12 WAS COMPLETED U/S. 144 C(3) R.W.S. 143(3) ON 17.04.2014 DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT .79,16,99,428/ - UNDER NORMAL PROVISIONS OF THE ACT AND BOOK PROFITS AT .1166,18,01,549/ - U/S. 115JB OF THE ACT. IN THE COURSE OF THE ASS ESSMENT PROCEEDINGS , ASSESSING OFFICER ISSUED LETTER DATED 15.03.2013 FOR THE ASSESSMENT YEARS 2005 - 06 TO 2011 - 12 CALLING FOR INFORMATION TO FURNISHING COMPU TATION OF PROFIT ELIGIBLE FOR DEDUCTION U/S. 80IA IN RESPECT OF EACH UNIT. ASSESSING OFFICER ALSO REQUIRED THE ASSESSEE TO EXPLAIN WHY DISALLOWANCE U/S. 14A 20 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., SHOULD NOT BE MADE U/S. 14A R.W. RULE 8D UNDER NORMAL COMPUTATION AS WELL AS BOOK PROFITS U/S. 115JB OF THE ACT. ASSESSEE SUBMITTED ITS DETAILS OF PROFIT ELIGIBLE FOR DEDUCTION U/S. 80IA FO R ALL T HE ASSESSMENT YEARS I.E. ASSESSM ENT YEARS 2005 - 06 TO 2011 - 12. A DETAILED NOTE ON DEDUCTION U/S.80IA WAS ALSO FURNISHED. COPY OF THE PROFIT AND LOSS ACCOUNT FOR 80IA AND NON 80IA ACTIVITIES OF THE ASSESSEE COMPANY ALONG WITH THE COMPUTATION OF DED UCTION U/S. 80IA FOR THE ASSESSMENT YEAR 2011 - 12 WAS FURNISHED. ASSESSEE ALSO FU RNISHED ITS REPLY BY WAY OF NOTE REGARDING DISALLOWANCE U/S. 14 A R.W. RULE 8D EXPLAINING WHY THERE SHOULD NOT BE ANY SUCH DISALLOWANCE. ASSESSMENT WAS COMPLETED ACCEPTING THE CLAIM OF THE ASSESSEE IN RESPECT OF DEDUCTION U/S. 80IA ON SBU 1 AND SBU 2 UNITS. IN THE ASSESSMENT ORDER , ASSESSING OFFICER DISALLOWED DEDUCTION U/S.14A R.W. RULE 8D AND TP ADJUSTMENT WAS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF WHICH THE INCOME GOT ENHA NCED ON WHICH DEDUCTION U/S. 80IA WAS DENIED . 25. LD.PCIT ISSUED NOTICE U/S. 263 OF THE ACT DATED 17.02.2017 STATING THAT THERE IS AN IRREGULAR ALLOWANCE OF DEDUCTION U/S. 80IA OF THE ACT IN RESPECT OF POWER PLANT UNIT NAMELY SBU 2 WHICH WAS EARLIER OWNED BY JSW (VIJAYNAGAR) LIMITED AND THEN TRANSFERRED TO THE ASSESSEE COMPANY AS A RESULT OF MERGER. IN THE SHOW CAUSE NOTICE LD.PCIT STATED THAT AS PER SECTION 80IA(12) THE BENEFIT OF DEDUCTION FOR THE UNEX PIRED PERIOD IS 21 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., ALLOWED TO THE TRA NSFERRED AMALGAMATED /RESULTING COMPANY I F SUCH AMALGAMATION/DEMERGER OCCURRED BEFORE THE PERIOD AVAILABLE FO R TAX HOLIDAY. HOWEVER, IN VIEW OF SUB - SECTION ( 12A ) WAS INSERTED BY THE FINANCE ACT 2007 IN SECTION 80IA , SUB - SECTION ( 12 ) OF SECTION 80IA SHALL NOT APPLY TO ANY UNDERTAKING OR ENTERPRISE WHICH IS TRANSFERRED IN A S CHEME OF AMALGAMATION OR DEMERGER AFTER 31.03.2007 . LD.PCIT STATED THAT ON A PERUSAL OF RECORDS AND ASSESSMENT ORDER , ASSESSING OFFICER HAS NOT MADE DISALLOWANCE U/S. 80IA IN RESP ECT OF POWER PLANT OF SBU 2 AND THEREFORE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. SIMILARLY HE OBSERVED THAT BY VIRTUE OF THE TP ADJUSTMENT MADE U/S. 92CA AND BY VIRTUE OF THE DISALLOWANCE MADE U/S. 14A T HERE WAS AN INCREASE IN PROFITS /INCOME OF THE ASSESSEE AND THE ASSESSING OFFICER ALLOWED THE CLAIM FOR DEDUCTION U/S. 80IA ON SUCH ENHANCED INCOME WHICH ACCORDING TO THE LD.PCIT THE DEDUCTION WOULD HAVE BEEN RESTRICTED AND THEREFORE THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND LASTLY IT IS STATED BY THE LD.PCIT IN THE SHOW CAUSE NOTICE THAT ON PERUSAL OF THE ASSESSMENT ORDER IT IS SEEN THAT THE INCOME COMPUTATION UNDE R THE HEAD INCOME FROM THE HOUSE PROPERTY INCOME FROM CAPITAL GAINS AND INCOME FROM OTHER SOURCES AMOUNT ED TO .100,35,34,962/ - AND WHEREAS AFTER ALLOWING THE CLAIM FOR DEDUCTION 22 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., U/S. 80IA TO THE ASSESSEE THE TOTAL INCOME IS COMPUTED AT .79,16,99,428/ - WHICH IS LESS THAN .100,35,34,962/ - , THEREFORE THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE . 26. IN RESPONSE TO THE SHOW CAUSE NOTICE , ASSESSEE FILED A DETAILED REPLY DATED 06.03.2017 IN RESPECT OF ALL THE FOUR ISSUE S RAISED BY THE LD.PCIT IN THE SHOW CAUSE NOTICE . IN SO FAR AS THE OBJECTION OF THE ASSESSEE IN RESPECT OF ALLOWANCE OF DEDUCTION U/S. 80IA OF THE ACT ON THE ENHANCED INCOME / PROFIT ON ACCOUNT OF DISAL LOWANCE MADE U/S. 14A AND THE TP ADJUSTMENT MADE , WE FIND THAT THE ASSESSEE CONTESTED THESE ISSUES BEFORE THE LD.CIT(A) AND THE LD.CIT(A) BY ORDER DATED 26.12.2016 DELETED THE TP ADJUSTMENT AS WELL AS THE ADDITION MADE U/S. 14 A R.W. RULE 8D WHILE COMPUTING THE INCOME UNDER NORMAL PROVISIONS AS WELL AS THE BOOK PROFITS U/S. 115JB OF THE ACT. IN SUCH CIRCUMSTANCES AS THE ADDITION/DISALLOWANCE IN RESPECT OF TP ADJUSTMENT AND U/S. 14A R.W. RULE 8D ARE SUBJECT MATTER OF APPEAL BEFORE THE LD.CIT(A), THE LD.PCIT HAS NO JURISDICTION TO REVISE THE O RDER U/S. 263 OF THE ACT ON THESE ISSUE S WHICH WERE SUBJECT MATTER OF APPEAL BEFORE THE LD.CIT(A). THIS ASPECT HAS BEEN EXAMINED BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF RANKA JEWELLERS VS ADDL. CIT [328 ITR 148 ] , WHERE IN THE HON'BLE JURISDICTIONAL HIGH COURT HELD AS UNDER: - 23 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., 'THE POWER UNDER SECTION 263(1) CAN BE EXERCISED BY THE COMMISSIONER WHERE HE CONSIDERS THAT ANY ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE EXPLANATION (C ) TO THE PROVISION PROVIDES THAT WHERE ANY ORDER REFERRED TO IN SUB - SECTION (1) AND PASSED BY THE ASSESSING OFFICER HAS BEEN MADE A SUBJECT - MATTER OF ANY APPEAL, THE POWERS OF THE COMMISSIONER UNDER THE SUB - SECTI ON SHALL EXTEND TO SUCH MATTERS AS HAD NOT BEEN 'CONSIDERED AND DECIDED' IN THE APPEAL. IN OTHER WORDS, THE EXERCISE OF POWER UNDER SECTION 263(1) IS IN RESPECT OF AN ORDER PASSED BY THE ASSESSING OFFICER, WHERE THE ORDER IS REGARDED AS BEING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. WHERE AN ORDER PASSED BY THE ASSESSING OFFICER IS SUBJECT TO AN APPEAL THAT HAS BEEN FILED, THE POWER OF THE COMMISSIONER TO INVOKE HIS REVISIONAL JURISDICTION UNDER SECTION 263 CAN ONLY EXTEND TO SUCH MATTERS W HICH HAVE NOT BEEN CONSIDERED AND DECIDED IN THE APPEAL. THE WORDS WHICH HAVE BEEN USED IN THE EXPLANATION (C) TO SUB - SECTION (1) OF SECTION 263 ARE CONSIDERED AND DECIDED.' 27. IN VIEW OF THE ABOVE DECISION OF THE HO N'BLE JURISDICTIONAL HIGH COURT, THE LD.PCIT CANNOT ASSUME JURISDICTION U/S. 263 OF THE ACT ON THE ISSUE OF TP ADJUSTMENT AND DISALLOWANCE U/S. 14A R.W. RULE 8D WHICH WERE ALREADY SUBJECT MATTER OF THE APPEAL BEFORE THE LD.CIT(A). HENCE WE HOLD THAT ASSESSMENT ORDER PASSED BY THE ASSESSING O FFICER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE IN SO FAR AS THESE TWO ISSUES ARE CONCERNED. THUS, WE SET A SIDE THE ORDE R OF THE LD.PCIT TO THAT EXTE NT AS IT IS BEYOND THE SCOPE OF THE PROVISIONS OF SECTION 263 OF THE ACT. 28. COMI NG TO THE ALLOWANCE U/S. 80IA IN RESPECT OF SBU 2 UNIT IS CONCERNED THE LD.PCI T REVISED THE ASSESSMENT ORDER OBSERVING AS UNDER: - 24 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., 5.1 IRREGULAR ALLOWANCE OF DEDUCTION U/S.80IA IN RESPECT OF POWER PLANT UNIT SBU 2(2 X 800MW ) AS REGARDS THE ISSUE OF IRREGULAR ALLOWANCE OF DEDUCTION U/S.80IA IN RESPECT OF POWER PLANT UNIT SHU 2 (2 X 300MW), THE ASSESSEE SUBMITTED THAT THE ERSTWHILE COMPANY JSW ENERGY (VIJAYNAGAR) LTD. DID NOT OWN POWER PLANT BUT WAS IN THE PROCESS OF SETTING UP TWO POWER PLANTS WHICH W ERE UNDER CONSTRUCTION WITH A CWIP OF RS.1,129.16 CRORES PRIOR TO THE MERGER ON 01.04.2008. THE ASSESSEE FURTHER SUBMITTED THAT THE TWO POWER PLANTS WERE COMMISSIONED IN THE YEAR 2009 - 10 I.E. AFTER THE DATE OF MERGER AND THE CLAIM U/S.80IA IN RESPECT OF TH ESE UNITS WERE MADE SINCE A.Y. 2010 - 11 IN THE HANDS OF THE ASSESSEE COMPANY AND THE SAME WAS ALLOWED AFTER THOROUGH EXAMINATION REGARDING ELIGIBILITY AND QUANTUM OF DEDUCTION. HOWEVER, A PLAIN READING OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT THERE HAS BE EN NO DELIBERATION ON THIS ISSUE BY THE ASSESSING OFFICER AND ACCORDINGLY THE CONTENTION OF THE AR THAT THE CLAIM OF DEDUCTION U/S.80IA HAS BEEN ALLOWED AFTER THOROUGH EXAMINATION CANNOT BE ACCEPTED. 