Law:

Section:

Section 263 of the Income-tax Act, 1961 - Revision - Of orders prejudicial to interest of revenue - Assessment years 1995-96 and 1996-97 - Whether every conclusion and finding by assessing authority should be supported by reasons, however, brief it may be, and in a situation where it is only a question of computation in accordance with relevant articles of a Double Taxation Avoidance Agreements, it should be clearly indicated in order of assessing authority, whether or not assessee had given particulars or details of it and if assessing authority fails in that, order definitely constitutes an order not merely erroneous but also prejudicial to interest of revenue and Commissioner would be justified in exercising jurisdiction under section 263 - Held, yes [In favour of revenue] FACTS The assessee-company, while filing its returns for the assessment years 1995-96 and 1996-97, had claimed certain deductions towards its tax liability, the amounts as had been deducted by way of TDS in respect of payments received by its business activities in Canada and Thailand, in terms of double taxation agreement relief in existence between India and the countries of Canada and Thailand. The Assessing Officer allowed the assessee's claim. The Commissioner, in exercise of powers under section 263, set aside the assessment orders and remanded the matter to the assessing authority particularly, to allow deductions under the DTAAs with Canada and Thailand by verification and computation of the tax liability of the income abroad and under the Income tax enactments of the two countries and to ascertain the exact relief that the assessee could claim article 23(2) of the DTAA with Canada and article 23(3) of the DTAA with Thailand. On appeal, the assessee contended that the Commissioner could not have exercised jurisdiction under section 263 for the reason that the order, which was sought to be revised, was neither shown to be erroneous nor prejudicial to the interest of the revenue and, in fact, it was virtually a case of the Commissioner opining differently from the assessing authority and, therefore, was not amenable to the revisional jurisdiction. The argument of the assessee found…

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