Income Tax Appellate Tribunal - Amritsar
Max India Ltd. vs Asstt. Cit on 1 August, 2003
Equivalent citations: (2004)90TTJ(ASR)670
ORDER
BY THE BENCH:
This is an appeal by the assessee against the order of the CIT(Central), Ludhiana, dated 5-3-1997, relating to assessment year 1992-93 passed under section 263 of the Income Tax Act, 196 1.
2. The only effective ground raised by the assessee in this appeal, reads as under
"l. On the facts and in the circumstances of the case, the learned Commisioner, erred in setting aside the order passed by the assessing officer under section 263 of the Income Tax Act, 1961. "
3. The facts of the case in brief are that the assessee was engaged in the business of manufacturing of drug intermediates called 6APA and 7ADCA, electronic chemicals and formulations. The assessee filed its return of income on 29-12-1992, declaring Nil income. However, the assessment was completed at an income of Rs. 22,31,889 vide order under section 143(3), dated 15-3-1995. The assessee claimed deduction of Rs. 1,33,09,439 under section 80HHC of the Income Tax Act which was allowed by the assessing officer as such, the deduction under section 80HHC was claimed by the assessee as per following calculations "Deduction under section 80HHC Profits of the Business Rs.
(a) Income from business 1,49,46,364 Less : Commission recd.
1,02,87,639 Interest recd.
8,20,478 Service charges 13,92,131 Cash assistance 60,34,388 Duty drawback 3,36,76,495 5,22,11,175 90% of above 4,69,90,058 3,20,43,694 NIL
(b) Total Turnover As per P&L a/c 73,87,12,140 Deduct Cash assistance 60,34,388 Duty drawback 3,36,76,495 Freight & insurance 46,03,064 Export 69,43,98,193
(c) Export on FOB basis 25,85,92,700
(d) Deduction under section 80HHC 26,85,92,700 x NIL NIL 69,43,98,193 Plus Deduction as per proviso to sub-section (3) of section 80HHC Cash assistance 60,34,388 Duty drawback 3,36,76,495 3,97,10,883 3,57,39,795 90% of above 25,85,92,700 x 3,57,39,795 69,43,98,193 1,33,09,439 1,33,09,439 3.1 However, the learned CIT on 8-10-1995, issued a show-cause notice to the assessee requiring to show-cause as to why the assessment order dated 16-3-1995, should no't be set aside treating the same as erroneous and prejudicial to the interest of the revenue on account of omission of the assessing officer to work out the correct deduction under section 80HHC and allow the same at the time of assessment. In the show-cause notice the learned Commissioner pointed out that :
(i) While making the assessment order, the assessing officer did not apply his mind with respect to the claim for deduction under section 80HHC which has been allowed by him as claimed without verifying as to whether or not the said claim was in accordance with the relevant provisions of law.
(ii) While working out the deduction under section 80HHC, whereas negative figure of profit was there, it was adopted as 'NIL' figure, which was in contravention of the relevant provisions of the Income Tax Act.
3.2 It was in the background of the above mistakes pointed out by the learned Commissioner; he proposed to exercise his power under section 263 of the Income Tax Act.
3.3 In response to the show-cause notice the assessee vide letter dated 15-9-1995, submitted as under :
"Reassessment year 1992-93, proceedings under section 263 of the Income Tax Act, 1961, regarding under section 80HHC.
1. Kindly refer to your letter No. CIT(C)/JB-13/263/150/95-96/2468, dated 9-10-1995, proposing to reduce the deduction under section 80HHC of the Income Tax Act, 1961, allowed by the assessing officer in the order passed under section 143(3) on 15-3-1995.
It has been stated in your above referred notice that the order passed by the assessing officer is erroneous as well as prejudicial to the interest of revenue for reason that while working cut the deduction under section 80HHC, whereas negative figure of profit was there, it was adopted as NIL figure, which was in contravention of the relevant provisions of the Income Tax Act and the same has resulted in excess claim for deduction under section 80HHC having been allowed by the assessing officer.
