Jsw Energy Ltd Mumbai v. Pr Cit Cen 4 Mumbai

In The Income Tax Appellate Tribunal Mumbai Bench J Mumbai Before Shri C N Prasad Honble Judicial Member And Shri Manoj Kumar Ag G Arwal Honble 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 80 Ia Of The Act Under Normal Provisions And Declared Book Profits U S 115 Jb At 10 89 39 48 987 The Assessment U S 144 C 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 115 Jb At 11 66 18 01 549 3 Later The Comptroller And Auditor General Of India Cag Has Raised Objection That Deduction U S 80 Ia In Respect Of Power Plant Unit Sbu 2 2 X 300 Mw 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 80 I A 12 A 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 80 Ia In Respect Of Power Plant Unit Sbu 2 2 X 300 Mw 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 80 Ia In Respect Of The Amount Of Income Enhanced U S 92 Ca Of The Act On Account Of Tp Adjustment 3 Irregular Allowance Of Deduction U S 80 Ia On Account Of Increase In Profit As A Result Of Disallowance Made U S 14 A 4 Irregular Allowance Of Deduction U S 80 Ia 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 144 C 3 Dated 17 04 2014 Was Duly Approved By Addl Cit Central Range 10 U S 153 D 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 80 Ia 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 80 Ia Of The Act In Respect Of Power Plant Unit Sbu 2 2 X 300 Mw Based On Subsequent Years 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 80 Ia Of The Act In Respect Of Amount Of Income Enhanced U S 92 Ca 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 144 C 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 14 A 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 Honble 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 80 Ia Of The Act To The Extent Of Taxable Business Income Wrongly Interpreting Provisions Of Section 80 A 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 80 Ia On Enhanced Income Due To Disallowance U S 14 A Of The Act B Irregular Allowance Of Deduction U S 80 Ia On Enhanced Income Due To Disallowance U S 92 Ca Of The Act C Irregular Allowance Of Deduction U S 80 Ia In Respect Of Income Other Than Income Derived From Eligible Sources D Irregular Allowance Of Deduction U S 80 Ia Of Power Plant Unit Sbu 2 2 X 300 Mw 7 Regarding Irregular Allowance Of Deduction U S 80 Ia On Enhanced Income Due To Disallowance U S 14 A Of The Act Learned Counsel For The Assessee Submitted That Certain Interest And Other Expenses Were Disallowed U S 14 A 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 80 Ia 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 Honble 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 80 Ia On Account Of Disallowance U S 14 A 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 80 Ia Going Up By The Some Amount As Therefore Such Enhanced Profit Would Be Eligible For Benefits Of Section 80 Ia 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 Honble 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 80 Ia On Enhanced Income Due To Disallowance U S 92 Ca 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 80 Ia On Account Of Addition U S 92 Ca Of The Act In View Of Specific Provision Of Section 92 C 4 Of The Act In This Regard Learned Counsel For The Assessee Submit S That Proviso To Section 92 C 4 States That No Deduction Under Chapter Via Shall Be Allowed On Enhanced Income Due To Arms Length Adjustment U S 92 Ca Of The Act It Does Not Say That Deduction Claimed By The Assessee Shall Be Reduced By The Amount Of Addition Made U S 92 Ca Of The Act He Submits That A S Evident F Rom The A Ssessment Order Since Ao Has Allowed Deduction U S 80 Ia As Claimed By The Assessee Question Does Not Arise To Reduce It Further By The Amount Of Addition Made U S 92 Ca Of The Act He F Urther Submits That In Any Ca Se The Issue Of Addition U S 92 Ca 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 80 Ia 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 80 Ia To The Extent Of Business Income Of The Assessee And Whereas Ao Has Allowed Deduction U S 80 Ia To The Extent Of Gross Total Income Which Is Not In Consonance With Provisions Of Section 80 A 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 80 Ia And One Unit Has Completed 10 Years Hence Now Not Eligible For 80 Ia 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 80 A Of The Act Limits Deduction Under Chapter Vi A To The Extent Of Gross Total Income Of The Assessee Deduction U S 80 Ia 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 80 Ia Of The Act Learned Counse L For The Assessee Submits That Honble 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 Honble Jurisdictional High Court Such Order Of Ao Cannot Be Termed As Erroneous He Placed Reliance On The Honble 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 Honble 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 80 Ia Of Power Plant Unit Sbu 2 2 X 300 Mw Is Concerned The Learned Counsel For The Assessee Submitted That The Ld Pcit Stated That The Power Plant Unit Sbu 2 2 X 300 Mw 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 80 Ia 12 A Of The Act Deduction U S 80 Ia 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 80 Ia 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 Honble 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 300 Mw 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 300 Mw 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 300 Mw 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 300 Mw 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 80 Ia 12 And 80 Ia 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 80 Ia 12 A 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 12 A 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 80 Ia 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 80 Ia Of The Act He Submits That T He Claim U S 80 Ia 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 80 Ia 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 80 Ia 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 Honble 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 Honble 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 80 Ia 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 80 Ia 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 80 Ia 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 Honble 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 80 Ia Of The Act Has Been Allowed To The Assessee And Similarly There Has Been Excess Deduction U S 80 Ia Of The Act In Respect Of Enhanced Income On Account Of Deduction U S 14 A And On Account Of Tp Adjustment And Also Excess Deduction Was Allowed U S 80 Ia 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 80 Ia 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 153 A 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 115 Jb 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 80 Ia In Respect Of Each Unit Assessing Officer Also Required The Assessee To Explain Why Disallowance U S 14 A 20 Ita No 3659 Mum 2017 A Y 2011 12 M S Jsw Energy Ltd Should Not Be Made U S 14 A R W Rule 8 D Under Normal Computation As Well As Book Profits U S 115 Jb Of The Act Assessee Submitted Its Details Of Profit Eligible For Deduction U S 80 Ia Fo R All T He Assessment Years I E Assessm Ent Years 2005 06 To 2011 12 A Detailed Note On Deduction U S 80 Ia Was Also Furnished Copy Of The Profit And Loss Account For 80 Ia And Non 80 Ia Activities Of The Assessee Company Along With The Computation