The Commissioner of Income Tax-I, vs. M/s. Future Tech Indistries Limited

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ITTA/672/2014HC TelanganaHBHC01040125201426 November 20143 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the Income Tax Appellate Tribunal (ITAT) correctly set aside the order of the Commissioner of Income Tax (CIT) passed under Section 263 of the Income Tax Act, 1961. The Tribunal found that the pre-conditions for invoking Section 263 were not satisfied. These pre-conditions, as explained by the Supreme Court in Malabar Industries Company Ltd. v. Commissioner of Income Tax, require the CIT to be satisfied that the Assessing Officer's order is both erroneous and prejudicial to the interests of the Revenue. The ITAT's finding that these elements were missing was deemed correct by the High Court. Consequently, the High Court found no question of law involved for its decision and dismissed the appeal.

What were the facts?

The appeal was filed by the Commissioner of Income Tax (Revenue) against the order of the Income Tax Appellate Tribunal (ITAT). The ITAT had cancelled an order passed by the Commissioner of Income Tax (CIT) under Section 263 of the Income Tax Act, 1961. The assessment year in question was 2008-2009. The Revenue contended that the assessing officer had failed to examine the allowability of finance charges, making the assessment order erroneous and prejudicial to the interests of the Revenue. The ITAT found that the pre-conditions for invoking Section 263 were not satisfied.

What were the issues?

1. Whether, on the facts and circumstances of the case and in law, the Income Tax Appellate Tribunal is correct in cancelling the order of the CIT passed under Section 263 of the Income Tax Act, without appreciating that the assessing officer has failed to examine the allowability of finance charges and hence, the assessment order is erroneous and prejudicial to the interests of the Revenue? (Question of law and mixed fact and law, turning on Section 263 of the Income Tax Act, 1961). Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The assessing officer failed to examine the allowability of finance charges, rendering the assessment order erroneous and prejudicial to the interests of the Revenue. The ITAT erred in cancelling the CIT's order under Section 263 without appreciating this failure.

Which sections of the Income-tax Act were involved?

Section 263

AI-generated summary — verify with the full judgment below

HIGH COURT OF JUDICATURE AT HYDERABAD FOR THE STATE OF TELANGANA AND THE STATE OF ANDHRA PRADESH

PRESENT

THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE SRI JUSTICE SANJAY KUMAR

I.T.T.A. NO.672 OF 2014

DATED:26.11.2014

Between:

The Commissioner of Income Tax – I Hyderabad … Appellant

And

M/s. Future Tech. Industries Limited Sy. No.308, Plot No.1B/2 Sri Venkateswara Cooperative Industrial Estate Jeedimetla, Hyderabad … Respondent

THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE SRI JUSTICE SANJAY KUMAR

I.T.T.A. NO.672 OF 2014

JUDGMENT: (per the Hon’ble The Chief Justice Sri Kalyan Jyoti Sengupta)

This appeal is directed against the judgment and order of the learned Tribunal dt.26.3.2014 in relation to assessment year 2008- 2009, on the following suggested question of law. “Whether, on the facts and circumstances of the case and in law, the Income Tax Appellate Tribunal is correct in cancelling the order of the CIT passed under Section 263 of the Income Tax Act, without appreciating that the assessing officer has failed to examine the allowability of finance charges and hence, the assessment order is erroneous and prejudicial to the interests of the Revenue?”

We have heard Sri J.V. Prasad, learned counsel for the appellant - Revenue and gone through the impugned judgment and order of the learned Tribunal.

The Tribunal has set aside the order of the learned Commissioner of Income Tax, passed under Section 263 of the Income Tax Act, 1961. It found that the pre-conditions for invocation of provisions of Section 263 of the Act are not satisfied. These pre- conditions that inheres in the aforesaid Section have been explained by the Supreme Court in Malabar Industries Company Ltd. v. Commissioner of Income Tax[1] observing that the Commissioner of Income Tax has to be satisfied that (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. In this case, these elements were missing.

The learned Tribunal therefore correctly set aside the order of the Commissioner of Income Tax. In the circumstances, no question of law is involved for a decision by us in this appeal. The appeal is accordingly dismissed. There will be no order as to costs. ________________________ K.J. SENGUPTA, CJ

_______________________ SANJAY KUMAR, J 26.11.2014

bnr

[1] 243 ITR 83 (SC)

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