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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI NARENDRA KUMAR BILLAIYA, HONBLE & SHRI ANIKESH BANERJEE, HONBLE
ORDER \nPER NARENDRA KUMAR BILLAIYA, AM:\n1. This appeal by the assessee is preferred against the order of\nthe Principal Commissioner of Income Tax, Mumbai\n[hereinafter 'the ld. Pr. CIT'] dated 10/03/2025 pertaining to AY\n2020-21 framed u/s 263 of the Act.\n2. The sum and substance of the grievance of the assessee is that the\nld. Pr. CIT erred in assuming jurisdiction conferred upon him by the\nprovisions of section 263 of the Act and further erred in holding that the\nassessment order dated 25/08/2022 framed u/s 143(3) r.w.s.144B of the\nAct is erroneous insofar as it is prejudicial to the interest of the revenue.\n3. Briefly stated the facts of the case are that the assessee derives\nincome from salary and investments and filed his return of income on\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nΙ.Τ.Α. No. 2096/Mum/2025\n2\n10/12/2020 declaring total income at ₹ 23,71,38,203/-. The return was\nselected for scrutiny assessment and accordingly statutory notices were\nissued and served upon the assessee. After perusal of the return of\nincome, materials available on record and reply furnished by the\nassessee on different dates in respect of the notices issued, no adverse\ninference was drawn and the return of income of the assessee was\naccepted as such.\n3.
1. Assuming powers conferred upon him by the provisions of\nsection 263 of the Act, the ld. Pr. CIT, issued and served the following\nnotice:-\nGOVERNMENT OF INDIA\nMINISTRY OF FINANCE\nINCOME TAX DEPARTMENT\nOFFICE OF THE PRINCIPAL COMMISSIONER OF INCOME TAX\nPCIT, Mumbai-1\nTo.\nSANJIV МЕНТА\nIndia\nPAN/TAN:\nAANPM7571K\nAY:\n2020-21\nDIN & Notice No:\nITBA/REV/F/REV1/2024-\n25/1073386072(1)\nDATED:\n18/02/2025\nM/s/Mr/Ms\nNOTICE FOR THE HEARING\nSubject: Notice for Hearing in respect of Revision proceedings u/s 263 of the THE INCOME TAX АСТ,\n1961 Assessment Year 2020-21.\nIn this regard, a hearing in the matter is fixed on 25/02/2025 at 12:30 PM. You are requested to attend\nin person or through an authorized representative to submit your representation, if any alongwith\nsupporting documents/information in support of the issues involved (as mentioned below). If you wish\nthat the Revision proceeding be concluded on the basis of your written submissions/representations\nfiled in this office, on or before the said due date, then your personal attendance is not required. You\nalso have the option to file your submission from the e-filing portal using\nthe link:\nincometaxindiaefiling.gov.in\nIssues Involved:\n1. Audit has put up details as to under assessment leading to the loss of the revenue,\ndue to failure of AO to properly address the issue mentioned. As such the assessment is\nerroneous and prejudicial to interest of revenue and may have to be revised as section 263\nof the Income Tax Act, 1961.\n2. The details of audit objection are as under:-\n\"Assessee E filed return for AY 2020-21 declaring a gross total income of Rs.2371,38,203/-\nThe return was duly processed under section 143(1) of the Act and case of assessee was\nselected for scrutiny under CASS for 'Refund Claim' and 'Tax Credit claim u/s 90/91'. Notice\nunder section 143(2) of the I.T Act, 1961 dated 29.06.2021 was duly issued and served upon\nthe assessee. The case was duly concluded vide Order passed under section 143(3) read\nwith section 144B of the Income Tax Act dated 25.8.2022 determining total income at Rs\n23,71,38,203/-.\n2. During the course of assessment proceeding, assessee filed computation of total income\nNote: If digitally signed, the date of digital signature may be taken as date of document.\nROOM NO:330,3rd Floor, AAYAKAR BHAVAN, MAHARISHI KARVE ROAD, MUMBAI, Maharashtra, 400020\nEmail: MUMBAI.PCIT1@INCOMETAX.GOV.IN, Office Phone: 0222015923\nlote:- The website address of the e-filing portal has been changed from www.incometaxindiaefiling.gov.in to www.incometax.gov.in.\nDIN-Document identification No.\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nΙ.