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Income Tax Appellate Tribunal, Kolkata Bench, KOLKATA
Before: SHRI N. V. VASUDEVAN & SHRI M. BALAGANESH,
For the Appellant/Revenue None For the Respondent/Assessee Sri G. Mallikarjuna, CIT, DR Date of Hearing 29.03.2017 Date of Pronouncement 29.03..2017 ORDER Per M. BALAGANESH, AM
This is an appeal filed by the assessee directed against the order of the Ld.. Pr. Commissioner of Income Tax-3, Kolkata, (hereinafter referred to as the “CIT)) passed u/s 263 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”), dated 24.03.2015, against the order of the ld. AO u/s 143(3) of the Act, dt. 01.03.2013
The only issue to be decided in this appeal is as to whether the ld. CIT is justified in invoking revisionary jurisdiction u/s 263 of the Act in the facts and circumstances of the case.
The brief facts of this issue is that the assessee company filed its return of income electronically on 21.11.2013 showing loss of Rs.2,57,539/- and the assessment was completed u/s 143(3) of the Act on 01.03.2013 accepting loss at Rs 2,57,539/-. The Ld. CIT later sought to revise the said assessment on the ground that the Ld. AO erred in granting deduction towards expenditure eligible to Rs.27,000/- being Soil Testing Fees, which, in his opinion, is not liable to the assessee as there had been no business in F.Y. 2009-10. The assessee filed reply before the Ld. CIT stating that in any case the disallowance would only result in reduction of loss by Rs.27,000/- and since the return was filed belatedly, the assessee in any way would not be eligible for benefit of carry forward of the said loss in terms of Section 80 r.w. 139(3) of the Act. Hence, it was pleaded that there is no prejudice caused to the interest of the Revenue by the said revisionary proceedings.
The Ld. CIT ignoring the said submission passed an order u/s 263 of the Act on 24.03.2015, on the ground that the Ld. AO had not examined the facts and details while allowing this expenditure and due to incorrect application of law and wrong assumptions of facts, the order passed by him is erroneous and prejudicial to the interest of the Revenue.
4.1. None appeared on behalf of the assessee.
We have heard the Ld. DR. The facts stated herein above remain undisputed and hence the same are not re-iterated for the sake of brevity. We find that there is no prejudice that is caused to the interest of the Revenue even if the subject mentioned expenditure towards Soil Testing Fees amounting to Rs.27,000/- is required to be disallowed. It is not in dispute that the assessee had filed its return
3 Assessment Year: 2010-11 Agrodoot Pipes Pvt. Ltd. of income for the assessment year 2010-11 belatedly and hence in any case would not be entitled for carry forward of loss to subsequent years. It is not in dispute that even if the disallowance of Rs.27,000/- remains, it would only result in loss which in any way, is not eligible to be carried forward. Hence we hold that no prejudice is caused to the interest of the Revenue in the facts and circumstances of the instant case. It is well settled by the Hon’ble Supreme Court in the case of Malabar Industrial Company Ltd. vs. CIT reported in 243 ITR 83 (SC) that recourse to Section 263 (1) cannot be taken if the impugned order is erroneous but not prejudicial to the interest of the Revenue; or if it is prejudicial to the interest of the Revenue but not erroneous. Hence the twin conditions are to be satisfied for invoking revisionary jurisdiction u/s 23 of the Act. We hold that the twin conditions are not satisfied in the instant case. Hence the revisionary order passed by the Ld. CIT u/s 263 of the Act is hereby quashed and grounds raised by the assessee in this regard are allowed.
In the result the appeal of the assessee is allowed.
Order pronounced in the Court on 29.03.2017.