Law:

Section:

Section 263, read with section 80HHC of the Income-tax Act, 1961 - Revision - Of orders perjudicial to interests of revenue - Assessment year 1995-96 - In original assessment, assessee had been allowed deduction under section 80HHC of entire net profit pertaining to its export business - Commissioner, by invoking powers under section 263, set aside said assessment order on ground that assessee was entitled to only proportionate deduction in light of section 80HHC(3) - On appeal, Tribunal set aside order passed by Commissioner holding that on facts, view taken by Assessing Officer was a possible view and, therefore, condition precedent for invoking jurisdiction under section 263 did not exist - Whether on facts, Tribunal was justified in upsetting order passed by Commissioner (Appeals) under section 263 - Held, yes FACTS In the original assessment, the assessee had been allowed deduction under section 80HHC of the entire net profit pertaining to its export business. The Commissioner (Appeals), exercising power under section 263, set aside said assessment order on the ground that the assessee was entitled to only proportionate deduction in light of section 80HHC(3). He, therefore, re-calculated the deduction. On appeal, the Tribunal quashed the order passed by the Commissioner holding that the view taken by the Assessing Officer was a possible view and, therefore, his order could not be said to be erroneous and prejudicial to the interest of the revenue. On the revenue's appeal : HELD It was evident from the order of the Assessing Officer that he had considered detailed particulars filed before him and after discussion allowed the deduction of the entire profit earned by the assessee pertaining to its export business. Therefore, the submission of the revenue, that the order of the Assessing Officer was erroneous or was passed without application of mind because in his order he had not made elaborate discussion in that regard, was to be rejected. In any event, the revenue had, admittedly, not argued before the Commissioner or before the Tribunal that the order passed by the Assessing Officer was without application of mind. The Commissioner had set aside the order…

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