Τ.Α. No. 2096/Mum/2025\n3\nfor AY 2020-21 alongwith UK Tax return and related working of Foreign Tax Credit claimed in\nreturn. On perusal of ITR for AY 2020-21 it was found that, assessee is a Resident and\nOrdinary Resident of India. Assessee in return filed for AY 2020-21 showed Salary income\nearned from UNILEVER PLC, UK of Rs 101,92,906/- and claimed tax credit on said salary\nincome of Rs 96,29,657/-. Assessee in return filed in India for AY 2020-21 claimed huge\nrefund of Rs 71,10,730/-.\n3. Assessee's UK Tax return for FY 2019-20 showed salary income of 281,974 (Sterling\nPounds).\nAs is evident from Schedules and UK Tax return filed for FY 2019-20, the salary income of\nassessee from UNILEVER PLC was 281974 Pounds which included within its fold the tax\ngross up borne by employer hence, the tax gross up was forming part of salary in the UK Tax\nreturn filed for FY 2019-20.\nNow, assessee's computation of total income showed that salary from UK offered for taxes in\nIndia was Rs 101,92,906/- on which Foreign Tax Credit claimed was Rs 96,29,657/-.\n4. The facts as evident from return filed by assessee clearly shows that, assessee offered UK\nsalary of Rs 101,92,906/- which is only 115,138 pounds whereas UK Tax return shows that\nassessee in FY 2019-20 earned 281,974 pounds as Salary from UK. Further, it is also not\nthe case that, assessee claimed lower tax credit. Assessee on salary of 281974 pounds\nearned in UK, paid tax of 111,888 pounds (equivalent to INR of 99,05,165/-) and in India\nclaimed credit of Rs 96,29,657/- which is literally 95% of tax paid in UK. When, the entire\nforeign salary is not offered in return filed in India for AY 2020-21 the Act of assessee\nclaiming 95% of tax credit for tax paid in UK is also not acceptable. Further, assessee is\nResident and Ordinary Resident and in such cases, the world income of assessee becomes\ntaxable in India and corresponding tax credits can be claimed as per law. However claiming\nentire tax credit without even offering the entire (domestic + foreign) income is uncalled for\nand also not intended by legislature. Accordingly, it is clearly evident and established that,\nassessee in INDIA did not offered foreign salary of 166,836 pounds ( 281974 pounds\n115,138 pounds). The equivalent of INR comes to Rs 147,69,575/-.\n5. The AO during the course of assessment proceeding failed to consider the lower foreign\nsalary income offered by assessee in return for AY 2020-21 filed in India and passed the\nAssessment Order.\n3. In this regard, you are requested to file your submission with respect to the\naforementioned issue and hearing is fixed as mentioned above.\nMANVENDRA GOYAL\nPCIT, Mumbai-1\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 2096/Mum/2025\n4\n4. Before proceeding any further, it would be pertinent to\nunderstand the assessment proceedings and the notice and the queries\nraised during the course of assessment. On 29/06/2021, notice under\nsection 143(2) of the Act was issued and the assessee was required to\nclarify in respect of the double taxation relief u/s 90/91 of the Act and\nthe claim of refund. The assessee filed a detailed reply which reads as\nunder:-\n8 July 2021\nAssistant Commissioner of Income Tax (ACIT),\nNaFAC-1(1)(2), Delhi\nAssessee\nPAN\n Assessment Year (AY)\nSubject\nSanjiv Mehta\nAANPM7571K\n2020-21\nResponse to notice under 143(2) of the Income-tax Act, 1961\n('the Act')\nI refer to the notice issued under section 143(2) of the Act dated 29 June 2021 (copy of notice\nenclosed as Annexure 1) requesting an online response within 15 days from the date of receipt\nof notice.\nIn this connection, I wish to submit the following documents for the financial Year ('FY') 2019-\n20:\na) Copy of ITR-V (Acknowledgement of the India tax return filed electronically) enclosed as\nAnnexure 2\nb) Copy of India tax return enclosed as Annexure 3\nc) Copy of computation of total income enclosed as Annexure 4\nd) Form 16 and Form 12BA as Annexure 5.