Manish Kumar v. CIT - Taxpublishers.in

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The Tax Publishers2012 TaxPub(DT) 0740 (Ind-Trib) : (2012) 044 (I) ITCL 0226 : (2012) 134 ITD 0027 : (2012) 147 TTJ 0371 : (2012) 072 DTR 0255 : (2012) 017 ITR (Trib) 0324 INCOME TAX ACT, 1961 --Revision under section 263--Orders prejudicial to the interest of revenueAO adopted possible view--Assessee basically derived income from salary and was also holding equity shares of various companies as investment since many years. Income earned on these shares were regularly assessed by assessing officer as long-term/short-term capital gains. In the course of scrutiny assessment, after applying its mind assessing officer accepted the long-term capital gain and short-term capital gain offered by assessee, because the transactions were not frequent and the shares were held as investment in the same manner as were held in earlier years. assessing officer also found that the interest paid on borrowing was also not claimed as business expenditure nor claimed or allowed as set-off against the interest income. The order so passed by assessing officer was held to be erroneous and prejudicial to the interest of revenue by CIT under section 263. He observed that profit arising from said transactions was taxable under business head. Held: When assessing officer after applying his mind had taken a view, which was tenable in law, such order could not be branded as erroneous only on the plea that it was prejudicial to the interests of revenue. The power of suo motu revision under sub-section (1) of section 263 is in the nature of supervisory jurisdiction and the same can be exercised only if both the circumstances specified therein exist, viz., (i) the order is erroneous; and (ii) by virtue of the order being erroneous prejudice has been caused to the interest of revenue. It has, therefore, to be considered firstly as to when an order can be said to be erroneous. An order cannot be termed as erroneous unless it is not in accordance with law. If ITO acting in accordance with law makes certain assessment, the same cannot be branded as erroneous by the Commissioner simply because according to him the order should have been written more elaborately. This section does not visualize a case of substitution of judgment of CIT for that of ITO, who passed the order, unless the decision is held to be erroneous. Income Tax Act, 1961 Section 263 IN THE ITAT INDORE BENCH JOGINDER SINGH, JM & R.C. SHARMA, A.M. Manish Kumar v. CIT ITA No. 26 (Ind) of 2011 A.Y. 2006-07 19 August 2011 SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2012 TaxPub(DT) 0740 (Ind-Trib) : (2012) 044 (I) ITCL 0226 : (2012) 134 ITD 0027 : (2012) 147 TTJ 0371 : (2012) 072 DTR 0255 : (2012) 017 ITR (Trib) 0324

INCOME TAX ACT, 1961

--Revision under section 263--Orders prejudicial to the interest of revenueAO adopted possible view--Assessee basically derived income from salary and was also holding equity shares of various companies as investment since many years. Income earned on these shares were regularly assessed by assessing officer as long-term/short-term capital gains. In the course of scrutiny assessment, after applying its mind assessing officer accepted the long-term capital gain and short-term capital gain offered by assessee, because the transactions were not frequent and the shares were held as investment in the same manner as were held in earlier years. assessing officer also found that the interest paid on borrowing was also not claimed as business expenditure nor claimed or allowed as set-off against the interest income. The order so passed by assessing officer was held to be erroneous and prejudicial to the interest of revenue by CIT under section 263. He observed that profit arising from said transactions was taxable under business head. Held: When assessing officer after applying his mind had taken a view, which was tenable in law, such order could not be branded as erroneous only on the plea that it was prejudicial to the interests of revenue.

The power of suo motu revision under sub-section (1) of section 263 is in the nature of supervisory jurisdiction and the same can be exercised only if both the circumstances specified therein exist, viz., (i) the order is erroneous; and (ii) by virtue of the order being erroneous prejudice has been caused to the interest of revenue. It has, therefore, to be considered firstly as to when an order can be said to be erroneous. An order cannot be termed as erroneous unless it is not in accordance with law. If ITO acting in accordance with law makes certain assessment, the same cannot be branded as erroneous by the Commissioner simply because according to him the order should have been written more elaborately. This section does not visualize a case of substitution of judgment of CIT for that of ITO, who passed the order, unless the decision is held to be erroneous.

Income Tax Act, 1961 Section 263

IN THE ITAT INDORE BENCH

JOGINDER SINGH, JM & R.C. SHARMA, A.M.

Manish Kumar v. CIT

ITA No. 26 (Ind) of 2011

A.Y. 2006-07

19 August 2011