Magus Customer Dialog Private Limited, Bangalore V. Pr. CIT - 4, Bangalore

ITA 809/BANG/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7436 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 23-10-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 18-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G R REDDY I
• Assessee Lawyers: R B KRISHNA
• Keywords: Non-deduction of tax; Bad and doubtful debts
• Section: 143(3); 263; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N V VASUDEVAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO.809/BANG/2016 ASSESSMENT YEAR : 2011-12 MAGUS CUSTOMER DIALOG PRIVATE LTD., NO.26, ZAM ZAM CENTRE, 1 ST FLOOR, INFANTRY ROAD, BEHIND VIJAYA BANK, BENGALURU 560 001. PAN: AABCM 3799C VS. THE PRINCIPAL COMMISSIONER OF INCOME TAX, BENGALURU 4, BENGALURU. APPELLANT RESPONDENT APPELLANT BY : SHRI R.B. KRISHNA, ADVOCATE RESPONDENT BY : SHRI G.R. REDDY, CIT(DR)-I, ITAT, BENGALURU DATE OF HEARING : 23.10.2017 DATE OF PRONOUNCEMENT : 25.10.2017 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DATED 17.03.2016 OF THE PRINCIPAL COMMISSIONER OF INCOME- TAX-4, BENGALURU [HEREINAFTER REFERRED TO AS THE PR. CIT ], BANGALORE PASSED U/S. 263 OF THE INCOME-TAX ACT, 1961 [THE ACT]. 2. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS O F RENDERING CALL CENTRE SERVICES. FOR THE AY 2011-12 , THE ASSESSEE ITA NO.809/BANG/2016 PAGE 2 OF 11 FILED A RETURN OF INCOME DECLARING AT TOTAL LOSS OF RS.63,43,922. AN ORDER OF ASSESSMENT U/S. 143(3) OF THE ACT DATED 01 .11.2013 WAS PASSED BY THE AO ACCEPTING THE LOSS RETURNED BY THE ASSESSEE. 3. THE PR. CIT IN EXERCISE OF HIS POWERS U/S. 263 OF T HE ACT WAS OF THE VIEW THAT THE AFORESAID ORDER OF AO DATED 01.11 .2013 ACCEPTING THE RETURNED LOSS FILED BY THE ASSESSEE WAS ERRONEO US AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 4. THE PR. CIT ON PERUSAL OF THE RECORDS NOTICED THAT IN NOTE 19 TO THE FINANCIAL ACCOUNTS, THERE WAS A REFERENCE TO TH E ASSESSEE HAVING ENTERED INTO AN AGREEMENT WITH M/S. EASY ACCESS FIN ANCIAL SERVICES, A NBFC FOR FACTORING OF DEBTS AND PURSUANT TO THE SAID AGREEMENT, SOME OF THE RECEIVABLES OF THE COMPANY WERE SOLD AT A DISCOUNT WITH A FURTHER OBLIGATION ON ASSESSEES PART TO COLLECT THE PROCEEDS OF RECEIVABLES SOLD AND REMIT THE SAME TO NBFC. THE D ISCOUNT PORTION WAS TERMED AS FACTORING CHARGES AMOUNTING TO RS.2 1,43,516. THE SAME WAS DEBITED TO THE P&L ACCOUNT AND CLAIMED AS A DEDUCTION WHILE COMPUTING INCOME OF THE ASSESSEE FROM BUSINES S. THE PR.CIT WAS OF THE VIEW THAT THE FACTORING CHARGES WAS IN T HE NATURE OF INTEREST WITHIN THE MEANING OF SECTION 2(28A) OF TH E ACT AND THEREFORE THE ASSESSEE OUGHT TO HAVE DEDUCTED TAX AT SOURCE U /S. 194A OF THE ACT ON THE FACTORING CHARGES. SINCE THE ASSESSEE F AILED TO DEDUCT TAX ITA NO.809/BANG/2016 PAGE 3 OF 11 AT SOURCE, THE FACTORING CHARGES WHICH WERE CLAIMED AS DEDUCTION WHILE COMPUTING INCOME FROM BUSINESS, THE AO OUGHT TO HAVE DISALLOWED THE CLAIM FOR DEDUCTION OF FACTORING CHA RGES BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. 