Assessee was eligible for claiming deduction under section 80HHC of the Income- tax Act as it was engaged in export of goods. At one stage of computation of such deduction it had incurred a loss which it ignored for further computation. In the assessment order passed by the AO this position stood accepted. Commissioner exercised revisionary jurisdiction under section 263 of the said Act and directed\u00a0 the AO to set off the loss and hence compute the income eligible for deduction\u00a0\u00a0\u00a0\u00a0\u00a0 at\u00a0 a\u00a0 lower amount. According to\u00a0 him, ignoring theloss in\u00a0 the computation\u00a0\u00a0 of deduction had rendered the assessment order to be erroneous insofar as\u00a0 it\u00a0 was prejudicial to the interests of the revenue. Subsequently, by Finance Act, 2005 with retrospective effect from 01.04.1992, a proviso was insertedbelow section 80HHC(3) of the said Act to provide that the loss has to be set off. The Tribunal and the High Court had held the assumption of revisionary jurisdiction\u00a0 by the Commissioner to be invalid.<\/p>\n
\u00a0<\/p>\n
Whether the jurisdictional pre-conditions in section 263 i.e., the assessment order being erroneous and prejudicial to the interests of the revenue were fulfilled in\u00a0\u00a0\u00a0 the present case.<\/p>\n
\u00a0<\/p>\n
Relying on earlier judgment in the case of Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR 83\u00a0 (SC), <\/em><\/strong>the Court has held that when the AO\u00a0 adopted one\u00a0\u00a0 \u00a0of the courses permissible in law and it has resulted in loss of revenue; or where two views were possible and the AO\u00a0 has taken one view with which\u00a0 \u00a0the Commissioner does not agree it cannot be treated as an erroneous order prejudicial to the interests of the revenue, unless the view is\u00a0 unsustainable in\u00a0 law. It has further observed that existence of two views has to be seen when the Commissioner passed the revision order. For existence of two views reference has also been made to thefact that section 80HHC stood amended several times.<\/p>\n \u00a0<\/p>\n Based on the above, it is held that it is not permissible to the Commissioner to exercise revisionary jurisdiction under section 263 of the Income-tax Act when,<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n at the time of passing the revision order, two views were possible on\u00a0 an\u00a0 issue\u00a0 and the AO had adopted one of the views. (AY. 1992-93) (CA Nos. 5555-55556 of 2005, dt. 1-11-2007)<\/p>\n Editorial<\/em><\/strong>: The aforesaid view has been subsequently taken by the Supreme Court\u00a0 in CIT v. Kwality Steel Suppliers Complex 395 ITR 1\/157 DTR 1\/297 CTR 553\/250 Taxman 23 (SC). <\/em><\/strong>Further, in CIT v. G. M.\u00a0 Mittal Stainless Steel (P.)\u00a0 Ltd. 263 ITR 255, <\/em><\/strong>the Supreme Court has held that the assessment order cannot\u00a0\u00a0\u00a0 be held to be erroneous even when the AO has followed a High Court judgment which has been subsequently reversed by the Supreme Court.<\/p>\n \u201cAlways aim at complete harmony of thought and word and deed. Always aim at purifying your thoughts and everything will be well.\u201d<\/em><\/p>\n – Mahatma Gandhi<\/p>\n","protected":false},"excerpt":{"rendered":" S. 263: Revision by Commissioner \u2013 Assessment order is neither erroneous nor prejudicial to the interests of the Revenue when two views are possible \u2013 two views should exist at the time when the revision order is passed [ S.80HHC ]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-13477","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-3vn","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/13477","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=13477"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/13477\/revisions"}],"predecessor-version":[{"id":13478,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/13477\/revisions\/13478"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=13477"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=13477"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=13477"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Held<\/h3>\n