2. In this regard you are requested to kindly note that the deduction under section 80HHC was correctly computed at Rs. 1,33,09,439 (copy enclosed Annex.-I) and certified by the auditors of the company (copy enclosed-Annex. 2). You are requested to please note that sub-section (3) of section 80HHC of the Income Tax Act, 1961, provides the manner of computing deduction. Sub-section (3) has three clauses (a), (b) and (c). While clause (a) deals with the profit on export of goods which are manufactured by the assessee, clause (b) deals with profit on export of trading goods and clause (c) deals -with profit on export of goods which are manufactured/traded by the assessee.
However, at the end of sub-section (3) a proviso is added to the effect that the profits computed under clause (a) or clause (b) or clause (c) above shall be further increased by the amount which bears to 90 per cent of cash assistance and duty drawback, etc., the same proportion as the export turnover bears to the total turnover of the business carried on by the assessee. ,
3. It will appear from the above that Firstly, the deduction under section 80HHC has to be completed under any of the three clauses of sub-section (3) of section 80HHC and then the same is to be increased by the amount, if any, calculated as per the above referred proviso. The proviso clearly indicates that it will only increase the deduction, if any, computed under any of the three clauses of sub-section (3) of section 8HHC. In other words, the proviso will operate only to increase the deduction. Since the proviso has been placed in sub-section (3) of section 80HHC after the three clauses and uses the words 'shall be further increased', the result of computation under any of the three clauses cannot reduce the benefit granted by the proviso.
Secondly, all the three clauses of sub-section (3) use the word Profit. The word 'Profit' denotes a surplus and not a deficit and accordingly if the result of computation under any of the three clauses is negative, the same will have to be ignored since all the three clauses operate to compute only profit and not a negative figure. In case the result of computation under any of the three clauses is negative, the same cannot, accordingly, effect or set off or reduce the eligible profits in other clauses.
4. The word 'Profit' does not include "Loss"
An interpretation that profits will not include losses in reckoning relief under section 80HHC finds support from the following
(i) Precedent in law Under section 14(2)(a) of the Indian Income Tax Act, 1922, the expression 'Profits' was used in the context of exclusion of a partner share in an registered firm in the computation of income in his assessment.
A question arose whether the partner would be entitled to the share of loss because the exclusion related to profits and gains and not specific losses. In the case of Ramniklal Tribhowandas v. V.R. Amin, First Income Tax Officer (1961) 42 ITR 92 (Bom), it has been held by the Bombay High Court that 'profits' and 'gains' used in the section would mean only positive profits and gains and not loss.
(ii) Comparative law Where the law requires that loss should be treated as negative income or that it should be reckoned as such, it has specifically stated so, for exemption, Expln. 2 to sub-section (2) of section 64 provides that for the purpose of section 63 'income' includes loss. The word 'profits' even more specifically than the word 'income' indicates a surplus rather than a deficit, By defining "income" to include losses in the context of aggregation, the legislative intent and practice, it is clear, is to specifically stipulate the same whenever losses are sought to be included.
(iii) Prior provision The Direct Tax Laws (Amendment) Act, 1989, has substituted the word 'profit' for the pre-existing word 'income' and it has been explained that this has been done to rationalise the provision and to avoid confusion (as per para 10.7 of CBDT's Circular No. 559, dated 4-5- 1990, copy of the relevant extract enclosed as Annex. 3). The purpose, it can reasonably be inferred, is to use the more explicit word 'profit' instead of the less clear expression 'income' which may comprehend loss as well.
5. In view of the above, it is clear that the deduction under section 80HHC was correctly computed, correctly certified by the auditors and was correctly allowed by the assessing officer in the order passed under section 143(3) of the Income Tax Act, 1961.
You are, therefore, requested to kindly drop the proceedings initiated under section 263 of the Income Tax Act, 1961.
Thanking you, Yours faithfully, (Ravi Parkash) Chief-Group Taxation"
3.4 After considering the submissions of the assessee, the Commissioner made the observation that the interpretation of the word 'Profit' referred by the assessee was not correct. According to him, it was highly improbable that there was legislative intention to ignore the losses as computed under various sub-clauses to sub-section (3) of section 80HHC of the Income Tax Act, 1961 and in case result of computation under the head 'Profits and gains' of 'business' or 'profession' was a negative figure, such a negative figure was to be reduced for arriving at the deduction under section 80HHC, which 90 per cent of in proportion as the export turnover bears to the total turnover. The learned CIT therefore, set aside the order passed by the assessing officer under section 143(3) and directed him to recompute the deduction under section 80HHC.