5.1.1 IT IS TO BE NOTED THAT THE AMENDMENT TO SECTION 2 63 OF THE ACT, VIDE FINANCE ACT 2015 W.E.F. 1 ST JUNE 2015, BY INSERTION OF EXPLANATION 2 TO SECTION 263 OF THE ACT IS DECLARATORY &, CLARIFICATORY IN NATURE AND INSERTED TO PROVIDE CLARITY ON THE ISSUE AS TO WHICH ORDERS PASSED BY THE AO SHALL CONSTITUTE E RRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. BY THE SAID EXPLANATION, IT IS, INTER - ALIA, PROVIDED THAT IF THE ORDER IS PASSED WITHOUT MAKING INQUIRIES OR VERIFICATIONS BY AO WHICH, SHOULD HAVE BEEN MADE OR THE ORDER IS PASSED ALLOWING ANY RELIEF WI THOUT INQUIRING INTO THE CLAIM; THE ORDER SHALL BE DEEMED TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THUS THE SCOPE OF REVISIONARY POWER OF THE COMMISSIONER/ PRINCIPAL COMMISSIONER IS WIDENED. FOR READY REFERENCE, THIS EXPLANATION [I.E. EX PLANATION 2 TO SECTION 263 IS REPRODUCED HERE UNDER: '(EXPLANATION 2. - FOR THE PURPOSES OF THIS SECTION, IT IS HEREBY DECLARED THAT AN ORDER PASSED BY THE ASSESSING OFFICER SHALL BE DEEMED TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, IF IN THE OPINION OF THE PRINCIPAL COMMISSIONER OR COMMISSIONER, (A) THE ORDER IS PASSED WITHOUT MAKING INQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN MADE; (B) THE ORDER IS PASSED ALLOWING ANY RELIEF WITHOUT INQUIRING INTO THE CLAIM; 25 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., (C) THE ORDER HAS NOT BEEN MADE IN ACCORDANCE WITH ANY ORDER, DIRECTION OR INSTRUCTION ISSUED BY THE BOARD UNDER SECTION 119; OR (D) THE ORDER HAS NOT BEEN PASSED IN ACCORDANCE WITH ANY DECISION WHICH IS PREJUDICIAL TO THE ASSESSEE, RENDERED BY THE JURISDICTIONA L HIGH COURT OR SUPREME COURT IN THE CASE OF THE ASSESSEE OR ANY OTHER PERSON.'' THE CLAUSES (A) &. (B) TO THE SAID EXPLANATION MAKES IT VERY CLEAR THAT THE ORDER PASSED BY THE AO WITHOUT MAKING ENQUIRIES/VERIFICATION WHICH SHOULD HAVE BEEN MADE, OR ALLOWI NG ANY RELIEF WITHOUT ENQUIRING INTO THE CLAIM, WOULD BE DEEMED TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, IN VIEW OF THE SAID EXPLANATION 2 TO SECTION 263 OF THE ACT. 5.1.2 THE BASIC PL EA THAT THE ASSESSEE HAS TAKEN IN THE CONTEXT OF THE ISSUE IS THAT THE SUBSECTION 12A TO SECTION 80IA IS NOT APPLICABLE TO ITS CASE. IN THIS REGARD, IT HAS BEEN STATED THAT JSW ENERGY (VIJAYNAGAR) LTD., HAS BEEN THE SUBSIDIARY OF THE ASSESSEE COMPANY (JSW ENERGY LTD.) IN WHICH THE ASSESSEE COMPANY HAD INVESTED RS.188 CRORE AND JSW STEEL LTD., HAS INVESTED RS.80.01 CRORES; THAT THE COST OF THE PROJECT (OF POWER PLANTS REFERRED AS SEW 2 UNITS) AS ON 31.03.2008 AMOUNTED TO RS. 1129 CRORES; THAT BEFORE COMMISSI ONING OF THOSE PLANTS THE SUBSIDIARY COMPANY GOT MERGED WITH THE ASSESSEE COMPANY IN A SCHEME OF THE COMPANY ARRANGEMENT AS APPROVED BY THE HONBLE BOMBAY HIGH COURT VIDE ITS ORDER DATED 10/12/2008; THAT THE MERGER GOT EFFECTIVE W.E.F. 01.04.2008. 5.1.3 T HE ASSESSEE HAS FURTHER SUBMITTED THAT THE GENERATION OF POWER STARTED ONLY AFTER THOSE UNITS WERE TAKEN OVER BY THE ASSESSEE COMPANY AS A RESULT OF MERGER. WITH THAT VIEW OF THE MATTER, IT IS CONTENDED THAT THE RESTRICTION IMPOSED BY SUBSECTION 12A TO SEC TION 80IA IS NOT APPLICABLE TO THE FACTS OF ITS CASE. 5.1.4 IT IS NOTED THAT THE AO EXAMINED THE ISSUE OF CLAIM OF DEDUCTION U/S 80 IA IN RESPECT OF UNITS SBU 2(2X300MW) WHILE SCRUTINIZING THE CASE OF ASSESSEE FOR SUBSEQUENT ASSESSMENT YEAR [AY 2012 - 13] A ND PASSED A DRAFT ORDER U/S 144C(1) ON 26.03.2016 WHEREBY THE AO DENIED THE CLAIM SO MADE BY THE ASSESSEE ON THIS ISSUE. THE DRAFT ORDER WAS FORWARDED TO THE ASSESSEE. THE ASSESSEE OPTED FOR SEEKING DIRECTION OF THE DRP (AS SOME OF THE ISSUES OF ADDITION I NVOLVED TRANSFER PRICING ADJUSTMENT) AND THE DRP TOO VIDE ITS ORDER DATED 23.12.2016 ISSUED DIRECTIONS U/S 144C(5) TO THE AO TO DISALLOW THE CLAIM OF DEDUCTION U/S 80IA ON THIS ISSUE. ACCORDINGLY THE AO PASSED A FINAL ORDER U/S. 143(3) R.W.S 144C(13) ON 3 0.07.2017. 26 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., 5.1.5 IN THE BACKGROUND OF WHAT I HAVE DISCUSSED ABOVE, I AM OF THE VIEW THAT THE DEDUCTION U/S 801A MADE BY THE ASSESSEE AS REGARDS THE UNIT SBU 2(2 X 300MW) BEING JSW(VIJAYNAGAR) LTD., HAS NOT BEEN EXAMINED BY THE AO PROPERLY. IN VIEW THEREOF THE ORDER MADE BY THE AO IN THE PRESENT CASE FOR A.Y. 2011 - 12 IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. ACCORDINGLY, THE ORDER OF THE AO IS SET - ASIDE TO THE FILE OF THE AO TO BE MADE DE - NOVO AFTER MAKING NECESSARY ENQUIRIES AND INVESTIGATIO N AND AFTER ASCERTAINING ALL THE FACTS ON THE ISSUE OF CLAIM OF DEDUCTION U/S.80IA IN RESPECT OF POWER PLANT UNIT SBU 2 (2 X 300MW) 29. ON A CAREFUL EXAMINATION OF THE ABOVE ORDER PASSED BY THE LD.PCIT WE FIND THAT THE LD.PCIT HAS RESTED HIS DECISION TO HOLD THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE IS MAINLY FOR THE TWO REASONS. FIRSTLY IT HAS BEEN STATED BY THE LD.PCIT IN THE ORDER THAT THE C LAIM FOR DEDUCTION U/S. 80IA MADE BY THE ASSESSEE AS REGARDS THE UNIT SBU 2 HAS NOT BEEN EXAMINED BY THE ASSESSING OFFICER PROPERLY FOR THE ASSESSMENT YEAR UNDER CONSIDERATION AND THE ASSESSING OFFICER EXAMINED THIS ISS UE OF CLAIM OF DEDUCTION U/S. 80IA IN RESPECT OF UNIT SBU 2 WHILE SCRUTINIZING THE CASE OF THE ASSESSEE IN THE SUBSEQUENT ASSESSMENT YEAR I.E. AY 2012 - 13 AND PASSED ORDER DENYING THE CLAIM OF THE ASSESSEE AND THEREFOR E THE ORDER MADE BY THE ASSESSING OF FICER IN THE PRESENT CASE IS ERRONEOUS AND PREJUDICIA L TO THE INTEREST OF THE REVENUE. ON A CAREFUL READING OF THE ORDER OF THE LD.PCIT , WE FIND THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS HELD TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE FOR THE REASON THAT N O PROPER ENQUIRIES WERE MADE BY THE ASSESSING OFFICER. LD.PCIT HAS NOT 27 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., MENTIONED WHAT KIND OF ENQUIRIES THE ASSESSING OFFICER FAILED TO DO WHILE COMPLETING THE ASSESSMENT. LD.PCIT ALSO FAILED TO DEAL WITH ANY OF THE CONTENTIO NS RAISED BY THE ASSESSEE IN THE REPLY TO THE SHOW CAUSE NOTICE. WE ALSO FIND THAT THE LD.PCIT HAS NOT GIVEN ANY FINDING AS TO HOW AND IN WHAT MANNER THE ORDER OF THE ASSESSING OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE LD. PCIT HAS NOT MADE ANY ENQUIRY ON HIS OWN BUT SIMPLY DIRECTED THE ASSESSING OFFICER TO MAK E FURTHER NECESSAR Y ENQUIRIES AND INVESTIGATION. ON THE OTHER HAND, WE SEE THAT THE ASSESSING OFFICER CALLED FOR THE DETAILS IN RESPECT OF THE CLAIM MADE U/S. 80IA FOR THE ASSESSMENT YEARS 2005 - 06 TO 2011 - 12 AND THE ASSESSEE FURNISHED NECESSARY DETAILS AND THE ASSESSING OFFICER ALLOWED THE CLAIM FOR DEDUCTION U/S. 80IA IN THE ASSESSMENT YEAR 2010 - 11 AND IN THE CURRENT ASSESSMENT YEAR AS WELL. 30. THE HON'BLE DELHI HIGH COURT IN THE CASE OF PCIT V. DELHI AIRPORT METRO EXPRESS PVT. LTD. (SUPRA) HAS CATEGORICALLY HELD THAT FOR THE PURPOSE OF EXERCISING JURISDICTION U/S. 263 OF THE ACT AND REACHING A CONCLUSION THAT THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF T HE REVENUE THE LD.PCIT HAS TO UNDERTAKE SOME MINIMAL ENQUIRY IF THE LD.PCIT IS OF THE VIEW THAT ASSESSING OFFICER HAD NOT UNDERTAKEN ANY ENQUIRY IT BECOMES INCUMBENT ON THE LD.PCIT TO CONDUCT SUCH ENQUIRY. IN THE CASE ON HAND WE FIND THAT THE LD.PCIT HAS MERELY RELIED ON THE ORDER OF THE ASSESSING 28 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., OFFICER FOR THE SUBSEQUENT ASSESSMENT YEAR AND ALSO OBSERVING THAT THERE WERE NO ENQUIRIES MADE BY THE ASSESSING OFFICE R FOR THE CURRENT ASSESSMENT YEAR CAME TO THE CONCLUSION THE ASSESSMENT ORDER PASSED IS ERRON EOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN THE INSTANT C ASE THE LD.PCIT IGNORED THE ENQUIRIES CONDUCTED BY THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS AND SUBMISSIONS MADE BY THE ASSESSEE IN RESPONSE TO THE SHOW C AUSE NOTICE U/S. 263 OF THE ACT AND HAS MERELY OBSERVED THAT THE ASSESSMENT ORDER WAS PASSED WITHOUT MAKING PROP ER ENQUIRIES. IT IS A MATTER OF RECORD THAT LD.PCIT HAS HIMSELF NOT UNDERTAKEN ANY ENQUIRY TO REACH A CONCLUSION THAT THE ORDER IS ERRONEOUS AND PREJUDICIAL T O THE INTEREST OF THE REVENUE. 31. THE HON'BLE DELHI HIGH COURT IN THE CASE OF DIT V. JYOTI FOUNDATION [357 ITR 388] AND ITO V. DG HOUSING P ROJECTS LTD [ 343 ITR 329 ] HELD THAT EXERCISE OF JURISDICTION U/S. 263 CANNOT BE OUT SOURCED BY THE COMMISSIONER OF INCOME TAX TO THE ASSESSING OFFICER AND THEREFORE THE COMMISSIONER CANNOT DIRECT THE ASSESSING OFFICER TO CONDUCT THE ENQUIRIES AND IT WAS HELD THAT REVISING AUTHORITY MUST MAKE ENQUIRY AND SAY THAT ASSESSMENT ORDER WAS ERRONEOUS . IN THE CASE OF ITO V. DG HOUSI NG PROJECTS LTD (SUPRA) THE HON'BLE DELHI HIGH COURT HELD THAT A FINDING THAT THE ORDER IS ERRONEOUS IS A CONDITION OR REQUIREMENT WHICH MUST BE SATISFIED FOR EXERCISE OF JURISDICTION U/S. 263 OF THE ACT. THE MATTER 29 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., CANNOT BE REMITTED FOR A FRESH DECISION BY THE ASSESSING OFFICER TO CONDUCT FURTHER ENQUIRIES WITHOUT A FINDING THAT THE ORDER IS ERRONEOUS. IT WAS HELD THAT , IN SUCH MATTERS TO REMAND THE MATTER TO THE ASSESSING OFFICER WOULD IMPLY THAT THE COMMISSIONER HAS NOT EXAMINED AND DECIDED WHETHER OR NOT ORDER IS ERRONEOUS BUT HAS DIRECTED THE ASSESSING OFFICER TO DECIDE QUESTION. IT WAS HELD THAT , THE ORDER OF THE ASSESSING OFFICER MAY OR MAY NOT BE WRONG AND THE COMMISSIONER CAN DIRECT THE ASSESSING OFFICER FOR RECONSIDERATION ONLY WHEN THE ORDER IS ERRONEOUS. IT WAS HELD THAT THE ORDER OF RE VISION CANNOT BE PASSED BY THE COMMISSIONER TO ASK THE ASSESSING OFFICER TO DECIDE WHETHER THE ORDER WAS ERRONEOUS. IT WAS HELD THAT THIS IS NOT PERMISSIBLE AND THE CIT MUST AFTER RECORDING THE REASONS HELD THA T THE ORDER IS ERRONEOUS. 