5. IN RESPONSE TO THE SHOW CAUSE NOTICE ISSUED BY THE PR. CIT U/S. 263 OF THE ACT DATED 28.07.2015, THE ASSESSEE SENT REPLIES DATED 21.08.2015, 05.11.15 AND 04.12.2015 IN WHICH THE AS SESSEE TOOK A STAND THAT FACTORING CHARGES WERE NOT IN THE NATU RE OF INTEREST WITHIN THE MEANING OF SECTION 2(28A) OF THE ACT AND IN THIS REGARD HAD RELIED ON THE DECISION OF THE HONBLE ITAT KOLKATA BENCH IN THE CASE OF ITO V. MKJ ENTERPRISES LTD. IN ITA NO.729/KOL/2011 FOR AY 2007- 08, ORDER DATED 27.01.2014 , WHEREIN IT WAS HELD THAT DISCOUNTING/FACTORING CHARGES WERE NOT IN THE NATUR E OF INTEREST WITHIN THE MEANING OF SECTION 2(28A) OF THE ACT AND THEREF ORE THERE WAS NO OBLIGATION TO DEDUCT TAX AT SOURCE U/S. 194A OF THE ACT. 6. WITHOUT PREJUDICE TO THE AFORESAID CONTENTION, THE ASSESSEE SUBMITTED THAT THE AO WAS APPRISED OF THIS LEGAL PO SITION IN A LETTER DATED 16.07.2014. THIS LETTER, THOUGH IT WAS FILED AFTER THE CONCLUSION OF THE ASSESSMENT PROCEEDINGS, CLEARLY EXPLAINED TH E NATURE OF FACTORING CHARGES AND AS TO HOW THERE WAS NO OBLIGA TION TO DEDUCT TAX AT SOURCE ON FACTORING CHARGES U/S. 194A OF THE ACT . THE SUBMISSION ITA NO.809/BANG/2016 PAGE 4 OF 11 OF THE ASSESSEE WAS THAT IN THE COURSE OF ASSESSMEN T PROCEEDINGS THE AO HAD ORALLY RAISED QUERIES ON THIS ASPECT AND THAT WAS CLARIFIED IN THE LETTER DATED 16.07.2014 FILED BEFORE THE AO. WITHOUT PREJUDICE TO THE AFORESAID ARGUMENT, THE ASSESSEE ALSO SUBMIT TED THAT THE 2 ND PROVISO TO SECTION 40(A)(IA) OF THE ACT HAD BEEN IN TRODUCED BY THE FINANCE ACT, 2012 W.E.F. 1.4.2013. THE EFFECT OF T HE SAID PROVISO WOULD BE THAT IF THE ASSESSEE SATISFIES THE AO THAT THE RECIPIENT OF THE PAYMENT FROM THE ASSESSEE ON WHICH NO TDS WAS MADE, IF HE FURNISHES THE RETURN OF INCOME U/S. 139 OF THE ACT HAS TAKEN INTO ACCOUNT THE SUM RECEIVED FROM THE ASSESSEE IN COMPU TING HIS INCOME AND PAID TAXES DUE ON THE INCOME, THEN NO DISALLOWA NCE U/S. 40(A)(IA) COULD BE MADE. THE ASSESSEE POINTED OUT THAT THOUGH AMENDMENT WAS ONLY W.E.F. 1.4.2013, THE SAME WAS AP PLICABLE RETROSPECTIVELY AS HELD BY THE HONBLE DELHI HIGH C OURT IN THE CASE OF CIT V. ANSAL LANDMARK TOWNSHIP PVT. LTD. (2015) 377 ITR 635 (DEL) . 