The Tax Publishers2021 TaxPub(DT) 0082 (Bang-Trib)

INCOME TAX ACT, 1961

Section 263

Assessment order cannot be considered to be prejudicial to the interests of revenue as the claim of the assessee was supported by the decision rendered by Supreme Court in the case of Rotork Controls India (P) Ltd [(2009)(180 Taxman 422)(SC) : 2009 TaxPub(DT) 1730 (SC)], however, there should not be any doubt that, unless the facts relating to the claim were examined, the question of application of decision rendered by Supreme Court cannot be examined, therefore, there was no infirmity in the revision order passed by CIT.

Revision under section 263 - Validity - AO did not make any enquiry with regard to assessee's claim towards provision for warranty expenses -

Assessee was engaged in the business of marketing of industrial machinery and also providing software services to industrial machinery. Assessment in this case was completed by AO under section 143(3) and accepted the total income returned by the assessee. CIT called for assessment record and noticed that the assessee has claimed a sum as deduction towards provision for warranty expenses”. CIT noticed that AO did not make any enquiry with regard to the above said claim. Since AO failed to examine this issue, PCIT held that assessment order was rendered erroneous and prejudicial to the interest of revenue. Hence, he initiated revision proceedings under section 263. Held: AO passed the order without making any enquiry on this issue and the same would render the order erroneous and in view of its tax implications, the same would cause prejudice to the interests of revenue. Assessee submitted that the assessment order cannot be considered to be prejudicial to the interests of revenue as the claim of assessee was supported by the decision rendered by Supreme Court in the case of Rotork Controls India (P) Ltd [(2009)(180 Taxman 422)(SC) : 2009 TaxPub(DT) 1730 (SC)]. There should not be any doubt that unless the facts relating to the claim were examined, the question of application of the decision rendered by Supreme Court cannot be examined. Thus, there was no infirmity in the revision order passed by CIT.

Distinguished:M/s. Rotork Controls India (P) Ltd. v. CIT (2009)(180 Taxman 422)(SC) : 2009 TaxPub(DT) 1730 (SC). Relied:CIT v. Max India Ltd. (2007) 295 ITR 282 (SC) : 2007 TaxPub(DT) 1548 (SC) Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR 80 (SC)) : 2000 TaxPub(DT) 1227 (SC) Grasim Industries Ltd. v. CIT (2010) 321 ITR 92 (Bom) : 2010 TaxPub(DT) 1431 (Bom-HC).

REFERRED :

FAVOUR : Against the assessee

A.Y. : 2014-15



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