3.5 Aggrieved by the aforesaid order of the learned Commissioner, the assessee is in appeal before this Bench of the Tribunal. Before us, Shri Ajay Vohra, advocate, the learned counsel for the assessee, vehemently argued that the assessment order was neither erroneous nor prejudicial to the interest of the revenue, therefore, the learned Commissioner was not justified in setting aside the order passed by the assessing officer by invoking the provisions of section 263 of the Income Tax Act. It was stated that the claim of the assessee was supported by the auditor's certificate and the claim was rightly allowed by the assessing officer and the view taken by him was one of the possible view. He further submitted that various Benches of the Tribunal had taken a view that whenever there is loss, the same should be taken as Nil while computing deduction under section 80HHC of the Income Tax Act. A reference was made to the following decisions of the various Benches of the Tribunal :
(1) Asstt. CIT v. Avon Cycles Ltd. dated 26 May, (sic-Nov.) 2002, in ITA No. 116/Chd/1997 for the assessment year 1994-95 (reported at (2004) 82 TTJ (Chd) 127Ed.
(2) Vishal Exports Overseas Ltd. v. Income Tax Officer dated 20-1-2003, in ITA No. 1248/Mum/2002 for the assessment year 1998-99.
(3) Indian Sugar & General Industry Export Import Corpn. Ltd. v. D.y CIT (2002) 121 Taxman 305 Qel)(Mag) ITAT Delhi Bench, It was submitted that the view taken by the assessing officer was supported by the decisions of various Benches of the Tribunal and if the view taken by the assessing officer was one of the possible view, the order cannot be considered as erroneous or prejudicial to the interest of the revenue. The reliance was placed on the following case laws :
(1) Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR 83 (SC) (2) Russell Properties (P) Ltd. v. A. Chowdhury, Addl. CIT (1977) 109 ITR 229 (Cal) (3) K.N. Aggarwal v. CIT (1991) 189 1TR 769 (All) (4) CIT v. Orissa State Financial Corpn. (1993) 203 ITR 747 (Ori) (5) Pratibha Syntex Ltd. v. Jt. CIT (2002) 81 ITD 118 (Ahd-Trib) 3.6 In his rival submissions, the learned Departmental Representative strongly supported the order of the learned Commissioner and submitted that the claim has wrongly been allowed by the assessing officer without considering the term "Profit of business" as defined in sub-clause (baa) to the Explanation.
It was stated that whenever there was a negative figure under the head "'Profit and gains' of business or profession" the same was required to be reduced while calculating the deduction under section 80HHC of the Income Tax Act, 1961. The reliance was placed on the decision of the Tribunal Calcutta Bench in the case of Yarn Syndicate Ltd. v. Dy. CIT (2001) 79 ITD 189 (Cal-Trib).
4. We have heard both the learned representatives and considered their rival submissions along with the material available on the record. The issue before us is as to whether the learned Commissioner was justified in invoking the provisions of section 263 of the Income Tax Act. We find that the connotation of expression "erroneous" in the context of exercise of revisionery powers by the CIT under section 263 of the Income Tax Act are much narrow than the ordinary connotation of this expression in a common parlance. The Hon'ble Supreme Court in the case of Malabar Indusuial Co. Ltd. v. CIT (supra) held as under
"A bare reading of section 263 of the Income Tax Act, 1961, makes it clear that the prerequisite for the exercise of jurisdiction by the Commissioner suo motu under it, is that the order of the Income Tax Officer is erroneous in so far as it is prejudicial to the interests of the revenue. The Commissioner has to be satisfied of twin conditions namely, (i) the order of the assessing officer sought to be revised is erroneous; and (ii) it is prejudicial to the interest of the revenue. If one of them is absent-if the order of the Income Tax Officer is erroneous but is not prejudicial to the revenue or if it is not erroneous but is prejudicial to revenue recourse cannot be had to section 263(l) of the Act. The provision cannot be invoked to correct each and every type of mistake or error committed by the assessing officer, it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principle of natural justice or without application of mind. The phrase 'prejudicial' to the interests of the revenue" is not an expression of art and is not defined in the Act. Understood in its ordinary meaning it is of wide import and is not confined to loss of tax. The scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the revenue. If dub to an erroneous order of the Income Tax Officer, the revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the revenue. The phrase "Prejudicial to the interests of the revenue" has to be read in conjunction with an erroneous order passed by the assessing officer. Every loss of revenue as a consequence of an order of the assessing officer, cannot be treated as prejudicial to the interests of the revenue, for example, when an Income Tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Income Tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the Income Tax Officer is unsustainable in law. "