\nDetails of Double taxation relief under section 90 of the Act:\nDuring FY 2019-20, I was employed with Hindustan Unilever Limited ('HUL') and qualified to\nbe a Resident and Ordinarily Resident ('ROR') in India. Hence, as per section 5 of the Act,\nmy global income is taxable in India. Accordingly, in addition to the income from India, my\nsalary income for services rendered in UK and dividend from Unilever NV and PLC shares\nhave been duly offered to tax in the India tax return filed.\nThe above-mentioned foreign incomes have been subject to double taxation as the same\nwere taxable in UK (salary) and in Netherlands (Unilever NV dividends). Hence, a foreign tax\ncredit ('FTC') has been claimed as per section 90 of the Act, read with Article 24 of the\nDouble Taxation Avoidance Agreement ('DTAA') between India and UK, and Article 23 of the\nDTAA between India and Netherlands. A detailed calculation of foreign tax credit which has\nbeen claimed in the India tax return on UK salary income and Unilever NV dividend income\nalong with its supporting documents is attached as Annexure 6. Also, a copy of Form 67\ndownloaded from e-filing portal is attached Annexure 7.\nCartified True Copy\nM.NO-183984\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 2096/Mum/2025\n5\nRefund claim\nSince the amount taxes paid were higher than my tax liability, there is a refund arising to me\nin my computation of income. The said refund has arisen because of foreign tax credit claimed\nin the tax return.\nTrust this meets with your requirements. Should your goodself require any further information\n/ documents, please provide me an opportunity of submitting the same.\nYours faithfully,\nSanjiv Mehta\nEncl: As above.\n4.
Notice u/s 142(1) of the Act dated 20/12/2021 was issued along\nwith a questionnaire and the relevant question for our consideration\nread as under:-\n9.2 With respect to the relief claimed u/s 90/91 during the year under\nconsideration,\nsubmit\nthe\nbelow\nspecified\ndetails:\ni.\nDetails of income accrue or arise in India as well as outside\nIndia during the year. Please also furnish the calculation the relief\nclaimed u/s 90/91 during the year.\nii.\nDetailed note on the basis of relief claimed.\niii.\nTax Residency Certificate in case of Non-Resident.\niv. Details of taxes paid outside India on the income accrue or\narise outside India with documentary evidence.\nV. Details of places where services are rendered against the\nincome claimed to be accrued or arose outside India.\nvi.\nFile a detailed note proving that the income stated to be earned\noutside India is not the part of total income as per Indian Income Tax\nAct.\n4.
The assessee filed detailed reply along with supporting\ndocuments in particular, the following need consideration:-\n“With respect to the relief claimed u/s 90/91 during the year under\nconsideration, details are as follows:\nI qualify to be resident and ordinarily resident in India and have offered my global\nincome to tax in India. As I had workdays in the United Kingdom (UK), the salary\nfor these workdays has been taxed in the UK also. Given that this leads to double\ntaxation, I have claimed credit of taxes paid in the UK in India. A copy of the UK tax\nreturn evidencing the tax paid in the UK is attached as Annexure 7.\n5. The computation of income filed along with the return of income\nfiled during the course of assessment proceedings is as under:-\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nΙ.Τ.Α. No. 2096/Mum/2025\n6\nFinancial Year: 2019-20\nDate of Birth: 09 July 1960\nSanjiv Soshil Mehta\nResidential\nStatus:\nPAN No.:\nResident and\nordinary resident\nAANPM7571K\nParticulars\nCOMPUTATION OF INCOME\nNotes\nINR\nINR\nIncome from Salary received in India\nBasic Salary\n7,03,06,896\nOther Allowance\n8,73,67,595\nPerquisites\n39,600\nCars/Other Automotive\n195\nFree meals\n3,19,91,118\nStock Options\n18,97,05,404\nLess: Standard Deduction\n(50,000)\nLess: Profession Tax\n(2,500) 18,96,52,904\nIncome from Salary received in UK (Annexure 8)\nWorld Crest - self-occupied\n1,01,92,906\nMarquise, The Park - self-occupied\nGross annual value\n26,000\nLess: Municipal taxes\n(1,101)\nNet annual value\n24,899\nLess: Standard deduction u/s 