7. THE PR. CIT, HOWEVER, WAS OF THE VIEW THAT THE AO W HILE COMPLETING THE ASSESSMENT DID NOT EXAMINE THE QUEST ION WHETHER THE PROVISIONS OF SECTION 194A OF THE ACT ARE APPLICABL E TO FACTORING CHARGES. IN THIS REGARD, THE PR. CIT ALSO HELD THAT THE NOTE FILED BY THE ASSESSEE DATED 16.07.2014 WAS AFTER THE CONCLUSION OF THE ASSESSMENT AND WILL BE OF NO EFFECT. THE CIT ALSO HELD THAT THE ITA NO.809/BANG/2016 PAGE 5 OF 11 DEFINITION OF INTEREST U/S. 2(28A) OF THE ACT WAS BROUGHT INTO STATUTE TO TAKE WITHIN ITS FOLD EVEN FACTORING CHARGES. TH E RELEVANT OBSERVATIONS OF THE PR. CIT ARE EXTRACTED HEREUNDER :- 4.1.1 THE ISSUE IN DISPUTE IS WHETHER THE EXPENDITURE INCURRED ON FACTORING CHARGES CAN BE CO VERED UNDER THE PROVISIONS OF SECTION 2(28A) OF THE INCOM E TAX ACT. 'FACTORING' INVOLVES THE ASSIGNMENT OF A DEBT TO A FINANCIER BY THE CLIENT OF THE DEBT, THE GIVING OF SUCH ASSIGNMENT TO THE DEBTOR AND COLLECTION OF THE DEBT BY THE FINANCIER (FACTOR). THE CLIENT TRANSFERS ITS TRADE RECEIVABLES/INVOICES TO A FACTOR IN ORDER TO OBTAIN CASH ON AN IMMEDIATE BASIS. THE FACTOR IS ESSENTIALLY A FUN DING SOURCE THAT AGREES TO PAY TO A CLIENT THE VALUE OF THE INVOICE LESS ITS COMMISSION AND FEES. THE LEGAL TITLE TO TH ESE RECEIVABLES MAYOR MAY NOT BE TRANSFERRED TO THE FAC TOR. IN FACTORING ARRANGEMENTS, THE CLIENT MAY TRANSFER ITS INVOICES TO A FACTOR WITH AN UNDERSTANDING THAT THE CLIENT M AY BUY BACK ANY UNCOLLECTED INVOICES. ALTERNATIVELY, THE F ACTOR ASSUMES RESPONSIBILITY FOR ALL BAD DEBTS. THE FEES PAID BY THE CLIENT TO THE FACTOR MAY BEAR DIFFERENT NAMES S UCH AS FACTORING CHARGES, DISCOUNTING CHARGES, COMMERCIAL FINANCE ETC. BY WHATEVER NAME CALLED, THE CHARACTER OF 'INT EREST' PAYMENT TO THE FACTOR WILL NOT CHANGE. THE ASSESSIN G OFFICER HAS NOT EXAMINED THE ARRANGEMENT BETWEEN TH E ASSESSEE COMPANY, THE CLIENT, AND THE FACTOR, NAMEL Y, M/S. EASY ACCESS FINANCIAL SERVICES. THE TERMS OF THE AGREEMENT/ARRANGEMENT NEEDED TO BE CALLED FOR AND EXAMINED BY THE ASSESSING OFFICER TO ARRIVE AT A FI NDING WHETHER OR NOT THE FINANCING PROVIDED BY THE FACTOR WAS IN THE NATURE OF LOAN ON WHICH IT CHARGED INTEREST UND ER THE HEAD 'FACTORING CHARGES' AS ENVISAGED UNDER SECTION 2(28A) OF THE INCOME TAX ACT. 4.1.2. IT IS CLEAR FROM A PLAIN READING OF SECTION 2(28A) THAT MONEY PA I D IN RESPECT OF AMOUNT BORROWED OR DEBT INCURRED , IS INTEREST PAYABLE IN ANY MANNER. IT INCLUDES IN THE TERMS, THE MONEY BORROWED OR INCURR ED, DEPOSITS, CLAIMS, INCLUDING A DEPOSIT, CLAIM OR OTHER SIMILAR RIGHT OR OBLIGATION AND INCLUDES ANY SERVICE FEE OR OTHER ITA NO.809/BANG/2016 PAGE 6 OF 11 CHARGE IN RESPECT OF THE MONEYS BORROWED OR DEBT IN CURRED OR IN RESPECT OF ANY CREDIT FACILITY WHICH HAS NOT BEEN UTILISED. THUS, INTEREST INCLUDES ANY EXPENDITURE, BY WHATEVER NAME CALLED, INCURRED IN CONNECTION WITH SERVICING OF LOANS AS LONG AS THERE EXISTS A LENDER AND A BOR ROWER OF LOANS. THUS, THE STATUTORY DEFINITION GIVEN UNDER S ECTION 2(28A) REGARDS AMOUNTS WHICH MAY NOT OTHERWISE BE TREATED AS INTEREST. IN THE PRESENT CASE, FACTORIN G CHARGES HAVE BEEN PAID IN RESPECT OF AN OBLIGATION INCURRED IN RELATION TO THE MONEY BORROWED THROUGH INVOICES. TH E MERE FACT THAT THE ASSESSEE DID NOT TREAT THE SAME AS CO MING WITHIN THE AMBIT OF 'INTEREST' WILL NOT ALTER THE N ATURE OF THIS CHARGE. 