Similarly, the Tribunal Pune Bench (TM) in the case of Jamnadas T. Mehta v. Income Tax Officer (2002) 75 TTJ (Pune)(TM) 843: (2002) 257 ITR 90 (Pune)(TM)(AT) held that "the ambit of interference under section 263 is not to set aside merely unfavourable orders and bring to tax some more money to the treasury. The section is not enacted to get a sheer escapement of revenue which is taken care of by other provisions in the Act. Prejudice that is contemplated under section 263 is prejudice to the income-tax administration as a whole. Section 263 is to be invoked not as a jurisdictional corrective or as a review of subordinate's order in exercise of the supervisory power, but it is to be invoked and employed only for setting right distortions and prejudicies to the revenue which is a unique conception which has to be understood in the context of, and in the interests of the revenue administration. Where two views are possible and the assessing officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue, unless the view taken by the assessing officer is unsustainable in law."
In view of the above, we have to see in the instant case as to whether the view taken by the assessing officer is perverse or impossible view and unless and until it is established that the view taken by the assessing officer is perverse or impossible, the Commissioner could not invoke the revisionary powers conferred upon him by statute. Therefore, we deem it appropriate to examine as to whether the view taken by the assessing officer was at all possible view or not. In the instant case, while claiming deduction under section 80HHC of the Income Tax Act the assessee ignored the loss while calculating the deduction and the figure relating to the profit from the business was adopted at Nil, since there was loss. First of all, we may mention here that the Tribunal Calcutta 'A' Bench in the case of Yarn Syndicate Ltd. v. Dy. CIT (supra) has held as under
"The assessee was having negative figure of profit and took the same as nil to get the benefit under section 80HHC(3)(b). If the profit was considered as nil, as claimed, no adjustment could be made which was otherwise allowable as per proviso to sub-section (3) of section 80HHC, and also nowhere it was mentioned that negative profit may be considered as nil. Thus, considering the facts of the case, no interference was required in the order of the Commissioner (Appeals). The assessing officer rightly made adjustment in the negative profit according to the proviso to section 80HHC(3)."
From the above, it would be clear that one of the views was that in case there is a loss that should be adjusted instead of taking figure at nil. However, other Benches of the Tribunal have taken a different view. In the case of Assistant Commissioner v. Avon Cyces Ltd. Order dated 26 May, (sic-Nov.) 2002, in ITA No. 116/Chd/1997 for the assessment year 1994-95 (supra) Tribunal Chandigarh 'A' Bench (supra) held that :
"the machinery to compute the income from export activity is provided in section 80HHC(3) and after computing such income, such income is required to be deducted from the gross total income of the assessee in order to arrive at the taxable income/total income of the assessee as contemplated by section 80HHC(l) in other words, the deduction under section 80HHC(l) has to be a positive figure-. If, after computing the amount under section 80HHC(3), there is a resultant loss, it cannot be deducted from the gross total income in order to arrive at the total income. Only the resultant profits from the export activities representing net profits or 90 per cent of the export incentive as per proviso to section 80HHC(3) could be deducted from the gross total income to arrive at the total income/taxable income. Thus, there has to be positive income under section 80HHC(3) and if there is loss as per clauses (a) to (c) of section 80HHC(3), the same has to be ignored, only then 90 per cent of the export incentive will represent the positive income."
In the case of Vishal Exports Overseas Ltd. v. 1TO (supra), the Tribunal 'I Bench Mumbai (supra) observed in para 13 as under :
"13. For the above reasons, we are of the view that the judgment of the Bombay High Court in IPCA Laboratories (supra) is not of assistance to the revenue in the present controversy. Since the matter is already concluded in favour of the Ahmedabad, Cochin and Mumbai Benches of the Tribunal, respectfully following them, we uphold the assessee's contention and direct the assessing officer to allow the deduction under section 80HHC without adjusting the export loss against the amount computed under the proviso to sub-section, (3). Ground Nos. 1 to 7 are allowed."
