Law:

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Section 263 of the Income-tax Act, 1961 - Revision - Of order prejudicial to interest of revenue Where no finding was recorded by revisional authority that order was prejudicial to interest of revenue and tenor of order only led to conclusion that order was found to be erroneous by revisional authority, in absence of a positive finding that order was not in interests of revenue, it was not open for revisional authority to assume jurisdiction [In favour of revenue] The assessee had made payment of goodwill to one NC. The said payment was allowed. The Commissioner, acting under section 263 set aside the assessment order holding that the payment of goodwill made by the assessee to NC appeared to be unwarranted and for extraneous considerations. The assessee had not been able to substantiate the goodwill payment over and above the monthly rent vis-a-vis the benefits derived by it. A perusal of the records indicated that while making the assessment the Assessing Officer had not dealt with this issue in-depth and had allowed the payment of goodwill without ascertaining the exact nature of the payment and the commercial expediency for incurring such expenditure. Held that, it was clear that no finding was recorded by the revisional authority that the order was prejudicial to the interests of the revenue and the tenor of the order only led to the conclusion that the order was found to be erroneous by the revisional authority. In the absence of a positive finding that the order was not in the interests of the revenue, it was not open for the revisional authority to assume jurisdiction. Consequently, the revisional authority was not justified in setting aside the order passed by the Assessing Officer. CASE REVIEW CIT v. Max India Ltd. [2007] 295 ITR 282 (SC) and Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83 (SC) followed and relied upon. CASES REFERRED TO CIT v. Max India Ltd. [2007] 295 ITR 282 (SC) (para 4) and Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83 (SC) (para 3). J.D. Mistry, P.C. Tripathi and Atul K. Jasani for the Appellant. P.S. Sahadevan for the Respondent. JUDGMENT 1. Heard learned counsel for the parties. This appeal was admitted on the…

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