4.1.3. SECTION 194A OF THE ACT PRESCRIBES THAT AN Y PERSON WHO IS RESPONSIBLE FOR PAYING TO A RESIDENT ANY INCOME BY WAY OF INTEREST OTHER THAN INTEREST ON SE CURITIES, SHALL DEDUCT TAX AT SOURCE AT THE RATES IN FORCE AT THE TIME OF MAKING SUCH PAYMENTS, EITHER BY WAY OF CASH, CHEQUE , DRAFT OR CREDITING THE PAYEE'S ACCOUNT, INCLUDING A NY SUSPENSE ACCOUNT. SUB-SECTION (3) THERE UNDER EXEMP TS THE PAYER FROM TDS PROVISIONS, IBID, IF THE INTERES T PAYMENTS ARE MADE TO CERTAIN CATEGORIES OF PAYEES, WHICH INCLUDE, INTER ALIA, BANKING COMPANIES TO WHICH THE BANKING REGULATION ACT, 1949 APPLIES. NON BANKING FINANCIAL COMPANIES (NFBCS) WHICH ARE REGISTERED SEPARATELY W ITH THE RESERVE BANK OF INDIA AND NOT REGULATED BY THE PROVISIONS OF THE BANKING REGULATION ACT ARE, HOWEV ER, REQUIRED TO DEDUCT TAX AT SOURCE AT THE TIME OF MAK ING INTEREST PAYMENT AND FAILURE TO DO SO ATTRACTS DISA LLOWANCE U/S 40(A)(IA) OF THE ACT. IT IS NOT IN DISPUTE THAT M/S. EASY ACCESS FINANCIAL SERVICES IS A NON BANKING FINANCIA L COMPANY (NBFC) AND NOT A BANKING COMPANY GOVERNED BY THE BANKING REGULATION ACT AND HENCE NOT EXEMPT FROM THE APPLICATION OF THE SAID SECTION. 8. THE PR. CIT AFTER MAKING THE ABOVE OBSERVATIONS HEL D THAT SINCE THE AO HAS NOT EXAMINED THIS CLAIM WHILE CONC LUDING THE ASSESSMENT, HIS ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS ITA NO.809/BANG/2016 PAGE 7 OF 11 OF THE REVENUE. ON THE QUESTION OF THE ARGUMENT RE GARDING INSERTION OF 2 ND PROVISO TO SECTION 40(A)(IA) OF THE ACT W.E.F. 01. 04.2013 BEING RETROSPECTIVE, THE PR. CIT REFERRED TO TWO DECISION S; ONE OF THE HONBLE KERALA HIGH COURT AND THE OTHER OF THE HON BLE PUNJAB & HARYANA HIGH COURT TAKING A VIEW THAT SECOND PROVIS O TO SECTION 40(A)(IA) OF THE ACT WAS ONLY PROSPECTIVE; HELD TH AT THE ARGUMENT OF THE ASSESSEE IN THIS REGARD CANNOT BE ACCEPTED. TH E RELEVANT OBSERVATIONS OF THE PR. CIT ARE CONTAINED IN PARA 4 .2.2 OF HIS ORDER WHICH READS AS FOLLOWS:- 4.2.2 THE DELHI HIGH COURT DECISION RELIED UPON BY THE ASSESSEE IN ANSAL LANDMARK TOWNSHIP PVT. LTD. CASE IS IN FAVOUR OF THE ASSESSEE. HOWEVER, THE KERALA HIGH COURT IN THE CASE OF THOMAS GEORGE MUTHOOT VS. CLT IN ITA NO. 278 OF 2014 HAS TAKEN A CONTRADICTORY VIEW WHEREIN IT HAS BEEN HELD THAT 'UNLESS IT IS EXPRESSLY STATED THAT A PROVISION IS RETROSPECTIVE, IT IS ALWAYS PROSPECTIV E IN OPERATION. READING OF THE SECOND PROVISO TO SECTION 40(A) (IA) DOES