Is Max India right?

[ashutosh majumdar]

In Max India, the Hon'ble SC has held that for considering the validity of an order passed u/s 263, the position prevailing "on the date of the order of the CIT has to be considered". Now how can this be? My point is that if the Q is whether the order of th AO is erroneous or prejudicial to the interests of the revenue, the position prevailing "on the date of the order of the AO" has to be seen. If the AO did the correct thing as per the law prevailing when he signed the order can a subsequent position prevaling at the time the CIT considers the matter make the former order bad-in-law. Obviously not. The rest of the order of the SC fits in with this logic so I don't know if their reference to "on the date of the order of the CIT" can be regarded as being obiter dicta.

Ashutosh.

[taxationlaws]

Dear Ashutosh,

In relation to your views on SC ruling in MAX India Limited case (dated 1 November 2007), it seems that albeit SC has decided the validity of subject CIT's order under section 263 of the Income Tax Act ('Act') giving reference to the date when CIT passed the subject order under section 263 of the Act but that in my understanding, as voiced by you also, may not dilute the position, that in case two views were possible at the time when AO passed its order then jurisdiction under section 263 is not invokable and reference in this regard may be interalia made to underlying ruling of Punjab & Haryana High Court in Max India (supra) 268 ITR 128 and latest Gauhati High Court ruling in the case of Meghalaya Plywood 160 Taxman 89 (Para 9).

Hope the above is useful.

Warm regards
CA Kapil Goel
B.Com(H) ACA LLB

[ashutosh majumdar]

Hi Kapil,

Thanks for clearing that up. Makes more sense now.

Ashutosh.