4.1 Similarly, the ITAT, Delhi 'C' Bench in the case of Indian Sugar & General Industry Export Import Corpn. Ltd. v. Dy. CIT (supra) held as under :
"Sub-section (3) of section 80HHC begins with the words 'for the purpose of sub-section 'I'' Explanation (baa) distinguishes profits of the business from the plofits and gains of the business showing that they are separate items for the purposes of section 80HHC and the proviso to section 80HHC(3) further increases the profit by export incentives. Accordingly it has to be held that the reference in Expln. (baa) to the words 'profits of business' will denote a surplus only and not a deficit and, therefore, when the computation is to be made under section 80HHC, loss at any stage is required to be ignored A critical reading of the proviso to section 80HHC indicates that the negatve figure worked out under clause (a)/(b)/(c) of sub-section (3) of section 80HHC(3) cannot be increased by a positive figure, It can be adjusted and not increased. The plain reading of the proviso to sub-section (3) of section 80HHC provides clue that the figure or loss worked out under clauses (a), (b) and (c) has to be ignored. If there is a positive figure under clauses (a) and (b), there is no difficulty in increasing the same by 90 per cent of export incentives as stipulated in proviso to sub-section (3) of section 80HHC, but if the figure under clauses (a), (b) and (c) is negative, then the construction suggests that those losses cannot be increased by a positive figure and as such this required to be ignored.
Even if there is an ambiguity in the interpretation of section 80HHC, the interpretation favourable to the assessee is required to be adopted.
Thus, taking into the totality of the facts and circumstances of the case and since the profit from export of manufactured goods and profit from export of trading goods was negative, those figures had to be completely ignored and 90 per cent of export incentive had to be taken into consideration working out the claim of deduction under section 80HHC. "
4.2 On a similar issue, Tribunal Cochin Bench in the case of A.M. Moosa v. Assistant Commissioner (1996) 54 TTJ (Coch) 193 held as under
"It is a bounden duty to liberally construe the provisions of sub-section (3) and the proviso thereunder of section 80HHC as the section was enacted to give a fillip to the exporters who earned precious foreign exchange. In addition to this stand of thought clause (baa) of the Explanation has given a statutory definition of "profit of the business". According to the Explanation, in order to arrive at the "profits of the business", the profit as computed in terms of the provisions of the Income Tax Act should be reduced by certain sums specified in the Explanation. As the exercise is only to qualify the "profits of the business" in terms of the definition given, one is not empowered to arrive at a loss in such an exercise. If loss is confronted with consideration as a result of the exercise, the same should be ignored and should not merit ofinsideration. In the light of the discussions, the assessee did not have the statutory "Profit of business" as defined in the Explanation and, therefore, in terms of the main provisions of sub-section (3) he is not entitled to the deduction of such profit (which is nil) there being no profit. In the context and settfitig of the enactment and the objects of the section, the proviso should be read as an indep,endent provision to advance the cause rather than to defeat it. Thus, construing the proviso to sub-section (3) of section 80HHC as an independent provision, the assessee would be entitled to the deduction in an amount equal to 90 per cent of the sums referred to in clause (iiia) (not being profits on sale of a licence acquired from any other person), and clauses (iiib) and (iiic) of section 28, the same proportion as to export turnover bears to the total turnover to the business carried on by the assessee. From another point of view even if the proviso to sub-section (3) of section 80HHC is viewed only as a proviso, still the profit of business is to be taken as 'nil' there being no profit. This should be increased by the a'snount specified in the proviso to sub-section (3). As a result, a positive figure will emerge."