32. HON'BLE DELHI HIGH COURT IN THE CASE OF DIT V. JYOTI FOUNDATION (SUPRA) HELD THAT ENQUIRIES WERE CERTAINLY CONDUCTED BY THE ASSESSING OFFICER AND IT WAS NOT A CASE OF NO ENQUIRY, THE ORDER U/S. 263 ITSELF RECORDED THAT THE DIRECT OR FELT THAT THE ENQUIRIES WERE NOT SUFF ICIENT AND FURTHER ENQUIRIES AND DETAILS SHOULD HAVE BEEN CALLED FOR. THE ENQUIRY SHOULD HAVE BEEN CONDUCTED BY THE DIRECTOR HIMSELF TO RECORD THE FINDING THAT THE ASSESSMENT ORDER WAS ERRONEOUS. IT WAS HELD THAT T HE CIT SHOULD NOT HAVE SET - ASIDE THE ORDER AND DIRECT THE ASSESSING OFFICER TO CONDUCT THE ENQUIRY. 30 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., 33. IN THE CASE ON HAND BEFORE US ALSO ON A READING OF THE ORDER OF LD.PCIT , WE FIND THAT THE ALLEGATION OF THE LD.PCIT WAS THAT THE ASSESSING OFFICER DID NOT MAKE PROPER ENQUIRIES. IT IS NOT THE CASE OF THE LD.PCIT THAT THERE WAS NO ENQUIRY AT ALL. IN SUCH CIRCUMSTANCES THE ENQUIRY SHOULD HAVE BEEN CONDUCTED BY THE LD.PCIT HIM SELF TO RECORD A FINDING THAT THE ASSESSING OFFICER WAS ERRONEOUS. NOTHING HAS BEEN RECORDED BY THE LD.PCIT AS TO WHY THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THERE IS NO WHISPER IN THE ORDER OF T HE LD.PCIT AS TO WHY THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE EXCEPT STATING THAT IN VIEW OF THE CLAIM OF DEDUCTION U/S. 80IA MADE BY THE ASSESSEE AS REGARDS THE UNIT SBU 2 (2 X 300MW) BEING M/S JSW ( VIJAYNAGAR ) LTD HAS NOT BEEN EXAMINED BY THE ASSESSING OFFICER PROPERLY 34. THE ORDER PASSED BY THE ASSESSING OFFICER IN ALLOWING THE CLAIM FOR DEDUCTION U/S. 80IA MAY BE PREJUDICIAL TO THE INTEREST OF THE REVENUE BUT HOW S UCH ALLOWANCE OF DEDUCTIONS BECA ME ERRONEOUS HA S NOT BEEN EXPLAINED BY THE LD.PCIT IN HIS ORDER. THE ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH THE LAW. THE LD.PCIT IN HIS SHOW CAUSE NOTICE OR IN HIS ORDER COULD NOT POINT OUT THE ACTION OF THE ASSESSING OFFICER IN ALLOWIN G THAT DEDUCTION TO THE ASSESSEE U/S. 80IA IN 31 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., RESPECT OF SUB 2 UNIT IS NOT IN ACCORDANCE WITH THE LAW AND T HEREFORE, THE ORDER PASSED BY THE ASS ESSING OFFICER IS ERRONEOUS. 35. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. GABRIEL INDIA LTD (SUP RA) HELD THAT ON A READING OF SECTION 263 OF THE ACT, IT IS CLEAR THAT THE POWER OF SUO MOTU REVISION CAN BE EXERCISED BY THE COMMISSIONER ONLY AFTER AN EXAMINATION OF THE RECORDS OF ANY PROCEEDINGS IN THIS ACT AND IF HE CONSIDERS THAT ANY ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IT WAS HELD THAT IT IS NOT AN ARBITRARY AND UNCHARTERED POWER. BUT CAN BE EXERCISED ONLY ON FULFILLMENT OF THE REQUIREMENTS LAID DOWN IN SECTION 263 OF THE ACT. HON'BLE HIGH COURT HELD THAT THE CONSIDERATION OF THE COMMISSIONER AS TO WHETHER THE ORDER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICI AL TO THE INTERESTS OF THE REVENUE MUST BE BASED ON MATERIAL ON THE RECORD OF THE PROCEEDINGS CALLED FOR BY HIM IF THERE ARE NO MATERIAL ON RECORD ON THE BASIS OF WHICH IT CAN BE SAID THAT COMMISSIONER ACTING IN A REASONABLE MANNER COULD HAVE COME TO SUCH A CONCLUSION THE VERY INITIATION OF PROCEEDINGS BY HIM WILL BE ILLEGAL WITHOUT JURISDICTION. IT WAS ALSO HELD THAT FURTHER ENQUIRY AND/OR FRESH DETERMINATION CAN BE DIRECTED BY THE COMMISSIONER ONLY AFTER COMING TO THE CONCLUSION THAT THE EARLIER FINDING OF THE ASSESSING OFFICER PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE HON'BLE HIGH COURT FURTHER HELD THAT THE TWO CONDITIONS 32 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., MUST BE SATISFIED BEFORE THE COMMISSIONER COULD EXERCISE POWER U/S. 263 OF THE ACT NAMELY THE ORDER OF THE ASSESSING OFFICER MUST BE FOUND TO BE ERRONEOUS AND FURTHER IT MUST ALSO BE FOUND TO BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS BOTH THE CONDITIONS ARE SATISFIED THE COMMISSIONER DOES NOT GET JURISDICTION TO PASS THE ORDER U/S. 263 OF THE ACT REVISING THE ASSESSM ENT ORDER. IT WAS ALSO HELD THAT IT IS NOT NECESSARY THAT EVERY ORDER WHICH IS FOUND ERRONEOUS IS ALSO PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 36. IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. V. CIT [243 ITR 83] THE HON'BLE SUPREME COURT HELD THAT THE PRO VISIONS OF SECTION 263 CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER AND IT IS ONLY WHEN THE ORDER IS ERRONEOUS, SECTION 263 OF THE ACT WILL BE ATTRACTED. IT WAS HELD THAT T HE INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. IT WAS ALSO HELD THAT THE ORDER PASSED WITHOUT ADHERING TO PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND WILL SATISFY THE REQUIREMENT OF SECTION 263 OF THE ACT. THE LD.PCIT IN HIS ORDER COULD NOT POINT OUT THAT THE ACTION OF THE ASSESSING OFFICER IN ALLOWING THE DEDUCTION U/S. 80IA OF THE ACT IS EITHER O N INCORRECT ASSUMPTION OF FACTS OR O N INCORRECT APPLICATION OF LAW OR WITHOUT APPLICATI ON OF MIND. THERE IS NO REASON GIVEN WHATSO EVER BY THE LD.PCIT IN HIS ORDER AS TO HOW THE 33 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS EXCEPT STATING THAT THE CLAIM FOR DEDUCTION HAS BEEN EXAMINED BY THE ASSESSING OFFICER IN SUBSEQUENT AS SESSMENT YEAR AND THE CLAIM WAS DISALLOWED IN THAT YEAR AND THE ASSESSING OFFICER IN THE CURRENT YEAR HAS NOT MADE PROPER ENQUIRIES AND T HEREFORE HE CAME TO THE CONCLUSION THAT THE ASSESSMENT ORDER IS ERRONEOUS. WE ALSO FIND FROM THE ORDER OF THE LD.PCIT THAT THE OBJECTIONS OF THE ASSESSEE THAT THE PROVISIONS OF SECTION U/S. 80IA (12A) HAVE NO APPLICATION TO THE FACTS OF THE ASSESSEES CASE HAVE NOT BEEN DEALT WITH , THERE IS NOTHING IN THE ORDER PASSED BY THE LD.PCIT TO SHOW THAT T HE CONTENTIONS OF THE ASSESSEE WERE DEALT WITH BY THE LD.PCIT TO HOLD THAT THE ASSESSMENT ORDER PASSED ALLOWING THE DEDUCTION U/S. 80IA IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 37. THE COORDINATE BENCH IN THE CASE OF M/S METACAPS ENGINEERING & MAHENDRA CONSTRUC TION CO. V. CIT IN ITA.NO. 2895/MUM/2014 BY ORDER DATED 11.09.2017 HELD AS UNDER: - 13. WE FIND THAT AS OBSERVED BY US AT LENGTH HEREINABOVE, THE ASSESSEE BY WAY OF EXHAUSTIVE REPLIES FILED WITH THE CIT IN RESPECT OF ALL OF THE AFORESAID ISSUES, ON THE BASIS OF WHICH THE ORDER PASSED BY THE A.O WAS SOUGHT TO BE REVISED, HAD THUS FURNISHED CLA RIFICATIONS AS REGARDS ALL OF THE SAID ISSUES AND DEMONSTRATED THAT THE ASSESSMENT ORDER WAS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. HOWEVER, WE FIND THAT THE CIT WITHOUT POINTING OUT ANY INFIRMITY IN THE REPLY/EXPLANATION OF THE ASSE SSEE, AND AS TO WHY THE SAME COULD NOT BE ACCEPTED HAD RATHER HUSHED THROUGH THE MATTER AND CONCLUDED THAT THE ASSESSMENT ORDER PASSED BY THE A.O 34 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., WAS FOUND TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 14. WE HAVE GIVEN A THOUGHTFUL CONSI DERATION TO THE ORDER PASSED BY THE CIT AND ARE UNABLE TO PERSUADE OURSELVES TO UPHOLD THE SAME. WE FIND THAT AS PER THE MANDATE OF SEC. 263, A STATUTORY OBLIGATION IS CAST UPON THE CIT TO AFFORD AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, BEFORE AN ORD ER PASSED BY THE A.O IS REVISED IN EXERCISE OF THE REVISIONAL JURISDICTION VESTED WITH HIM UNDER THE SAID STATUTORY PROVISION. THE UNDERLYING PURPOSE OF AFFORDING OF SUCH AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IS TO GIVE AN OPPORTUNITY TO HIM TO EXP LAIN AS TO HOW THE ORDER PASSED BY THE A.O ON THE ISSUES ON WHICH THE SAME IS SOUGHT TO BE REVISED BY THE CIT, IS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. WE ARE OF THE CONSIDERED VIEW THAT THE VERY PURPOSE OF AFFORDING OF AN OPPORTUNI TY OF BEING HEARD TO THE ASSESSEE, ON THE ISSUES ON WHICH THE ORDER PASSED BY THE A.O IS SOUGHT TO BE REVISED BY THE CIT WOULD BE LOST AND RENDERED OTIOSE, IN CASE THE REPLY OF THE ASSESSEE EXPLAINING AS TO WHY THE ORDER SOUGHT TO BE REVISED IS NOT ERRONEO US AND PREJUDICIAL TO THE INTEREST OF THE REVENUE IS NOT JUDICIALLY DELIBERATED UPON BY THE CIT. WE ARE OF THE CONSIDERED VIEW THAT IT IS OBLIGATORY ON THE PART OF THE CIT TO CONSIDER THE REPLY OF THE ASSESSEE IN RESPECT OF THE ISSUES ON WHICH THE ORDER OF THE A.O IS SOUGHT TO BE REVISED BY HIM. IT IS ONLY IF THE CONVICTION OF THE CIT THAT THE ORDER OF THE A.O IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE OUTWEIGHS THE REPLY/EXPLANATION FURNISHED BY THE ASSESSEE, THAT THE CIT REMAINS VESTED WI TH THE JURISDICTION TO PROCEED WITH AND REVISE THE ORDER OF THE A.O. WE THOUGH ARE NOT OBLIVIOUS OF THE FACT THAT THE VIEW THAT AN ORDER PASSED BY THE A.O IS FOUND TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE REMAINS WITHIN THE EXCLUSIVE REALM OF THE WISDOM OF THE CIT, BUT THEN THE LEGISLATURE BY CONTEMPLATING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, CAN THUS SAFELY BE HELD TO HAVE PRESUPPOSED DUE APPLICATION OF MIND BY THE REVISIONAL AUTHORITY BEFORE REVISING THE ORDER PASSED BY THE A.O. WE ARE OF THE CONSIDERED VIEW THAT THE CIT AFTER