24(a)\n(7,470)\n17,429\nPalm Jumeirah - Rented out\nGross annual value [(415,000/12*9/30)+((325,000/12)*29/31)+(325000/12*8)]*19.94\n50,32,411\nLess: Municipal taxes\n50,32,411\nNet annual value\n(15,09,723)\nLess: Standard deduction u/s 24(a)\n35,22,688\nCapital Gains\nShort term capital gain/loss\nEquity (Annexure 1)\n(4,34,490)\nDebt (Annexure 1)\n465\nRealized gain from Citibank Total Wealth Advisor Report (Annexure 7)\n2,84,893\nCapital Gains from investment in Zurich Investment Policy (Annexure 2)\n1,38,135\nAdjusted against long term capital gain for FY 2019-20\n(10,996)\n10,996\nLong term capital gain/loss\nLong term equity (Annexure 1)\n(17,39,789)\nLong term, except listed equity shares:\nSale of Unilever NV and PLC shares (Annexure 3)\n1,90,23,577\nRealized gain from Citibank Total Wealth Advisor Report (Annexure 7)\n(12,57,432)\nSale of Debt oriented Mutual Funds (Annexure 1)\n14,64,266\n1,92,30,411\nTotal long term capital gains\n1,74,90,621\nSet-off with current year short term capital loss for FY 2019-20\n(10,996)\nSet-off with brought forward short term capital loss for FY 2018-19\n(3,72,557)\nSet-off with brought forward long term capital loss for FY 2014-15, 2017-\n18 and 2018-19\n(21,60,950)\n1,49,46,119\nIncome from other Sources\nFixed Deposit Interest (Indian Banks Annexure 5)\n32,37,211\nSavings Bank Interest (Indian Banks Annexure 5)\n6,10,069\nForeign Interest (Foreign Banks Annexure 6)\n12,78,976\n51,26,256\nDividend income from Unilever NV / PLC (Annexure 4)\n1,38,71,051\nGross Total income\n23,73,29,354\nLess: Deduction under Chapter VI-A\nDeduction under section 80C\nPF Contribution\nDeduction under section 80G\nDeduction under section 80TTA\nTotal Income\n44,63,091\n(1,50,000)\n(31,150)\n(10,000)\n23,71,38,203\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 2096/Mum/2025\n7\nSTATEMENT OF TAX LIABILITY\nParticulars\nIncome liable to tax at slab rates\nShort term capital gains - Equity\nLong term capital gains\nEquity\nLong term capital gains\nEquity\nTotal tax\nAdd: Surcharge @37%\nAdd: Education Cess thereon @ 4%\nTotal Tax liability\nLess: Foreign Tax Credit\nForeign tax credit on Unilever NV shares (Annexure 4)\nForeign tax credit on tax gross up in UK (Annexure 8)\nLess: Tax Deducted at Source\nInterest on FD (Annexure 5)\nTDS on Salary\nTax Payable\nLess: Advance Tax\nFirst Instalment paid on 14 June 2019\nSecond Instalment paid on 06 September 2019\nThird Instalment paid on 13 December 2019\nFourth Instalment paid on 13 March 2020\nTax Payable\nAdd: Interest u/s.234C\nFor deferment in payment of First Instalment\nFor deferment in payment of Second Instalment\nFor deferment in payment of Third Instalment\nFor deferment in payment of Fourth Instalment\nNet Tax Payable / (Refundable) (Rounded Off)\nExempt income Dividend from Companies\n-Dividend from Mutual funds\nTotal\nComputation on interest under section 234C\nTax Liability after TDS\nParticulars\nAdvance tax payable\nPeriod (months)\nInterest\n(INR)\n15% of Tax liability after TDS by 15 June\n4,98,400\n3\n45% of Tax liability after TDS by 15 September\n34,12,000\n57,84,000\n3\n75% of Tax liability after TDS by 15 December\n24,92,400\n1,06,92,000\n3\n100% of Tax liability after TDS by 15 March\n33,23,200\n1,46,93,000\n1\n6. In the return of income under the head Schedule 'S' details of\nincome as per salary, following details were furnished:-\nIncome (INR)\nTax Rate\n15%\n10%\n1,49,46,119\n20%\n22,21,92,084\n75,82,271\nTax (INR)\n29,89,224\n6,64,70,125\n6,94,59,349\n2,56,99,959\n9,51,59,308\n38,06,372\n9,89,65,680\n6,95,858\n96,29,657\n(1,03,25,515)\n8,86,40,165\n3,23,922\n(8,10,57,894)\n8,07,33,972\n75,82,271\n(71,10,729)\n2,25,350\n6,66,833\n8,92,183\nCumulative\nAdvance tax Paid (INR)\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 2096/Mum/2025\n8\nSchedule S:Details of Income from Salary\nDetail of\nEmployer\nName of Employer\nHINDUSTAN\nUNILEVER\nLIMITED\nNature of employer\nOthers\nTAN of\nEmployer(mandatory\nif tax is deducted)\nMUMH07226C\nAddress of Employer\nUNILEVER HOUSE, B1-L\nTown/City\nMUMBAI\n4, B.D. SAWANT MARG,\nCHAKALA, ANDHERI (\nEAST)\nState\nMAHARASHTRA\nPincode\n400099\n1\nGross Salary(la + lb + 1c)\n189705404\nla\nSalary as per section 17(1)\n157674491\nS. No.