Of Ded Uction U S 80 Ia 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 8 D Explaining Why There Should Not Be Any Such Disallowance Assessment Was Completed Accepting The Claim Of The Assessee In Respect Of Deduction U S 80 Ia On Sbu 1 And Sbu 2 Units In The Assessment Order Assessing Officer Disallowed Deduction U S 14 A R W Rule 8 D And Tp Adjustment Was Made By The Assessing Officer On Account Of Which The Income Got Enha Nced On Which Deduction U S 80 Ia 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 80 Ia 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 80 Ia 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 12 A Was Inserted By The Finance Act 2007 In Section 80 Ia Sub Section 12 Of Section 80 Ia 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 80 Ia 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 92 Ca And By Virtue Of The Disallowance Made U S 14 A T Here Was An Increase In Profits Income Of The Assessee And The Assessing Officer Allowed The Claim For Deduction U S 80 Ia 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 80 Ia 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 80 Ia Of The Act On The Enhanced Income Profit On Account Of Disal Lowance Made U S 14 A 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 8 D While Computing The Income Under Normal Provisions As Well As The Book Profits U S 115 Jb Of The Act In Such Circumstances As The Addition Disallowance In Respect Of Tp Adjustment And U S 14 A R W Rule 8 D 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 Honble Jurisdictional High Court In The Case Of Ranka Jewellers Vs Addl Cit 328 Itr 148 Where In The Honble 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 Nble 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 14 A R W Rule 8 D 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 80 Ia 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 80 Ia In Respect Of Power Plant Unit Sbu 2 2 X 800 Mw As Regards The Issue Of Irregular Allowance Of Deduction U S 80 Ia In Respect Of Power Plant Unit Shu 2 2 X 300 Mw 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 80 Ia 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 80 Ia 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 12 A To Section 80 Ia 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 12 A To Sec Tion 80 Ia 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 2 X 300 Mw While Scrutinizing The Case Of Assessee For Subsequent Assessment Year Ay 2012 13 A Nd Passed A Draft Order U S 144 C 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 144 C 5 To The Ao To Disallow The Claim Of Deduction U S 80 Ia On This Issue Accordingly The Ao Passed A Final Order U S 143 3 R W S 144 C 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 801 A Made By The Assessee As Regards The Unit Sbu 2 2 X 300 Mw 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 80 Ia In Respect Of Power Plant Unit Sbu 2 2 X 300 Mw 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 80 Ia 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 80 Ia 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 80 Ia 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 80 Ia In The Assessment Year 2010 11 And In The Current Assessment Year As Well 30 The Honble 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 Honble 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 Honble 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 Honble 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 80 Ia Made By The Assessee As Regards The Unit Sbu 2 2 X 300 Mw 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 80 Ia 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 80 Ia 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 Honble 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 Honble 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 Honble 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 Honble 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 80 Ia 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 80 Ia 12 A 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 80 Ia 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 Firms 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 Assessees 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 Honble 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 Honble 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 50 C 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 50 C 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 50 C 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 Honble 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 80 Ia 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 80 Ia 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 80 Ia 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 14 A Please Explain Why Disallowance U S 14 A R W Rule 8 D 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 80 Ia 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 14 A Should Not Be Added In Computing The Book Profit U S 115 Jb 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 80 Ia 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 80 Ia 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 80 Ia Uni Ts And Non 80 Ia 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 80 Ia 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 80 Ia And The Units Not Eligible For 80 Ia 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 Honble 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 Honble 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 Honble 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 Honble 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 Honble 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 Honble High Court Ha S Considered The Definitions Given To The Words Erroneous Erroneous Assessment And Erroneous Judgment In Blacks 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 Honble Delhi High Court Has Also Followed The Above Said View In The Case Of Cit Vs Sunbeam Auto Ltd 2011 332 Itr 167 The Honble Delhi High Court Has Also Extracted Following Observations Made By The Tribunal 38 Still Further The Honble 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 Honble 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 Nble 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 Honble 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 Honble 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 Honble 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 Honble 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 80 Ia 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 80 I 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 80 Ia And The Bar If Any Is To Be Considered Only In The First Year Of Claim For Deduction Made Under U S 80 Ia 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 80 Ia Of The Act Consequently It Cannot Be Denied Deduction For The Subsequent Years In As Much As Restraint Of Section 80 Ia 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 80 Ia 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 80 Ia 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 80 Ia On The Income Other Than Income Derived From Eligible Sources And He Should Have Examined The Claim In The Light Of Provisions Of Section 80 A 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 80 Ia 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 80 A 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