NOT SHOW THAT IT IS MEANT OR INTENDED TO BE CURATIVE OR REMEDIAL IN NATURE.' IT FURTHER HELD THAT 'BY THIS PROVISO, INSTEAD, AN ADDITIONAL BENEFIT IS GIVEN TO THE ASSESSEE.' THE HONBLE HIGH COURT OF PUNJAB AND HARYANA IN THE CASE OF IND SWIFT LABORATORIES LTD IN ITA NO. 188 OF 2014 ALSO DECIDED THIS ISSUE IN FAVOUR OF REVENUE. RESPECTFULLY FOLLOWING THE JUDGMENTS OF TH E KERALA HIGH COURT AND PUNJAB AND HARYANA HIGH COURT , I HOLD THAT THE NEW PROVISO TO SECTION 40(A)(IA) INSE RTED WITH EFFECT FROM 1.04.2013 IS PROSPECTIVE IN OPERATION A ND WILL THEREFORE NOT HELP THE CASE OF THE ASSESSEE. ITA NO.809/BANG/2016 PAGE 8 OF 11 9. THE FINAL DIRECTIONS OF THE PR. CIT IN THE IMPUGNED ORDER ARE AS FOLLOWS:- 5. IN VIEW OF THE ELABORATE DISCUSSION MADE ABOVE, I HOLD THAT THE ASSESSMENT ORDER PASSED BY THE ASSESS ING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTERES TS OF THE REVENUE. HENCE, IN EXERCISE OF POWERS CONFERRED ON ME UNDER CLAUSE (A) OF EXPLANATION (2) OF SECTION 263, I SET ASIDE THE ORDER OF ASSESSING OFFICER TO EXAMINE TH E CLAIM OF FACTORING CHARGES AND FRAME THE ASSESSMENT IN ACCORDANCE WITH THE LAW. 10. AGGRIEVED BY THE AFORESAID ORDER OF THE PR. CIT, TH E ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS. IT IS AN ADMIT TED POSITION THAT THE AO BEFORE COMPLETING THE ASSESSMENT DID NO T MAKE ANY ENQUIRIES QUESTIONING WHETHER PROVISIONS OF SECTION 194A OF THE ACT WERE APPLICABLE TO FACTORING CHARGES AND CONSEQUENT LY FACTORING CHARGES CANNOT BE ALLOWED AS A DEDUCTION IN COMPUTI NG INCOME FROM BUSINESS IN VIEW OF THE PROVISIONS OF SECTION 40(A) (IA) OF THE ACT FOR NON-DEDUCTION OF TAX AT SOURCE. THE LAW WITH REGAR D TO EXERCISE OF JURISDICTION U/S.263 OF THE ACT ON THE GROUND THAT THE AO FAILED TO MAKE ENQUIRIES WHICH HE OUGHT TO HAVE MADE IN THE G IVEN CIRCUMSTANCES OF A CASE IS WELL SETTLED. THE COMMI SSIONER CAN REGARD THE ORDER AS ERRONEOUS ON THE GROUND THAT IN THE ITA NO.809/BANG/2016 PAGE 9 OF 11 CIRCUMSTANCES OF THE CASE THE INCOME-TAX OFFICER SH OULD HAVE MADE FURTHER INQUIRIES BEFORE ACCEPTING THE STATEMENTS M ADE BY THE ASSESSEE IN HIS RETURN. THE INCOME-TAX OFFICER IS N OT ONLY AN ADJUDICATOR BUT ALSO AN INVESTIGATOR. HE CANNOT REM AIN PASSIVE IN THE FACE OF A RETURN WHICH IS APPARENTLY IN ORDER BUT C ALLS FOR FURTHER INQUIRY. IT IS HIS DUTY TO ASCERTAIN THE TRUTH OF T HE FACTS STATED IN THE RETURN WHEN THE CIRCUMSTANCES OF THE CASE ARE SUCH AS TO PROVOKE AN INQUIRY. IT IS BECAUSE IT IS INCUMBENT ON THE INCOM E-TAX OFFICER TO FURTHER INVESTIGATE THE FACTS STATED IN THE RETURN WHEN CIRCUMSTANCES WOULD MAKE SUCH AN INQUIRY PRUDENT THAT THE WORD 'E RRONEOUS' IN SECTION 263 INCLUDES THE FAILURE TO MAKE SUCH AN EN QUIRY. THE ORDER BECOMES ERRONEOUS BECAUSE