\nNature of salary\nDescription\nAmount\n1\nBasic Salary\n70306896\n2\nOther Allowance\n87367595\n1b\nValue of perquisites as per section 17(2)\n32030913\nS. No.\nNature of perquisites\nDescription\nAmount\n***This space has been left blank intentionally, P.T.O.***\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 2096/Mum/2025\n9\n Assessment Year: 2020-21\n1\nCars/Other Automotive\nFree meals\n39600\n195\n3\nOther benefits or amenities\nSTOCK OPTIONS\n31991118\nIc\nProfit in lieu of salary as per section 17(3)\n0\nS. No.\nNature of Profit in lieu of Salary\nDescription\nAmount\nDetail of\nName of Employer\nUnilever PLC\nNature of employer\nOthers\nTAN of\nEmployer\nEmployer(mandatory\nif tax is deducted)\nAddress of Employer\nLondon\nTown/City\nLondon\nState\nSTATE OUTSIDE INDIA\nZipcode\nXXXXXX\n1\nGross Salary(la + lb + 1c)\n10192906\nla\nSalary as per section 17(1)\n0\nS. No.\nNature of salary\nDescription\nAmount\n1b\nValue of perquisites as per section 17(2)\n10192906\nS. No.\nNature of perquisites\nDescription\nAmount\n1\nOther benefits or amenities\nTAX GROSS UP\n10192906\nIc\nProfit in lieu of salary as per section 17(3)\n0\nS. No.\nNature of Profit in lieu of Salary\nDescription\nAmount\nTotal gross salary from all employers (1)\n199898310\n3\n4\nLess: allowances to the extent exempt u/s 10(Ensure that it is included in Total Gross salary in (2)\nabove)\nSl.No Nature of Exempt Allowance\nNet Salary (2-3)\nDescription\nINCOME TAX DEPARTMEN\nAmount\n52500\n50000\n2500\nDeduction u/s 16 (5a + 5b+5c)\nSa\nStandard deduction u/s 16(ia)\n5b\nEntertainment allowance u/s 16(ii)\n5c\nProfessional tax u/s 16(iii)\n6\nIncome chargeable under the Head 'Salaries' (4-5)\nSchedule HP:Details of Income from House Property\n1 Address of property 1\nTown/City\nState\nCountry\nPincode\nOwner of the Property\nIs the property co-owned? (if \"YES\" please enter following details)\nW-5701 and E-5703, WORLD C\nREST, UPPER WORLI\nMUMBAI\nMAHARASHTRA\nINDIA\n400013\nSelf\nNO\n199845810\n7. The aforementioned factual matrix goes to show that specific\nqueries were raised to which specific replies were furnished by the\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 2096/Mum/2025\n10\nassessee along with supporting documentary evidence. The assessee\nhas furnished complete details of the salary income received by him\nwithin India and outside India from Hindustan Unilever Limited,\ntherefore, it cannot be said that any income was not offered for taxation.\nIn fact, the ld. Pr. CIT assumed jurisdiction on the basis of the audit\nobjection without there being ay application of mind.\n8. Our view is fortified by the decision of the Hon'ble Supreme\nCourt in the case of Malabar Industrial Co. Ltd., 243 ITR 83 (SC), where\nthe Hon'ble Supreme Court has laid down the following ratio:-\n“A bare reading of section 263 of the Income-tax Act, 1961, makes it clear that the\nprerequisite for the exercise of jurisdiction by the Commissioner suo moto under it,\nis that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to\nthe interests of the Revenue. The Commissioner has to be satisfied of twin conditions,\nnamely, (i) the order of the Assessing Officer sought to be revised is erroneous; and\n(ii) it is prejudicial to the interests of the Revenue. If one of them is absent--if the\norder of the Income-tax Officer is erroneous but is not prejudicial to the Revenue or\nif it is not erroneous but is prejudicial to the Revenue-- recourse cannot be had to\nsection 263(1) of the Act. The provision cannot be invoked to correct each and every\ntype of mistake or error committed by the Assessing Officer, it is only when an order\n7 is erroneous that the section will be attracted. An incorrect assumption of facts or\nan incorrect application of law will satisfy the requirement of the order being\nerroneous \".\n9. Further, the Hon'ble Bombay High Court in the case of CIT vs.