M/S THE TELOIJAN TEA CO LTD.,KOLKATA vs. C.I.T KOL - II,, KOLKATA

The assessee in the present case is a Company, which is engaged in the business of cultivation, manufacturing, purchase and sale of tea. In the assessment completed under section 143(3) vide order dated 03.12.2010, the total income of the assessee was determined by the Assessing Officer at a loss of Rs.48,63,187/-. The records of the said assessment came to be examined by the ld, CIT and on such examination, he found that interest income was taken by the Assessing Officer as a part of composite income of the assessee to which Rule 8 applied. According to the ld. CIT, the interest income thus was charged at low rate of tax by the ./2013 Assessment year: 2008-2009 Page 2 of 3 Assessing Officer and there was an error in the order of the Assessing Officer passed under section 143(3), which was prejudicial to the interest of the Revenue. He, therefore, issued a notice under section 263 calling for the explanation of the assessee. In reply, it was brought to the notice of the ld. CIT by the assessee that the issue raised by him in the notice issued under section 263 is already covered in favour of the assessee by the decision of the ld. CIT(Appeals) as well as the Tribunal rendered in assessee’s own case for the earlier years. The ld. CIT did not accept this explanation of the assessee for the following reasons given in his impugned order:- “I have considered the submission and perused the record. It is found that the decisions of the learned CIT(A) and the Hon’ble ITAT have not been accepted by the department and further appeal u/s 260A has been preferred before the Hon’ble High Court. The very fact that the issue has gone beyond the revenue authorities for adjudication entails that the final word has to come from the court(s). The law on this dispute is not settled as yet”.

We have heard the arguments of both the sides and also perused the relevant material available on record. As submitted on behalf of the assessee before the ld. CIT during the course of proceedings under section 263, the issue relating to inclusion of interest in the income of the assessee-company to which Rule 8 applied, was already decided in favour of the assessee by the ld. CIT(Appeals) as well as by the Tribunal in assessee’s own case for the earlier years and this position was not disputed by the ld. CIT. He, however, still proceeded to revise the assessment order passed by the Assessing Officer under section 143(3) on this issue on the ground that an appeal was preferred by the Department against the order of the Tribunal on this issue. We are unable ./2013 Assessment year: 2008-2009 Page 3 of 3 to agree with this conclusion drawn by the ld. CIT. The fact that the issue in question had already been decided in favour of the assessee by the Tribunal in assessee’s own case for earlier years, was sufficient to show that the view taken by the Assessing Officer while deciding this issue in favour of the assessee in the year under consideration was a possible view and it was not permissible for the ld. CIT(Appeals) to substitute his own view in place of such possible view taken by the Assessing Officer merely on the ground that the decision of the Tribunal was not accepted by the Department and appeal against the same was filed before the Hon’ble High Court. We, therefore, set aside the impugned order passed by the ld. CIT under section 263 and restore that of the Assessing Officer passed under section 143(3).