SUCH AN INQUIRY HAS NOT B EEN MADE AND NOT BECAUSE THERE IS ANYTHING WRONG WITH THE ORDER IF ALL THE FACTS STATED THEREIN ARE ASSUMED TO BE CORRECT. WE DERIV E SUPPORT FOR THE PROPOSITION AS STATED ABOVE FROM THE DECISION OF TH E HONBLE DELHI HIGH COURT IN THE CASE OF GEE VEE ENTERPRISES 99 ITR 375 (DEL) . IN THE LIGHT OF THE LAW ON THE ISSUE AND IN THE LIGHT OF THE ADMITTED FACT THAT THE AO DID NOT MAKE ANY ENQUIRIES WHICH WERE R EQUIRED TO BE MADE ON THE ISSUE IN QUESTION, THE ORDER OF THE AO BECAME BOTH ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE CALLING FOR EXERCISE OF REVISIONAL JURISDICTION U/S.263 OF THE ACT. WE THEREFORE ITA NO.809/BANG/2016 PAGE 10 OF 11 UPHOLD THE EXERCISE OF JURISDICTION U/S.263 OF THE ACT BY THE CIT BY THE IMPUGNED ORDER. 12. HOWEVER, WE MAKE IT CLEAR THAT THE QUESTION WHETHER FACTORING CHARGES WITH THE MEANING OF SECTION 2(28A) WILL BE IN THE NATURE OF INTEREST OR NOT SHOULD BE LEFT OPEN AND THE OBSERVA TIONS OF THE PR. CIT IN THE IMPUGNED ORDER IN PARA 4.1.1 AND PARA 4.1.3 SHOULD NOT HAVE ANY BEARING OR CONSIDERATION IN THE ASSESSMENT PROC EEDINGS OR THE APPELLATE PROCEEDINGS, PURSUANT TO THE IMPUGNED ORD ER. THIS IS BECAUSE THE PR. CIT HAS NOT CONSIDERED THE DECISION OF THE ITAT KOLKATA BENCH DIRECTLY ON THE ISSUE IN THE CASE OF MKJ ENTERPRISES LTD. (SUPRA) . WE ALSO MAKE IT CLEAR THAT THE OBSERVATIONS OF THE PR. CIT WITH REGARD TO THE RETROSPECTIVE OPERATION OF S ECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT SHOULD NOT INFLUENCE T HE AO OR THE APPELLATE AUTHORITIES IN THE PROCEEDINGS PURSUANT T O THE IMPUGNED ORDER. THIS IS BECAUSE THE PR. CIT IN THE IMPUGNE D ORDER HAS NOT CONSIDERED THE QUESTION AS TO WHETHER IN THE ABSENC E OF THE DECISION OF JURISDICTIONAL HIGH COURT, WHETHER THE VIEW FAVO URABLE TO THE ASSESSEE RENDERED BY THE NON-JURISDICTIONAL HIGH CO URT OR THE VIEW AGAINST THE ASSESSEE BY THE NON-JURISDICTIONAL HIGH COURT SHOULD BE TAKEN INTO CONSIDERATION. IN ANY EVENT, WE ARE OF THE VIEW THAT WHEN THE ASSESSMENT IS SET ASIDE ON THE GROUND THAT THE AO DID NOT MAKE ITA NO.809/BANG/2016 PAGE 11 OF 11 PROPER AND ADEQUATE ENQUIRIES BEFORE CONCLUDING THE ASSESSMENT, THE PR. CIT OUGHT NOT TO HAVE EXPRESSED ANY VIEW ON THE OTHER ISSUES THAT MIGHT ARISE FOR CONSIDERATION IN THE ASSESSMEN T PROCEEDINGS, PURSUANT TO THE ORDER U/S. 263 OF THE ACT. WITH TH E AFORESAID MODIFICATIONS, WE CONFIRM THE ORDER OF THE PR. CIT. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATE D AS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF OCTOBER, 2017. SD/- SD/- ( INTURI RAMA RAO ) ( N.V. VASUDEVA N ) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 25 TH OCTOBER, 2017. / DESAI SMURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.