\nGabriel India Ltd. reported in [1993] 203 ITR 108 (Bombay), while dealing\nwith identical issue has held as under:-\n13. We, therefore, hold that in order to exercise power under sub-section (1) of section\n263 of the Act there must be material before the Commissioner to consider that the\norder passed by the Income-tax Officer was erroneous in so far as it is prejudicial to\nthe interests of the Revenue. We have already held what is erroneous. It must be an\norder which is not in accordance with the law or which has been passed by the\nIncome-tax Officer without making any enquiry in undue haste. We have also held\nas to what is prejudicial to the interests of the Revenue. An order can be said to be\nprejudicial to the interests of the Revenue if it is not in accordance with the law in\nconsequence whereof the lawful revenue due to the State has not been realised or\ncannot be realised. There must be material available on the record called for by the\nCommissioner to satisfy him prima facie that the aforesaid two requisites are present.\nIf not, he has no authority to initiate proceedings for revision. Exercise of power of\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 2096/Mum/2025\n11\nsuo motu revision under such circumstances will amount to arbitrary exercise of\npower. It is well-settled that when exercise of statutory power is dependent upon the\nexistence of certain objective facts, the authority before exercising such power must\nhave material on record to satisfy it in that regard. If the action of the authority is\nchallenged before the court, it would be open to the courts to examine whether the\nrelevant objective facts were available from the records called for and examined by\nsuch authority. Our aforesaid conclusion gets full support from a decision of\nSabyasachi Mukharji J. (as his Lordship then was) in Russell Properties Pvt. Ltd. v.\nA. Chowdhury, Addl. CIT. In our opinion, any other view in the matter will amount\nto grossly unbridred and arbitrary power to the revising authority to initiate\nproceedings for re-examination in every case and stop re-examination and fresh enquiries\nin matters which have already concluded under the law. As the study cited it is\na quasi judicial power hedged in with limitation and has to be exercised subject to\nthe same and within its scope and ambit. So far as calling for the records and\nexamining the same is concerned, undoubtedly, it is an administrative act, but an\nexamination, to consider or in other words, to form an opinion that the particular\norder is erroneous in so far as it is prejudicial to the interests of the Revenue, is a\nquasi-judicial act because on this consideration or opinion the whole machinery of\nre-examination and reconsideration of an order of assessment, which has already been\nconcluded and controversy which has been set at rest, is set again in motion. It is an\nimportant decision and the same cannot be based on the whims or caprice of the\nrevising authority. There must be materials available from the records called for by\nthe Commissioner.\n14. We may now examine the facts of the present case in the light of the powers of the\nCommissioner set out above. The Income-tax Officer in this case had made enquiries\nin regard to the nature of the expenditure incurred by the assessee. These are part of\nthe record. Evidently, the claim was allowed by the Income-tax Officer on being\nsatisfied with the explanation of the assessee. Such decision of the Income-tax\nOfficer cannot be held to be "erroneous" simply because in his order he did not make\nan elaborate discussion in that regard. Moreover, in the instant case, the\nCommissioner himself even after initiating proceedings for revision and hearing the\nassessee, could not say that the allowance of the claim of the assessee was erroneous\nand that the expenditure was not revenue expenditure but an expenditure of capital\nnature. In his opinion, is not permissible. Further enquiry and/or fresh determination can\nbe directed by the Income-tax Officer only after coming to the conclusion that the earlier\nfinding of the Income-tax Officer was erroneous and prejudicial to the interests of the\nRevenue. Without doing so, he does not get the power to revise said the assessment.