RECEIVING THE REPLY/OBJECTIONS OF THE ASSESSEE IN RESPECT OF THE ISSUES ON WHICH THE ORDER OF THE A.O IS SOUGHT TO BE REVISED, IN ALL FAIRNESS, IS REQUIRED TO DELIBERATE ON THE SAME, AND THEREAFTER ON THE BASIS OF LOGICAL REASONING CONCLUDE AS TO WHETHER IN THE BACKDROP OF THE REPLY/EXPLANATION OF THE ASSESSEE CAN THE ORDER OF THE A.O BE CHARACTERIZED AS BOTH ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. WE ARE OF THE CONSIDERED VIEW THAT ME RE PLACING ON RECORD THE REPLY/EXPLANATION OF THE ASSESSEE ON THE ISSUES ON WHICH THE ORDER OF THE A.O IS SOUGHT TO BE REVISED AS A MERE FORMALITY, WOULD THEREIN RENDER THE VERY AFFORDING OF OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS NOTHING BETTER THAN BEING A FARCE AND AN EYE WASH, DEFEATING THE VERY LEGISLATIVE INTENT. WE ARE AFRAID THAT IN THE CASE OF THE PRESENT ASSESSEE, THOUGH THE CIT HAD PLACED ON RECORD THE REPLY OF THE ASSESSEE IN RESPECT OF THE ISSUES ON WHICH THE ORDER PASSED BY THE A.O WAS S OUGHT TO BE REVISED AND HAD ALSO REFERRED ABOUT THE SAME IN THE BODY OF HIS ORDER 35 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., PASSED UNDER SEC. 263, HOWEVER, NEITHER ANY REASON HAD BEEN GIVEN BY THE CIT, NOR IT CAN BE GATHERED FROM THE IMPUGNED ORDER, AS TO WHY THE EXPLANATION OF THE ASSESSEE THAT T HE ORDER PASSED BY THE A.O WAS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE ON THE ISSUES ON WHICH IT WAS SOUGHT TO BE REVISED, WAS NOT FOUND TO BE ACCEPTABLE. WE MAY CLARIFY THAT THOUGH THERE IS NO DOUBT THAT THE JURISDICTION TO REVISE THE ORDER PASSED BY THE A.O REMAINS WITHIN THE EXCLUSIVE DOMAIN OF THE JURISDICTION OF THE CIT, BUT HOWEVER, THE INTERNAL SAFEGUARD PROVIDED BY THE LEGISLATURE BY AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE WOULD FAIL IF THE EXPLANATION/OBJECTIONS RAISED BY THE ASSESSEE DURING THE COURSE OF SUCH PROCEEDINGS, THEREIN DEMONSTRATING THAT THE ORDER OF THE A.O IS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE ARE NOT JUDICIALLY CONSIDERED AND BROUGHT TO A LOGICAL END BY THE CIT. WE WOULD N OT HESITATE TO OBSERVE THAT DESPITE THE FACT THE ASSESSEE HAD DURING THE COURSE OF THE REVISIONAL PROCEEDINGS PLACED ON RECORD IRREFUTABLE MATERIAL WHICH INESCAPABLY ESTABLISHED THAT THE ORDER OF THE A.O WAS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE IN RESPECT OF CERTAIN ISSUES ON WHICH THE SAME WAS SOUGHT TO BE REVISED, HOWEVER, THE SAME DID NEVER SEE THE LIGHT OF THE DAY AND EXCEPT FOR FORMING PART OF THE RECORD AND FINDING A MENTION IN THE ORDER PASSED BY THE CIT U/S 263, WERE HOWEVER AS A MATTER OF FACT NEVER DELIBERATED UPON AND BROUGHT TO A LOGICAL END BY THE CIT. WE ARE OF THE CONSIDERED VIEW THAT IN THE BACKDROP OF THE EXPLANATION/OBJECTIONS FILED BY THE ASSESSEE DURING THE COURSE OF REVISIONAL PROCEEDINGS IN RESPECT OF CERTAIN ISS UES ON WHICH THE CIT HAD SOUGHT TO REVISE THE ORDER PASSED BY THE A.O UNDER SEC. 143(3), THE CIT HAD FAILED TO POINT OUT AS TO HOW THE ORDER OF THE A.O WAS FOUND TO BE ERRONEOUS. WE ARE OF THE CONSIDERED VIEW THAT IN THE ABSENCE OF CLEAR OBSERVATIONS OF THE CIT AS TO HOW THE ORDER OF THE A.O AFTER CONSIDERING THE EXPLANATION/OBJECTIONS FILED BY THE ASSESSEE WAS FOUND TO BE ERRONEOUS IN RESPECT OF THE SAID RESPECTIVE ISSUES, THUS, CAN SAFELY BE HELD TO HAVE FAILED THE FUNDAMENTAL REQUIREMENT FOR VALID ASSU MPTION OF JURISDICTION AS PER THE MANDATE OF LAW. WE FIND OUR AFORESAID VIEW TO BE SUPPORTED BY THE JUDGMENT OF THE HONBLE HIGH COURT OF DELHI IN THE CASE OF : CIT VS. VIKAS POLYMERS (2012) 341 ITR 537 (DEL), WHEREIN IT WAS OBSERVED, AS UNDER: - 18. WE A RE THUS OF THE OPINION THAT THE PROVISIONS OF S. 263 OF THE ACT, WHEN READ AS A COMPOSITE WHOLE MAKE IT INCUMBENT UPON THE CIT BEFORE EXERCISING REVISIONAL POWERS TO: (I) CALL FOR AND EXAMINE THE RECORD, AND (II) GIVE THE ASSESSEE AN OPPORTUNITY OF BEING H EARD AND THEREAFTER TO MAKE OR CAUSE TO BE MADE SUCH ENQUIRY AS HE DEEMS NECESSARY. IT IS ONLY ON FULFILMENT OF THESE TWIN CONDITIONS THAT THE CIT MAY PASS AN ORDER EXERCISING HIS POWER OF REVISION. MINUTELY EXAMINED, THE PROVISIONS OF THE SECTION ENVISAGE THAT THE CIT MAY CALL FOR THE RECORDS AND IF HE PRIMA FACIE CONSIDERS THAT 36 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., ANY ORDER PASSED THEREIN BY THE AO IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, HE MAY AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTE R MAKING OR CAUSING TO BE MADE SUCH ENQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY. THE TWIN REQUIREMENTS OF THE SECTION ARE MANIFESTLY FOR A PURPOSE. MERELY BECAUSE THE CIT CONSIDERS ON EXAMINATION OF THE R ECORD THAT THE ORDER HAS BEEN ERRONEOUSLY PASSED SO AS TO PREJUDICE THE INTEREST OF THE REVENUE WILL NOT SUFFICE. THE ASSESSEE MUST BE CALLED, HIS EXPLANATION SOUGHT FOR AND EXAMINED BY THE CIT AND THEREAFTER IF THE CIT STILL FEELS THAT THE ORDER IS ERRONE OUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, THE CIT MAY PASS REVISIONAL ORDERS. IF, ON THE OTHER HAND, THE CIT IS SATISFIED, AFTER HEARING THE ASSESSEE, THAT THE ORDERS ARE NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, HE MAY CHOOSE NOT TO EXERCISE HIS POWER OF REVISION. THIS IS FOR THE REASON THAT IF A QUERY IS RAISED DURING THE COURSE OF SCRUTINY BY THE AO, WHICH WAS ANSWERED TO THE SATISFACTION OF THE AO, BUT NEITHER THE QUERY NOR THE ANSWER WERE REFLECTED IN THE ASSESSMENT ORDER, THIS WOULD NOT BY ITSELF LEAD TO THE CONCLUSION THAT THE ORDER OF THE AO CALLED FOR INTERFERENCE AND REVISION. IN THE INSTANT CASE, FOR EXAMPLE, THE CIT HAS OBSERVED IN THE ORDER PASSED BY HIM THAT THE ASSESSEE HAS NOT FILED CERTAIN DOCUMENTS ON THE RECOR D AT THE TIME OF ASSESSMENT. ASSUMING IT TO BE SO, IN OUR OPINION, THIS DOES NOT JUSTIFY THE CONCLUSION ARRIVED AT BY THE CIT THAT THE AO HAD SHIRKED HIS RESPONSIBILITY OF EXAMINING AND INVESTIGATING THE CASE. MORE SO, IN VIEW OF THE FACT THAT THE ASSESSEE EXPLAINED THAT THE CAPITAL INVESTMENT MADE BY THE PARTNERS, WHICH HAD BEEN CALLED INTO QUESTION BY THE CIT WAS DULY REFLECTED IN THE RESPECTIVE ASSESSMENTS OF THE PARTNERS WHO WERE INCOME - TAX ASSESSEES AND THE UNSECURED LOAN TAKEN FROM M/S STUTEE CHIT & F INANCE (P) LTD. WAS DULY REFLECTED IN THE ASSESSMENT ORDER OF THE SAID CHIT FUND WHICH WAS ALSO AN ASSESSEE. WE FIND THAT A SIMILAR VIEW WAS ALSO ARRIVED AT BY THE HONBLE HIGH COURT OF PUNJAB & HARYANA IN THE CASE OF CIT VS. R.K. METAL WORKS (1978) 112 I TR 445 (P&H), WHEREIN STRESSING ON THE STATUTORY OBLIGATION ON THE PART OF THE CIT TO DEAL WITH THE POINTS RAISED BY THE ASSESSEE IN ITS EXPLANATION/OBJECTION FILED WITH HIM DURING THE COURSE OF THE REVISIONAL PROCEEDINGS TO SHOW THAT THE ORDER PASSED BY T HE A.O WAS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, IN CONTEXT OF THE ISSUES ON WHICH IT WAS SOUGHT TO BE REVISED, THE HONBLE HIGH COURT HELD AS UNDER: - 37 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., THERE IS NO INDICATION IN THE ORDER OF THE CIT AS TO THE BASIS ON WHICH HE CAME TO THE PRIMA FACIE CONCLUSION THAT THE CAPITAL BORROWED BY THE FIRM WAS UTILIZED FOR PURPOSES OTHER THAN THAT OF THE FIRM'S BUSINESS. WHEN THE ASSESSEE FILED A DETAILED WRITTEN STATEMENT BEFORE HIM, THE CIT DID NOT DEAL WITH ANY OF THE POINTS RAISED IN TH E STATEMENT. HE THOUGHT THAT THE BEST COURSE IN THE CIRCUMSTANCES WAS TO REMAND THE MATTER TO THE ITO FOR CONSIDERATION OF THE POINTS RAISED IN THE ASSESSEE'S WRITTEN STATEMENT. THAT CERTAINLY WAS NOT THE PROPER COURSE TO BE ADOPTED BY HIM. IT WAS NECESSAR Y 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 REVENUE 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 NECESSARY. 15. 16. WE FURTHER ARE PERSUADED TO BE IN AGREEMENT WITH THE CONTENTION OF THE LD. A.R THAT THE CIT HAD EVEN OTHERWISE FAILED TO SHO W AS TO HOW THE ORDER PASSED BY THE A.O WAS FOUND TO BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. WE FIND THAT THE SPECIFIC CONTENTION RAISED BY THE ASSESSEE DURING THE COURSE OF THE REVISIONAL PROCEEDINGS THAT THE ORDER PASSED BY THE A.O WAS IN NO WAY PREJUDICIAL TO THE INTEREST OF THE REVENUE, HAD HOWEVER NOT BEEN ADDRESSED BY THE CIT. WE ARE OF THE CONSIDERED VIEW THAT AS PER THE MANDATE OF LAW, FOR VALID ASSUMPTION OF JURISDICTION U/S 263 THE ORDER PASSED BY THE A.O MUST BE FOUND TO BE BOTH ERRONEOU S AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE TERM ERRONEOUS USED IN CONJUNCTION WITH THE TERM PREJUDICIAL MAKES IT CLEAR BEYOND ANY SCOPE OF DOUBT THAT BOTH THE PRECONDITIONS HAVE TO BE CUMULATIVELY SATISFIED, BEFORE THE ORDER PASSED BY THE A. O IS REVISED BY THE CIT. RELIANCE IN SUPPORT OF OUR AFORESAID VIEW IS DRAWN FROM THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL LTD. VS. CIT (2000 ) 243 ITR 83 (SC ) THIS CASE OF THE COORDINATE BENCH SQUARELY APPLIES TO THE F ACTS OF THE ASSESSEES CASE AS THE LD.PCIT FAILED TO DEMONSTRATE WITH REASONS THAT THE ASSESSMENT ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE NOT ONLY THAT , THE LD.PCIT FAILED TO ADDRESS THE OBJECTIONS 38 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., OF THE ASSESSEE ON THE ISSUES W HICH EXPLAINED THAT WHY THE ORDER SOUGHT TO BE REVISED IS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN THE CASE ON HAND ALSO THE LD.PCIT MERELY EXTRACTED THE OBJECTIONS OF THE ASSESSEE AND HE COULD NOT EXPLAIN WHY THE OBJECTIONS WERE W RONG AND LEAD TO THE ASSESSMENT ORDER BEING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND RATHER HE HAS SIMPLY RESTED HIS DECISION BY OBSERVING THAT THE ASSESSING OFFICER IN THE SUBSEQUENT YEAR EXAMINED THE CLAIM OF THE ASSESSEE AND MAD E DIS ALLOWANCE AND THEREFORE ORDER PASSED IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE . 38. IN THE CASE OF CIT V. DLF LIMITED [350 ITR 555] THE HON'BLE DELHI HIGH COURT HELD THAT UNDER THE PROVISIONS OF SECTION 263 OF THE ACT, IT IS NOT THAT MERE PREJUDICE TO THE REVENUE OR MERE ERRONEOUS VIEW WHICH CAN BE REVISED BUT THERE SHOULD BE ADDED ELEMENT OF UNSUSTAINABILITY IN THE ORDER OF THE ASSESSING OFFICER WHICH CLOTHES THE COMMISSIONER OF INCOME TAX WITH JURISDICTION TO ISSUE NO TICE AND PROCEED TO PASS APPROPRIATE ORDER U/S. 263 OF THE ACT. 39. IN THE CASE OF J.P. SHRIVAST AVA AND SONS (KANPUR) LTD. V. CIT [ 111 ITR 326] THE HON'BLE ALLAHABAD HIGH COURT HELD THAT WITHOUT GOING INTO THE MERITS OF THE CLAIMS OF THE ASSESSEE IT IS NOT POSSIBLE FOR THE 39 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., COMMISSIONER OF INCOME - TAX TO SAY THAT THE ORDER OF THE ASSESSING OFFICER HAD CAUSED ANY PREJUDICE TO THE INTERES TS OF THE REVENUE AND AS SUCH COMMISSIONER OF INCOME - TAX IS NOT COMPETENT TO SET ASIDE THE ASSESSMENT ORDER AND REMAND THE MATTER TO THE ASSESSING OFFICER. 40. IN THE CASE OF VINAY PRATAP THACKER V. CIT (SUPRA), IT HAS BEEN HELD THAT REVISION U/S. 263 IS NOT POSSIBLE ON A BORROWED SATISFACTION. WHILE HOLDING SO IT WAS OBSERVED AS UNDER: 22. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTIES AND HAVE ALSO PERUSED THE MATERIAL PLACED BEFORE US, INCLUDING THE CASE LAWS CITED BY EITH ER SIDE. ON GOING THROUGH THE SUBMISSIONS OF THE ASSESSEE, SCN AND AUDIT OBJECTION, WE FIND THAT THE ISSUE HAD BEEN DEALT WITH BY THE AO IN REGULAR ASSESSMENT PROCEEDINGS AND THEREAFTER AN AUDIT OBJECTION WAS RAISED, WHICH WAS USED BY THE AO TO CONVINCE TH E CIT TO INVOKE HIS JURISDICTION UNDER SECTION 263. WHEN WE READ THE SECTION, WHICH READS, AS, (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 O FFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS 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 CI RCUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT, OR CANCELLING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. THIS CLEARLY SHOWS, THAT THE CIT MUST HIMSELF COME TO A CONCLUSION, AFTER APPLYING HIS OWN MIND, BEC AUSE, THE WORDS USED IN THE SECTION ARE,.. AND IF HE CONSIDERS .., HERE, APPLICATION OF HIS OWN MIND BECOMES IMPORTANT. IT IS IMPORTANT TO EXAMINE THE SIMILARITY OF THE EXPRESSION USED UNDER SECTION 147(1) AND 263(1). UNDER SECTION 147(1), THE EXPRESSI ON USED IS HAS REASON TO BELIEVE AND UNDER SECTION 263(1), THE EXPRESSION USED IS IF HE CONSIDERS. THOUGH THE EXPRESSIONS USED ARE NOT VERBATIM PARI MATERIA, BUT THE MEANING WHICH IS TO BE DRAWN IN BOTH THE EXPRESSIONS ARE PARI MATERIA, I.E., AN INDEPE NDENT, UNPOLLUTED AND UNADOPTED APPLICATION OF MIND BY THE OFFICER, INVOKING THE PROVISION. 40 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., 23. WE HAVE SEEN FROM THE IMPUGNED ORDER OF THE CIT, DATED 11.02.2011, THE CIT ADMITS, A PROPOSAL WAS RECEIVED ON 10.06.2010 FROM THE AO UNDER SECTION 263 OF THE INCOME TAX ACT, 1961, POINTING OUT SOME DISCREPANCIES/SHORT COMINGS IN THE ASSESSMENT ORDER. THIS CLEARLY SHOWS THAT IN SO FAR AS THE CIT WAS CONCERNED, HE DID NOT APPLY HIS OWN MIND, WHICH THE HONBLE SUPREME COURT OF INDIA HAS SAID IN ICICI BANK (SUPRA) THAT THERE SHOULD BE AN I NDEPENDENT APPLICATION OF MIND. 24. ON PERUSAL OF THE SCN AND THE IMPUGNED ORDER, WE FIND THAT THERE IS A DEPARTURE FROM THE REASONS TAKEN TO INVOKE THE PROVISIONS UNDER SECTION 263, THIS ALSO FINDS FAVOUR WITH THE ARGUMENTS ADVA NCED BY THE AR AND GET COVERED BY THE DECISIONS CITED BY HIM. 25. WE ALSO HAVE TO ACCEPT THE ARGUMENTS OF THE AR WITH RESPECT OF APPLICABILITY OF SECTION 50C ON LEASE HOLD PROPERTIES, BECAUSE, THIS IS AN UNDISPUTED FACT THAT THE IMPUGNED PROPERTY WAS A LE ASED PROPERTY, EVEN THOUGH, IT IS A LONG LEASE, BUT THE TITLE OF THE SAME SHALL ALWAYS REMAIN WITH THE ACTUAL OWNER, IN THE PRESENT CASE, BMA. THOUGH THE ISSUE IS SQUARELY COVERED BY THE CITED DECISIONS, BUT GOING BY THE SUBMISSIONS OF THE DR THAT IT IS A CASE OF DEEMED OWNERSHIP, ITSELF CREATES A DOUBT THAT WHETHER THERE HAS TO BE AN APPLICATION OF SECTION 50C OR NOT. THIS DOUBT, IN OUR CONSIDERED OPINION IS FATAL TO INVOCATION OF PROVISIONS OF SECTION 263, BECAUSE PROVISION OF SECTION 263 CANNOT BE INVOKE D WHERE THE ISSUE BECOMES DEBATABLE, BECAUSE IF THE ISSUE IS DEBATABLE IT GOES OUT OF THE SCOPE OF ADMINISTRATION PROVISIONS BUT WOULD FALL IN THE REALM OF JUDICIAL PROVISIONS, WHICH IS NOT THE PURPOSE AND CONTEXT OF SECTION 263, WHICH, IN OUR OPINION IS T O DEAL ONLY ON TWO REALMS SIMULTANEOUSLY, I.E. WHETHER THE ORDER PASSED BY THE AO IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERES T OF REVENUE. 26. IN THE INSTANT CASE, THE CIT, BY INVOKING THE JURISDICTION UNDER SECTION 263 STEPPED ON THE CORRE CTNESS AND QUESTIONED THE APPLICABILITY OF SECTION 50C ON LEASED PROPERTY IN THE SCN, HE, THEREFORE TRANSGRESSED INTO THE JUDICIAL TERRITORY, WHICH HE CANNOT. 27 WE ARE AWARE OF THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GABRIAL INDIA LTD., REPORTED IN 203 ITR 108, WHEREIN, THE HONBLE BOMBAY HIGH COURT HELD, CIT CANNOT REVISE ORDER MERELY BECAUSE HE DISAGREES WITH THE CONCLUSION ARRIVED AT BY THE ITO. WE ARE ALSO AWARE OF THE CASE OF CIT VS SUNBEAM AUTO LTD., REPORTED IN 227 CTR 133, WHER EIN THE HONBLE DELHI HIGH COURT DREW A DISTINCTION BETWEEN LACK OF INQUIRY AND INADEQUATE ENQUIRY AND HELD THAT IN THE CASE OF INADEQUATE ENQUIRY, PROVISIONS UNDER SECTION 263 CANNOT BE INVOKED. IN OUR OPINION, IN THE INSTANT CASE, THIS IS NEITHER THE CASE OF INADEQUATE ENQUIRY NOR LACK OF ENQUIRY A T THE REGULAR ASSESSMENT STAGE. 41 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., 28. TAKING INTO CONSIDERATION THE ENTIRE GAMUT OF FACTS AND JUDICIAL DECISIONS, PLACED BEFORE US, WE ARE OF THE CONSIDERED OPINION THAT THE CIT COULD NOT HAVE INVOKED THE JURISDICTION UNDER SECTION 263 WITHOUT HIS OWN INDEPENDENT APPLICATION OF MIND; ON OTHERWISE DEBATABLE ISSUES AND BY MERELY DISAGREEING ON THE VIEW TAKEN BY THE AO. 29. IN THE RESULT, WE SET ASIDE THE ORDER OF THE CIT DATED 11.02.2011, PASSED UNDER SECTIO N 263 AND ANNUL THE INITIATION OF REVISION PROCEEDINGS AND AS A CONSEQUENCE, WE RESTORE THE ORDER PASSED BY THE AO, UNDER SECTION 143(3) DATED 15.12.2008. 41. SIMILARLY PUNE BENCH OF THE TRIBUNAL IN THE CASE OF SPAN OVERSEAS LTD V. CIT IN ITA.NO.1223 /PN/2013 DATED 21.12.2015 , IT H AS BEEN HELD AS UNDER: - 7. A PERUSAL OF THE IMPUGNED ORDER SHOWS, THAT THE COMMISSIONER OF INCOME TAX IN THE INSTANT CASE HAS MERELY REPRODUCED THE DEFICIENCIES POINTED OUT BY THE DY. COMMISSIONER OF INCOME TAX IN THE ASSESS MENT ORDER. THE COMMISSIONER OF INCOME TAX HAS NOT GIVEN THE REASONS AS TO HOW THE FINDINGS OF THE ASSESSING OFFICER ARE ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE. THE CONTENTION OF THE ASSESSEE IS THAT ALL THE RELEVANT DOCUMENTS WERE P LACED ON RECORD BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER HAS PASSED THE ORDER AFTER CONSIDERING THE SAME. THE DUTY OF THE ASSESSEE IS BRING ALL THE RELEVANT DOCUMENTS BEFORE THE ASSESSING OFFICER. THE MANNER IN WHI CH THE ORDER IS TO BE PASSED IS THE PREROG ATIVE OF THE ASSESSING OFFICER. 8. THE ORDER OF THE ASSESSING OFFICER MAY BE BRIEF AND CRYPTIC BUT THAT BY ITSELF IS NOT SUFFICIENT REASON TO HOLD THAT THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTE REST OF REVENUE. IT IS FOR THE COMMISSIONER TO POINT OUT AS TO WHAT ERROR WAS COMMITTED BY THE ASSESSING OFFICER IN TAKING A PARTICULAR VIEW. IN THE CASE IN HAND, THE COMMISSIONER OF INCOME TAX HAS FAILED TO POINT OUT ERROR IN THE ASSESSMENT ORDER. FOR INV OKING REVISIONARY POWERS, THE COMMISSIONER OF INCOME TAX HAS TO EXERCISE HIS OWN DISCRETION AND JUDGMENT. HERE THE COMMISSIONER OF INCOME TAX HAS INVOKED THE PROVISIONS OF SECTION 263 AT THE MERE SUGGESTION OF THE DY. COMMISSIONER OF INCOME TAX, WITHOUT EX ERCISING HIS OWN DISCRETION AND JUDGMENT. 9. THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF VINAY PRATAP THACKER VS. COMMISSIONER OF INCOME TAX (SUPRA) HAS SET ASIDE THE ORDER OF COMMISSIONER OF INCOME TAX PASSED U/S. 263 ON THE GROUND 42 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., THAT THE COMMISSIO NER OF INCOME TAX HAD NOT USED HIS OWN DISCRETION AND JUDGMENT IN ASSUMI NG THE REVISIONAL JURISDICTION.. 