\nIn the instant case, the Commissioner did not approve his action and set aside his order. We do not find any infirmity in the\nabove conclusion of the Tribunal.\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 2096/Mum/2025\n12\n10. The Hon'ble Supreme Court in the case of CIT vs. Max India Ltd.\nreported in [2007] 295 ITR 282 (SC), had the occasion to consider a\nsimilar challenge to 263 proceedings and held as under:-\n“1. In our view at the relevant time two views were possible on the word 'profits' in\nthe proviso to section 80HHC(3). It is true that vide 2005 amendment the law has\nbeen clarified with retrospective effect by insertion of the word 'loss' in the new\nproviso. We express no opinion on the scope of the said amendment of 2005. Suffice\nit to state that in this particular case when the order of the Commissioner was passed\nunder section 263 of the Income-tax Act two views on the said word 'profits' existed.\nIn our view the matter is squarely covered by the judgment of this Court in the case\nof Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83 as also by the judgment of\nthe Calcutta High Court in the case of Russell Properties (P.) Ltd. v. A. Chowdhury,\nAddl. CIT [1977] 109 ITR 229 at 243.\n2. At this stage we may clarify that under para 10 of the judgment in the case of\nMalabar Industrial Co. Ltd. (supra) this Court has taken the view that the phrase\n"prejudicial to the interest of the revenue" under section 263 has to be read in\nconjunction with the expression "erroneous" order passed by the Assessing Officer.\nEvery loss of revenue as a consequence of an order of the Assessing Officer cannot be\ntreated as prejudicial to the interest of the revenue. For example, when the Income-\ntax Officer adopted one of the courses permissible in law and it has resulted in loss\nof revenue; or where two views are possible and the Income-tax Officer has taken one\nview with which the Commissioner does not agree, it cannot be treated as an\nerroneous order prejudicial to the interest of the revenue, unless the view taken by\nthe Income-tax Officer is unsustainable in law. According to the learned Additional\nSolicitor General on interpretation of the provision of section 80HHC(3) as it then\nstood the view taken by the Assessing Officer was unsustainable in law and therefore\nthe Commissioner was right in invoking section 263 of the Income-tax Act. In this\nconnection he has further submitted that in fact 2005 amendment which is\nclarificatory and retrospective in nature itself indicates that the view taken by the\nAssessing Officer at the relevant time was unsustainable in law. We find no merit\nin the said contentions. Firstly, it is not in dispute when the Order of the\nCommissioner was passed there were two views on the word 'profit' in that section.\nThe problem with section 80HHC is that it has been amended eleven times. Different\nviews existed on the day when the Commissioner passed the above order. Moreover\nthe mechanics of the section have become so complicated over the years that two views\nwere inherently possible. Therefore, subsequent amendment in 2005 even though\nretrospective will not attract the provision of section 263 particularly when as stated\nabove we have to take into account the position of law as it stood on the date when\nthe Commissioner passed the order dated 5-3-1997 in purported exercise of his\npowers under section 263 of the Income-tax Act.\"\n11. Considering the facts of the case in totality in the light of the\njudicial decisions referred hereinabove, we set aside the order of the ld.\nआयकर अपीलीय अधिकरण\nINCOME TAX APPELLATE TRIBUNAL\nI.T.A. No. 2096/Mum/2025\n13\nPr. CIT dated 10/03/2025 and restore that of the AO dated 25/08/2022\nframed u/s 143(3) r.w.s.144B of the Act.\n12. In the result, appeal of the assessee is allowed.\nOrder pronounced in the Court on 23rd July, 2025 at Mumbai.\nSd/-\n(ANIKESH BANERJEE)\nJUDICIAL MEMBER\nSd/-\n(NARENDRA KUMAR BILLAIYA)\nACCOUNTANT MEMBER\nMumbai, Dated 23/07/2025\n*SC SPPS\nआदेश की प्रतिलिपि अग्रेषित/