10. IN VIEW OF THE FACT THAT THE COMMISSIONER OF INCOME TAX HAS INVOKED THE PROVISIONS OF SECTION 263 WITHOUT APPLYING HIS OWN INDEPENDENT JUDGMENT AND MERELY AT THE BEHEST OF PROPOSAL FORWARDED BY THE DY. COMMISSIONER OF INCOME TAX IS AGAINST THE SPIRIT OF ACT. THUS, THE IMPUGNED O RDER IS LIABLE TO BE SET ASIDE. 42. THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF JEEWANLAL V. ACIT [ 108 ITR 407 ] HELD TH AT FOR INVOKING THE POWER OF REVISION EXERCISE OF THE DISCRETION AND JUDGMENT MUST BE OF THE COMMISSIONER OF INCOME - TAX HIMSELF. IT WAS HELD THAT WHERE AT THE MERE SUGGESTION OF THE AUDIT DEPARTMENT WHILE THE COMMISSIONER OF INCOME - TAX CANNOT EXERCISE HIS POWER OF REVISION WITHOUT EXERCISING HIS OWN DISCRETION AND JUDGMENT. 43. IN THE CASE ON HAND WE ALSO FIND THAT T HE POINTS RAISED BY THE LD.PCIT IN THE NOTICE ISSUED U/S. 263 OF THE ACT ARE BASED ON THE OBSERVATIONS MA DE BY THE COMPTROLLER AND AUDITOR GENERAL IN THEIR REPORT NO .28 OF 2016 AND A DETAILED SUBMISSION WAS MADE BY THE ASSESSEE BY LETTER DATED 29.11.2016 WHICH IS AT PAGE NO . 39 OF THE PAPER BOOK EXPLAINING WHY THE OBJECTION IS FACTUALLY WRONG AND UNSUSTAINABLE IN LAW. THE LD.PCIT HAS NOT MADE ANY INDEPENDENT APPLICATION OF MIND TO THE ISSUE RAISED IN SHOW CAUSE NOTICE ON ALLOWANCE OF DEDUCTION U/S. 80IA OF THE ASSES SEE BY THE ASSESSING OFFICER. 43 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., 44. WE FURTHER FIND THAT THE CLAIM FOR DEDUCTION U/S. 80IA AROUSE FOR THE FIRST TI ME IN THE ASSESSMENT YEAR 2010 - 11 AND THE ASSESSING OFFICER AFTER CALLING FOR THE NECESSARY DETAILS ALLOWED THE CLAIM OF THE ASSESSEE. THE INITIAL YEAR OF CLAIM FOR DEDUCTION U/S . 80IA IS ASSESSMENT YEAR 2010 - 11. AS THIS IS A SEARCH CASE DETAILS ARE CALLED FOR, FOR THE ASSESSMENT YEARS 2005 - 06 TO 2011 - 12 AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR ALL THE SE YEARS INCLUDING THE CURRENT I.E. ASSESSMENT YEAR 2011 - 12 THE ASSE SSING OFFICER VIDE LETTER DATED 15.03.20 1 3 WHICH IS PLACED AT PAGE NO. 111 OF THE PAPER BOOK REQUIRED THE ASSESSEE TO FURNISH THE FOLLOWING INFORMATION: - 2. IN ADDITION TO THE REQUIREMENTS, YOU ARE REQUESTED TO FURNISH FOLLOWING DETAILS IN THE CASE OF M/S. JSW ENERGY LTD (JSWEL) AND M/S. JSW ENERGY (RATNAGIRI) LTD (JSW ERL) (NOW MERGED WITH M /S. JSW ENERGY LTD) SEPARATELY: I. YOU ARE REQUESTED TO FURNISH THE WORKING OF DISALLOWANCE U/S. 14A. PLEASE EXPLAIN WHY DISALLOWANCE U/S.14A R.W. RULE 8D FOR ALL THE YEARS SHOULD NOT BE MADE . II. PLEASE FURNISH DETAILS OF CAPITAL WORK IN PROGRESS . III. DETAILS OF MERGER RELATED EXPENSES AND ITS TREATMENT IN THE ACCOUNTS . PLEASE EXPLAIN WHY SUCH EXPENDITURE SHOULD NOT BE TREATED AS CAPITAL IN NATURE. IV. PLEASE FURNISH COMPUTATION OF PROFIT ELIGIBLE FOR DEDUCTION U/S. 80IA IN RESPECT OF EAC H UNIT. V. PLEASE FURNISH DETAILS OF FOREIGN EXCHANGE GAINS/LOSSES AND THE CONSEQUENT EFFECT ON CAPITAL ACCOUNT AND REVENUE ACCOUNT. VI. IN RESPECT OF SALE OF CERTIFIED EMISSIONS REDUCTION (327.56 CRORE) FOR ASSESSMENT YEAR 2008 - 09 IN THE CASE OF JSWEL, PLEASE SUBMIT DETAILS OF ORIGINS OF THESE ENTITLEMENTS. PLEASE PRODUCE DOCUMENTS IN SUPPORT OF SAID ENTITLEMENT AND SUBSEQUENT SALE. ALSO CLARIFY 44 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., WHETHER SIMILAR ENTITLEMENTS ARE RECEIVED IN ANY OTHER YEAR DURING THE BLOCK PERIOD. VII. PLEASE EXPLAIN WHY DISALLOWANCE U/S. 14A SHOULD NOT BE ADDED IN COMPUTING THE BOOK PROFIT U/S. 115JB OF THE ACT. 45. THE ASSESSEE SUBMITTED ITS REPLY WHICH IS PLAC ED AT PAGE NO. 112 TO 115 OF THE PAPER BOOK REGARDING THE CLAIM FOR DEDUCTION U/S. 80IA UNIT WISE. IN THE CIRCUMSTANCES IT CANNOT BE SAID THAT ASSESSING OFFICER HAS NOT CALLED FOR THE DETAILS AND EXAMINED THE ISSUE IN THE COURSE OF THE ASSESSMENT PROCEEDINGS. THE VERY ELI GIBILITY OF THE CLAIM FOR DEDUCTION U/S. 80IA HAS BEEN EXAMINED IN THE INITIAL ASSESSMENT YEAR 2010 - 11. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO FURNISH THE UNIT WISE BREAKUP OF THE CLAIM MADE BY THE ASSESSEE WITH RESPECT OF THE ACT SECTION 80IA UNI TS AND NON 80IA UNITS AND THIS WAS EXAMINED BY THE ASSESSING OFFICER AND ALLOWED THE CLAIM OF THE ASSESSEE. IN OUR VIEW WHEN THE CLAIM FOR DEDUCTION U/S. 80IA IS TO BE ALLOWED IN THE ASSESSMENT YEARS SUBSEQUENT TO THE INITIAL ASSESSMENT YEAR THE EXPECTED ENQUIRIES WHICH COULD HAVE BEEN MADE BY THE ASSESSING OFFICER IS TO CALL FOR THE COMPUTATION OF PROFITS FOR THE UNITS ELIGIBLE FOR 80IA AND THE UNITS NOT ELIGIBLE FOR 80IA WHICH EXACTLY HAS BEEN DONE BY THE ASSESSING OFFICER IN THE COURSE OF ASSESSMENT PRO CEEDINGS FOR SEARCH ASSESSMENTS FOR THE ASSESSMENT YEARS 2005 - 06 TO 2011 - 12 IN ORDER TO SATISFY HIMSELF THAT THE CLAIM OF THE ASSESSEE IS IN ORDER . THEREFORE , IT CANNOT BE SAID THAT THE AS SESSING 45 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., OFFICER HAS NOT MADE PROPER ENQUIRIES AND THERE IS NO APPLICATION OF MIND BY THE ASSESSING OFFICER . 46. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. FINE JEWELLERY (INDIA) LTD. [372 ITR 303] FOLLOWING ITS EARLIER DECISION IN IDEA CELLULAR LTD V. DCIT [301 ITR 407] HAS TA KEN A VIEW THAT: IF A QUERY IS RAISED DURING THE ASSESSMENT PROCEEDINGS AND RESPONDED TO BY THE ASSESSEE, THE MERE FACT THAT IT IS NOT DEALT WITH IN THE ASSESSMENT ORDER WOULD NOT LEAD TO A CONCLUSION THAT NO MIND HAD BEEN APPLIED TO IT. 47. THERE IS A DIFFERENCE BETWEEN LAC K OF ENQUIRY AND INADEQUATE ENQUIRY AND IT IS FOR THE ASSESSING OFFICER TO DECIDE THE EXTENT OF ENQUIRY TO BE MADE AS IT IS IN HIS SATISFACTION AS TO WHAT IS REQUIRED UNDER THE LAW. IN THE CASE OF CIT V. SUNBEAM AUTO LTD [ 332 ITR 167 ], T HE HON'BLE DELHI HIGH COURT HAS HELD THAT IF THERE WAS ANY ENQUIRY EVEN INADE QUATE THAT WOULD NOT BY ITSELF GIVE COMMISSIONER TO PASS ORDER U/S. 263 OF THE ACT MERELY BECAUSE THE COMMISSIONER HAS A DIFFERENT OPINION IN THE MATTER AND THAT ONLY IN C ASES WHERE THERE IS NO ENQUIRY THE POWER U/S. 263 OF THE ACT CAN BE EXERCISED. 48. EVEN THOUGH THERE HAS BEEN AN AMENDMENT IN THE PROVISIONS OF SECTION U/S. 263 OF THE ACT BY WHICH EXPLANATION 2 IS INSERTED WITH EFFECT FROM 01.06.2015 IN OUR CONSIDERED OPINION THE SAME DOES NOT GIVE UNFETTERED POWERS TO THE LD.PCIT TO ASSUME JURISDICTION U/S. 263 OF THE 46 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., ACT TO REVISE EVERY ORDER OF THE ASSESSING OFFICER TO RE - EXAMINE THE ISSUE ALREADY EXAMINED D UR ING THE COURSE OF ASSESSMENT PROCEEDING S. AT THIS STAGE IT IS RELEVANT TO REFER TO THE DECISION OF THE COORDINATE BENCH IN THE CASE NARAYAN TATU RANE V. ITO [ 17 TAXMAN.COM 227 ] WHEREIN EXPLANATION 2 AS INSERTED BY THE FINANCE ACT 2015 HAS BEEN CONSIDERED AND HELD THAT THE SAID EXPLANATION CANNOT BE SAID TO HAVE OVERRIDDEN THE LAW AS INTERPRETED BY THE HON'BLE DELHI HIGH COURT IN THE CASES OF NAGESH KNIT WEARS (P) LTD [345 ITR 135] AND CIT V. GOETZE (INDIA) LTD [361 ITR 505] ACCORDING TO WH ICH THE LD.PCIT HAS TO CONDUCT AN ENQUIRY AND ESTABLISH AND SHOW THAT THE ASSESSMENT ORDER IS NOT SUSTAINABLE IN LAW. THE COORDINATE BENCH FURTHER HELD THAT THE INTENTION OF THE LEGISLATURE COULD NOT HAVE BEEN TO AVOIDABLE THE LD.PCIT TO FIND FAULT WITH E ACH AND EVERY ASSESSMENT ORDER WITHOUT CONDUCTING ANY ENQUIRY OR VERIFICATION IN ORDER TO ESTABLISH THAT THE ASSESSMENT ORDER IS NOT SUSTAINABLE IN LAW. SINCE SUCH AN INTERPRETATION WILL LEAD TO UNENDING LITIGATION AND THERE WOULD NOT BE ANY POINT OF FINA LITY IN THE LEGAL PROCEEDINGS. WHILE HOLDING SO THE COORDINATE BENCH OBSERVED AS UNDER : - 12. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD. BEFORE GOING INTO THE MERITS OF THE ISSUE, WE WOULD LIKE TO DISCUSS ABOUT THE LEGAL POSITION WITH REGARD TO THE POWER OF LEARNED CIT TO INVOKE REVISION PROCEEDINGS UNDER SECTION 263 OF THE ACT. THE SCOPE OF REVISION PROCEEDINGS INITIATED UNDER SECTION 263 OF THE ACT WAS CONSIDERED BY HONBLE BOMBAY HIGH COURT, IN THE CASE OF GRASIM INDUSTRIES LTD. V CIT (321 ITR 92) BY TAKING INTO ACCOUNT THE LAW LAID DOWN BY THE HON'BLE SUPREME COURT. THE RELEVANT OBSERVATIONS ARE EXTRACTED BELOW: 47 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., 'SECTION 263 OF THE INCOME - TAX ACT, 1961 EMPOWERS THE COMMISSIONER TO CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDINGS UNDER TH E ACT AND, IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN, BY THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, TO PASS AN ORDER UPON HEARING THE ASSESSEE AND AFTER AN ENQUIRY AS IS NECESSARY, ENHANCING OR MO DIFYING THE ASSESSMENT OR CANCELLING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. THE KEY WORDS THAT ARE USED BY SECTION 263 ARE THAT THE ORDER MUST BE CONSIDERED BY THE COMMISSIONER TO BE 'ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF T HE REVENUE'. THIS PROVISION HAS BEEN INTERPRETED BY THE SUPREME COURT IN SEVERAL JUDGMENTS TO WHICH IT IS NOW NECESSARY TO TURN. IN MALABAR INDUSTRIAL CO. LTD. V. CIT [2000] 243 ITR 83, THE SUPREME COURT HELD THAT THE PROVISION 'CANNOT BE INVOKED TO CORREC T EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER' AND 'IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED'. THE SUPREME COURT HELD THAT AN INCORRECT ASSUMPTION OF FACT OR AN INCORRECT APPLICATION OF LAW, WI LL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. AN ORDER PASSED IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND, WOULD BE AN ORDER FALLING IN THAT CATEGORY. THE EXPRESSION 'PREJUDICIAL TO THE INTERESTS OF THE REVEN UE', THE SUPREME COURT HELD, IT IS OF WIDE IMPORT AND IS NOT CONFINED TO A LOSS OF TAX. WHAT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE IS EXPLAINED IN THE JUDGMENT OF THE SUPREME COURT (HEADNOTE). 'THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE REVEN UE' HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER, CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, FOR EXAMPLE, WHEN AN I NCOME - TAX OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME - TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERR ONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE INCOME - TAX OFFICER IS UNSUSTAINABLE IN LAW.' THE PRINCIPLE WHICH HAS BEEN LAID DOWN IN MALABAR INDUSTRIAL CO. LTD., [2000] 243 ITR 83 (SUPREME COURT) HAS BEEN FOLLOWED AND EXPLAINED IN A 48 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., SUBSEQUENT JUDGMENT OF THE SUPREME COURT IN CIT V. MAX INDIA LTD. [2007] 295 ITR 282. 13. 14. 15. 16. WE HAVE NOTICED EARLIER THAT THE LD PR. CIT CAN REVISED THE ORDER ONLY IF IT IS SHOWN THAT THE ASSESSMENT ORDER IS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE QUESTION AS TO WHEN AN ORDER CAN BE TERMED AS 'ERRONEOUS' WAS EXPLAINED BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF GABRIEL INDIA LTD (SUPRA) AS UNDER: - '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 INCOME TAX OFFICER ACTING IN ACCORDANCE WITH THE LAW MAKES A CERTAIN ASSESSMENT, THE SAME CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE, ACCORDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY. THIS SECTION DOES NOT VISUALIZE A CASE OF SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE INCOME - TAX OFFICER, WHO PASSED THE ORDER, UNLESS THE DECISION IS HELD TO BE ERRONEOUS. CASES MAY BE VISUALIZED WHERE THE INCOME TAX OFFICER WHILE MAKING AN ASSESSMENT EXAMINES THE ACCOUNTS, MAKES ENQUIRIES, APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME EITHE R BY ACCEPTING THE ACCOUNTS OR BY MAKING SOME ESTIMATE HIMSELF. THE COMMISSIONER, ON PERUSAL OF 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 IN COME AT A FIGURE HIGHER THAN THE ONE DETERM INED BY THE INCOME TAX OFFICER. THAT WOULD NOT VEST THE COMMISSIONER WITH POWER TO EXAMINE THE ACCOUNTS AND DETERMINE THE INCOME HIMSELF AT A HIGHER FIGURE. IT IS BECAUSE THE INCOME TAX OFFICER HAS EXERCISED THE Q UASI 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.... THERE MUST BE SOME PRIMA FACIE MATER IAL ON RECORD TO SHOW THAT THE TAX WHICH WAS LAWFULLY EXIGIBLE HAS NOT BEEN IMPOSED OR THAT BY THE APPLICATION OF THE RELEVANT STATUTE ON AN INCORRECT OR INCOMPLETE INTERPRETATION A LESSER TA X THAN WHAT WAS JUST HAS BEEN IM P O SED' 49 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., THE HON'BLE HIGH COURT HA S CONSIDERED THE DEFINITIONS GIVEN TO THE WORDS 'ERRONEOUS', 'ERRONEOUS ASSESSMENT' AND 'ERRONEOUS JUDGMENT' IN BLACK'S LAW DICTIONARY AND ACCORDINGLY HELD THAT AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH LAW. AN ORDER CAN BE TERMED AS 'ERRONEOUS' ONLY IF IT IS NOT IN ACCORDANCE WITH THE LAW. 17. THE HON'BLE DELHI HIGH COURT HAS ALSO FOLLOWED THE ABOVE SAID VIEW IN THE CASE OF CIT VS. SUNBEAM AUTO LTD (2011)(332 ITR 167). THE HON'BLE DELHI HIGH COURT HAS ALSO EXTRACTED FOLLOWING OBSERVATIONS MADE BY THE TRIBUNAL: - '38. STILL FURTHER, THE HON'BLE SUPREME COURT IN MALABAR INDUSTRIAL CO. (2000) 243 ITR 83 HAS HELD THAT WHEN TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ONE OF THE POSSI BLE VIEW, THEN THE ORDER CANNOT BE HELD TO BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. SINCE THE COMMISSIONER OF INCOME TAX COULD NOT COME TO A DEFINITE FINDING THAT THE EXPENDITURE IN QUESTION WAS A CAPITAL EXPENDITURE IN THE PROCEEDINGS UNDER SECTION 263, IN OUR OPINION, THE ORDER OF THE ASSESSING OFFICER COULD NOT BE HELD TO BE ERRONEOUS.' 18. IN THE CASE OF NAGESH KNITWEARS P LTD (2012)(345 ITR 135), THE HON'BLE DELHI HIGH COURT HAS ELUCIDATED AND EXPLAINED THE SCOPE OF THE PROVISIONS OF SEC. 263 OF THE ACT AND THE SAME HAS BEEN EXTRACTED BY THE DE LHI HIGH COURT IN THE CASE OF CI T VS. GOETZE (INDIA) LTD (361 ITR 505) AS UNDER: - 'THUS, IN CASES OF WRONG OPINION OR FINDING ON MERITS, THE COMMISSIONER OF INCOME TAX HAS TO COME TO THE CONCLUSION AND HIM SELF DECIDE THAT THE ORDER IS ERRONEOUS, BY CONDUCTING NECESSARY ENQUIRY, IF REQUIRED AND NECESSARY, BEFORE THE ORDER UNDER SECTION 263 IS PASSED. IN SUCH CASES, THE ORDER OF THE ASSESSING OFFICER WILL BE ERRONEOUS BECAUSE THE ORDER IS NOT SUSTAINABLE IN L AW AND THE SAID FINDING MUST BE RECORDED. THE COMMISSIONER OF INCOME TAX CANNOT REMAND THE MATTER TO THE ASSESSING OFFICER TO DECIDE WHETHER THE FINDINGS RECORDED ARE ERRONEOUS. IN CASES WHERE THERE IS INADEQUATE ENQUIRY BUT NOT LACK OF ENQUIRY, AGAIN THE COMMISSIONER OF INCOME TAX MUST GIVE AND RECORD A FINDING THAT THE ORDER/INQUIRY MADE IS ERRONEOUS. THIS CAN HAPPEN IF AN ENQUIRY AND VERIFICATION IS CONDUCTED BY THE COMMISSIONER OF INCOME TAX AND HE IS ABLE TO ESTABLISH AND SHOW THE ERROR OR MISTAKE MADE BY THE ASSESSING OFFICER, MAKING THE ORDER UNSTAINABLE IN LAW. IN SOME CASES POSSIBLY THOUGH RARELY, THE COMMISSIONER OF INCOME TAX CAN 50 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., ALSO SHOW AND ESTABLISH THAT THE FACTS ON RECORD OR INFERENCES DRAWN FROM FACTS ON RECORD PER SE JUSTIFIED AND MANDATED FURTHER ENQUIRY OR INVESTIGATION BUT THE ASSESSING OFFICER HAD ERRONEOUSLY NOT UNDERTAKEN THE SAME. HOWEVER, THE SAID FINDING MUST BE CLEAR, UNAMBIGUOUS AND NOT DEBATABLE. THE MATTER CANNOT BE REMITTED FOR A FRESH DECISION TO THE ASSESSING OFFICER TO COND UCT FURTHER ENQUIRIES WITHOUT A FINDING THAT THE ORDER IS ERRONEOUS. FINDING THAT THE ORDER IS ERRONEOUS IS A CONDITION OR REQUIREMENT WHICH MUST BE SATISFIED FOR EXERCISE OF JURISDICTION UNDER SECTION 263 OF THE ACT. IN SUC H MATTERS, TO REMAND THE MATTER TO THE ASSESSING OFFICER WOULD IMPLY AND MEAN THE COMMISSIONER OF INCOME TAX HAS NOT EXAMINED AND DECIDED WHETHER OR NOT THE ORDER IS ERRONEOUS BUT HAS DIRECTED THE ASSESSING OFFICER TO DECIDE THE ASPECT/QUESTION....' SIMILAR VIEW HAS BEEN EXPRESSED BY HO N'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. AMALGAMATIONS LTD (238 ITR 963). 19. THE LAW INTERPRETED BY THE HIGH CO URTS MAKES IT CLEAR THAT THE LD. PR . CIT, BEFORE HOLDING AN ORDER TO BE ERRONEOUS, SHOULD HAVE CONDUCTED NECESSARY ENQUIRIES OR VERIFICATION IN ORDER TO SHOW THAT THE FINDING GIVEN BY THE ASSESSING OFFICER IS ERRONEOUS, THE LD PR. CIT SHOULD HAVE SHOWN THAT THE VIEW TAKEN BY THE AO IS UNSUS TAINABLE IN LAW. IN THE INSTANT CASE, THE LD PR. CIT HAS FAILED TO DO SO AND HAS SIMPLY EXPRESSED THE VIEW THAT THE ASSESSING OFFICER SHOULD HAVE CONDUCTED ENQUIRY IN A PARTICULAR MANNER AS DESIRED BY HIM. SUCH A COURSE OF ACTION OF THE LD PR. CIT IS NOT I N ACCORDANCE WITH THE MANDATE OF THE PROVISIONS OF SEC. 263 OF THE ACT. THE LD PR. CIT HAS TAKEN SUPPORT OF THE NEWLY INSERTED EXPLANATION 2(A) TO SEC. 263 OF THE ACT. EVEN THOUGH THERE IS A DOUBT AS TO WHETHER THE SAID EXPLANATION, WHICH WAS INSERTED BY F INANCE ACT 2015 W.E.F. 1.4.2015, WOULD BE APPLICABLE TO THE YEAR UNDER CONSIDERATION, YET WE ARE OF THE VIEW THAT THE SAID EXPLANATION CANNOT BE SAID TO HAVE OVER RIDDEN THE LAW INTERPRETED BY HON'BLE DELHI HIGH COURT, REFERRED ABOVE. IF THAT BE THE CASE, THEN THE LD PR. CIT CAN FIND FAULT WITH EACH AND EVERY ASSESSMENT ORDER, WITHOUT CONDUCTING ANY ENQUIRY OR VERIFICATION IN ORDER TO ESTABLISH THAT THE ASSESSMENT ORDER IS NOT SUSTAINABLE IN LAW AND ORDER FOR REVISION. HE CAN ALSO FORCE THE AO TO CONDUCT TH E ENQUIRIES IN THE MANNER PREFERRED BY LD PR. CIT, THUS PREJUDICING THE INDEPENDENT APPLICATION OF MIND OF THE AO. DEFINITELY, THAT COULD NOT BE THE INTENTION OF THE LEGISLATURE IN INSERTING EXPLANATION 2 TO SEC. 263 OF THE ACT, SINCE IT WOULD LEAD TO UNEN DING LITIGATIONS AND THERE WOULD NOT BE ANY POINT OF FINALITY IN THE LEGAL PROCEEDINGS. THE HON'BLE SUPREME COURT HAS HELD IN THE CASE OF PARASHURAM POTTERY WORKS CO. LTD VS. ITO (1977)(106 ITR 1) THAT THERE MUST BE A POINT OF FINALITY IN ALL LEGAL PROCEED INGS AND THE STALE ISSUES SHOULD NOT BE REACTIVATED BEYOND A PARTICULAR STAGE AND THE 51 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., LAPSE OF TIME MUST INDUCE REPOSE IN AND SET AT REST JUDICIAL AND QUASI - JUDICIAL CONTROVERSIES AS IT MUST IN OTHER SPHERES OF HUMAN ACTIVITY. 20. FURTHER CLAUSE (A) OF EX PLANATION STATES THAT AN ORDER SHALL BE DEEMED TO BE ERRONEOUS, IF IT HAS BEEN PASSED WITHOUT MAKING ENQUIRIES OR VERIFICATION, WHICH SHOULD HAVE BEEN MADE. IN OUR CONSIDERED VIEW, THIS PROVISION SHALL APPLY, IF THE ORDER HAS BEEN PASSED WITHOUT MAKING ENQ UIRIES OR VERIFICATION WHICH A REASONABLE AND PRUDENT OFFICER SHALL HAVE CARRIED OUT IN SUCH CASES, WHICH MEANS THAT THE OPINION FORMED BY LD PR. CIT CANNOT BE TAKEN AS FINAL ONE, WITHOUT SCRUTINIZING THE NATURE OF ENQUIRY OR VERIFICATION CARRIED OUT BY TH E AG VIS - - VIS ITS REASONABLENESS IN THE FACTS AND CIRCUMSTANCES OF THE CASE. HENCE, IN OUR CONSIDERED VIEW, WHAT IS RELEVANT FOR CLAUSE (A) OF EXPLANATION 2 TO SEC. 263 IS WHETHER THE AG HAS PASSED THE ORDER AFTER CARRYING OUR ENQUIRIES OR VERIFICATION, W HICH A REASONABLE AND PRUDENT OFFICER WOULD HAVE CARRIED OUT OR NOT. IT DOES NOT AUTHORIZE OR GIVE UNFETTERED POWERS TO THE LD PR. CIT TO REVISE EACH AND EVERY ORDER, IF IN HIS OPINION, THE SAME HAS BEEN PASSED WITHOUT MAKING ENQUIRIES OR VERIFICATION WHIC H SHOULD HAVE BEEN MADE. IN OUR VIEW, IT IS THE RESPONSIBILITY OF THE LD PR. CIT TO SHOW THAT THE ENQUIRIES OR VERIFICATION CONDUCTED BY THE AG WAS NOT IN ACCORDANCE WITH THE ENQUIRES OR VERIFICATION THAT WOULD HAVE BEEN CARRIED OUT BY A PRUDENT OFFICER. H ENCE, IN OUR VIEW, THE QUESTION AS TO WHETHER THE AMENDMENT BROUGHT IN BY WAY OF EXPLANATION 2(A) SHALL HAVE RETROSPECTIVE OR PROSPECTIVE APPLICATION S HALL NOT BE RELEVANT. 49. THE COORDINATE BENCH IN THE CASE OF CROMPTON GREAVES LTD V. CIT IN ITA.NO . 1994/MUM/2013 AND ITA.NO. 2836/MUM/2014 BY ORDER DATED 01.02.2016 HELD THAT THE EXPLANATION 2 TO SECTION 263 OF THE ACT WHICH WAS INSERTED BY FINANCE ACT 2015 W.E.F 01.04.2015 IS RETROSPECTIVE AND APPLICABLE TO ASSESSMENT YEARS PRIOR TO A SSESSMENT YEAR 2 0 15 - 16. HOWEVER, THE COORDINATE BENCH OF MUMBAI TRIBUNAL IN ANOTHER CASE I.E. IN THE CASE OF M/S.METACAPS ENGINEERING & MAHENDRA CONSTRUCTION CO. (J.V) V. CIT IN ITA.NO. 2895/MUM/2014 DATED 11.09.2017 HELD THAT EXPLANATION 2 OF SECTION 263 CANNOT BE CONS TRUED TO BE RETROSPECTIVE IN 52 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., NATURE. IT WAS FURTHER NOTED THAT SIMILAR VIEW HAS BEEN TAKEN IN THE FOLLOWING CASES: - (I) A.V. INDUSTRIES V. ACIT IN ITA.NO. 3469/MUM/2010 DATED 06.11.2015 (II) JAYANTH MURTHY V. DCIT IN ITA.NO. 870 & 1234/AHD/2014 DATED 20.05.2016 T HE HON'BLE SUPREME COURT IN THE CASE OF CIT V. VEGETABLE PRODUCTS [88 ITR 192] IT WAS HELD THAT WHEN TWO VIEW S ARE POSSIBLE THE VIEW IN FAVOUR OF THE ASSESSEE SHOULD BE ADOPTED. 50. HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V. TATA COMMUNICATION S INTERNET SERVICES LIMITED [17 TAXMAN.COM 241] HELD AS UNDER: - THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT CLAUSE (II) OF SECTION 80 - IA (4) INSERTED IN SECTION 80 - IA(3) BY THE FINANCE ACT II OF 2004 WITH EFFECT FROM 01.04.2005 AND THAT THIS WAS NOT W ITH RETROSPECTIVE EFFECT. IT BECAME APPLICABLE ONLY AFTER ITS INSERTION WITH EFFECT FROM 01.04.2005. THE CIRCULAR ISSUED BY CBDT EXPLAINING THE PROVISIONS OF FINANCE ACT II OF 2004 TESTIFIES THE FACT THAT THIS INSERTION TOOK EFFECT FROM 1 - 42005 AND IS TO APPLY IN RELATION TO THE ASSESSMENT YEAR 2005 - 06 AND SUBSEQUENT YEARS. THE FIRST CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80 - IA INDISPUTABLY WAS FOR ASSESSMENT YEAR 2004 - 05. THE TRIBUNAL HAS RIGHTLY RECORDED THAT THE BUSINESS OF FAX AND EMAIL HAS BEEN STARTED BY THE ASSESSEE IN 1997 AND THE BUSINESS OF PROVIDING INTERNET SERVICES DURING THE YEAR 2000 BEING FROM 17 - 10 - 2000, THE RELEVANT ASSESSMENT YEAR 2001 - 02. THE QUESTION FOR CONSIDERATION WOULD BE AS TO WHETHER THERE WAS ANY VIOLATION OF PROVISIO NS IN THE CLAIM OF DEDUCTION UNDER SECTION 80 - IA (4)(II) FOR ASSESSMENT YEAR 2001 - 02 OR AT THE MAXIMUM FOR THE FIRST YEAR OF DEDUCTION UNDER SECTION 80 - IA BEING THE ASSESSMENT YEAR 2004 - 05. ADMITTEDLY, THE ASSESSEE WAS GRANTED DEDUCTION UNDER SECTION 80IA FOR THE ASSESSMENT YEAR 2004 - 05. THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE REVENUE COULD NOT PICK UP THE ASSESSMENT YEAR GRANTING CLAIM HOLDING THAT THERE WAS VIOLATION OF PROVISIONS OF SECTION 80 - IA(3) ON THE GROUND THAT THE BUSINESS WAS FORMED BY SPLITT ING UP AND RECONSTRUCTION OF BUSINESS ALREADY IN EXISTENCE OR THAT IT WAS FORMED BY TRANSFER OF PLANTS AND MACHINERY TO THE NEW BUSINESS. THE BA R AS PROVIDED UNDER SECTION 80 - IA (3) IS TO BE CONSIDERED ONLY FOR THE FIRST YEAR OF CLAIM FOR DEDUCTION UNDER SE CTION 80I A. ONCE THE ASSESSEE IS ABLE TO SHOW THAT IT HAS USED NEW PLANTS AND MACHINERY WHICH HAS NOT BEEN PREVIOUSLY USED FOR ANY PURPOSE 53 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., AND THE NEW UNDERTAKING IS NOT FORMED BY SPLITTING UP OR RECONSTRUCTION OF BUSINESS ALREADY IN EXISTENCE, IT IS ENTIT LED TO T HE DEDUCTION UNDER SECTION 80 - IA FOR SUBSEQUENT YEARS. SINCE THE ASSESSEE HAD BEEN GRANTED CLAIM OF DEDUCTION RIGHT FROM THE ASSESSMENT YEAR 2004 - 05 UNDER SECTION 80 - IA, CONSEQUENTLY IT CANNOT BE DENIED DEDUCTION FOR THE SUBSEQUENT YEARS INASMUCH A S RESTRAINT OF SECTION 80 - IA(3) CANNOT HE CONSIDERED FOR EVERY YEAR OF CLAIM OF DEDUCTION, BUT CAN HE CONSIDERED ONLY IN THE YEAR OF FORMATION OF THE BUSINES S. 51. THEREFORE, AS COULD BE SEEN FROM THE ABOVE DECISION THE ELIGIBILITY OF A CLAIM FOR DEDUCTION U/S. 80IA AND THE BAR IF ANY IS TO BE CONSIDERED ONLY IN THE FIRST YEAR OF CLAIM FOR DEDUCTION MADE UNDER U/S. 80IA OF THE ACT. IT WAS HELD THAT SINCE THE ASSESSEE HAD BEEN GRANTED CLAIM OF DEDUCTION RIGHT FROM THE ASSESSMENT YEAR 2004 - 05 U/S. 80IA OF THE ACT CONSEQUENTLY IT CANNOT BE DENIED DEDUCTION FOR THE SUBSEQUENT YEARS. IN AS MUCH AS RESTRAINT OF SECTION 80IA(3) CANNOT BE CONSIDERED FOR EVERY YEAR OF CLAIM OF DEDUCTION BUT CAN BE CONSIDERED DIVIDEND ONLY IN THE YEAR OF FORMATION OF BUSINESS. IN TH E CASE ON HAND SINCE THE ASSESSING OFFICER EXAMINED THE ISSUE THOROUGHLY , CALLED FOR VARIOUS DETAILS IN THE INITIAL ASSESSMENT YEAR BEING ASSESSMENT YEAR 2010 - 11 AND ALLOWED THE CLAIM OF THE ASSESSEE EVEN DURING THE CURRENT ASSESSMENT YEAR I.E. SUBSEQUENT TO 2010 - 11, T HE S AME CANNOT BE REVISED UNLESS THERE IS CHANGE IN FACTS OR CHANGE IN LAW. 52. IN VIEW OF THE ABOVE DISCUSSIONS WE ARE OF THE VIEW THAT THE LD.PCIT HAS FAILED TO SHOW THAT THE IMPUGNED ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER WAS NOT ONLY ERRONEOUS BUT ALSO PREJUDICIAL TO THE 54 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., INTEREST OF THE REVENUE. IT IS AN ESTABLISHED PROPOSITION OF LAW THAT BOTH THE CONDITION S I.E. ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE ARE REQUIRED TO BE SATISFIED FOR INVOKING THE PROVI SIONS OF SECTION 263 OF THE ACT. IN THE INSTANT CASE WE ARE OF THE VIEW THAT THE LD.PCIT HAS FAILED TO SHOW THAT BOTH THE CONDITION S EXIST. IN THE CIRCUMSTANCES WE FIND MERIT IN THE CONTENTIONS OF THE ASSESSEE THAT THE REVISION ORDER PASSED BY THE LD.PCI T FOR THE YEAR UNDER CONSIDERATION IS BEYOND THE SCOPE OF SECTION 263 AND HENCE NOT VALID IN SO FAR AS THE ACTION OF THE ASSESSING OFFICER IN ALLOWING THE CLAIM FOR DEDUCTION U/S. 80IA IN RESPECT OF SBU 2 UNIT . THEREFORE TO THIS EXTENT WE SET ASIDE THE OR DER OF THE LD.PCIT AND RESTORE THAT OF THE ASSESSING OFFICER. 53. COMING TO THE IRREGULAR DISALLOWANCE OF DEDUCTION U/S. 80IA IN RESPECT OF INCOME OTHER THAN INCOME DERIVED FROM ELIGIBLE SOURCES IS CONCERNED, WE AGR EE WITH THE VIEW OF THE LD.PCIT THAT THE ASSESSING OFFICER HAS NOT EXAMINED THE CLAIM OF DEDUCTION U/S. 80IA ON THE INCOME OTHER THAN INCOME DERIVED FROM ELIGIBLE SOURCES AND HE SHOULD HAVE EXAMINED THE CLAIM IN THE LIGHT OF PROVISIONS OF SECTION 80A OF THE ACT WHICH HE FAILED TO DO WHILE COMPLET ING THE ASSESSMENT. THEREFORE AS FAR AS THIS ASPECT OF THE MATTER IS CONCERNED WE UPHOLD THE ORDER OF THE LD.PCIT IN DIRECTING THE ASSESSING OFFICER TO COMPUTE THE ALLOWABLE DEDUCTION U/S. 80IA OF THE ACT IN ACCORDANCE WITH THE PROVISIONS CONT AINED 55 ITA NO.3659/MUM/2017 (A.Y: 2011 - 12) M/S. JSW ENERGY LTD., IN SEC TION 80A OF THE ACT AFTER MAKING NECESSARY ENQUIRIES AND INVESTIGATION AFTER GIVING ADEQUATE OPPORTUNITY TO THE ASSESSEE IN CO MPLETING THE ASSESSMENT AFRESH. 54. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLO WED. ORDER PRON OUNCED IN THE OPEN COURT ON T HE 15 TH DECEMBER , 2017. SD/ - SD/ - ( MANOJ KUMAR AG G ARWAL ) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 15 / 12 / 2017 VSSGB , SPS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER, (ASST. REGISTRAR) ITAT, MUM