4.3 Similar view has been taken by the Tribunal, Chandigarh Bench, in the case of Avon Cvcles Ltd. v. Asstt. CIT (1997) 59 TTJ (Chd) 75, by holding as under :
"T'he plain reading of section 80HHC shows that the negative profit worked out under clauses (a) and (b) of sub-section (3) of section 80HHC cannot be "increased" by a positive profit. A negative figure cannot be increased by a positive figure. It can be adjusted not increased. The plain reading of the proviso to clause (c) of sub-section (3) of section 80HHC provides clue that the negative profit or loss worked out under clauses (a) and (b) has to be ignored. If there is a profit under clauses (a) and (b), there is no difficulty in increasing the same by the 90 per cent export incentive as stipulated in,clause (c), but, if the profits under clauses (a) and (b) are negative, then harmonious construction suggests that those losses cannot be increased by a positive figure under clause (c). Even if there is ambituity, the same has to be interpreted in favour of the assessee. The assessing officer is accordingly directed to allow the assessee's claim under section 80HHC on the basis of 90 per cent of export inceiatives as worked out under proviso to sub-section (3) of section 80HHC by ignoring the loss under clauses (a) and (b) of the said section."
4.4 On a similar issue, the Tribunal Ahmedabad 'B' Bench in the case of Pratibha Syntex Ltd. v. Jt. CIT (2002) 81 ITD 11 B (Ahd-Trib) held as under :
"Sec. 80HHC(3) provides for quantification of Profits derived by the assessee from exports. This computation provision lays down three stages for computation of profits derived from exports :
(1) In the first stage "profits of the business" are to be computed as per Explanation (baa) appended below section 80HHC(4B).
'Profits and gains of business as income' minus 90 per cent of any sum under c1auses (iiia), (iiib) and (iiic) of section 28 or any receipt by way of brokerage, commission, interest etc. (2) Calculate proportion of the aforesaid 'profits of business' as export turnover bears to the total turnover of the business carried by the assessee.
(3) proviso lays down that the figure arrived at in stage No. (2) above would be further increased by an amount which bears to 90 per cent of any sum referred to in c1auses (iiia), (iiib) and (iiic) of section 28, same proportion as export turnover bears to the total turnover of business.
From the aforesaid working, it would be seen that the profits derived from exports as per section 80HHC(l) which qualifies for relief would be the amount arrived at in the second stage which is further increased by the amount arrived at in the third stage as above. If the figure in the first stage as above works out to be negative, it clearly means that the same would have to be ignored for the purpose of working out the proportionate figure in the second stage as above and in that eventuality "profit of the business" would be adopted as nil. There is obviously no question of calculating the proportion of the negative figure in the aforementioned second stage and the profits derived from exports, for the purpose of section 80HHC(1) would in that case comprise of the amount arrived at the third stage as above.
The interpretation being placed above is fully supported by the rule of literal interpretation as well as rule of purposive interpretation of statutes. It is relevant to note that section 80HHC(1) as well as section 80HHC(3) alongwith the proviso appended thereto consistently speak of profits. The word "profit" is understood and known in the common parlance as well as in the 'commercial' world as excess of incoming over outgoing. The computation section 80HHC(3)(a) provides for computation of profits derived from exports comprised in two components, say (A) and (B). The profit component (A) is to be further increased by profit component (B) to arrive at the profits derived from exports for purpose of section 80HHC(l). It is to be noted that the section envisages both the profit components as positive figures and there is no occasion for any adjustment if the figure as worked out under Explanation (baa) is a negative figure. What section 80HHC(3) provides for is not algebraic sum of two profit components, one computed under the main section, i.e., clause (a) and the other computed under the proviso to the section. Had the legislature used the word 'income' the word may have negative connotation also in the light of the inclusive definition of income under section 2(24). "
From the above discussions, it would be clear that the majority of the Tribunal Benches has taken a view that when the computation is to be made under section 80HHC, loss at any stage is required to be ignored. In other words, if the figures under clauses (a), (b) and (c) of sub-section (3) of section 80HHC are negative then the negative figure or loss worked out has to be ignored. In the instant case, the assessing officer has taken the view which has been supported by the aforesaid decisions of the various Benches of the Tribunal. Therefore, it can safely be held that the view taken by the assessing officer while allowing the claim of the assessee was one of the possible view. Now the question is, if the assessing officer has taken one of the possible view then whether the learned Commissioner was justified in exercising his revisionery powers under section 263 of the Income Tax Act and to direct the assessing officer to take another possible view. In that regard, we may mention here that in the case of Russell Properties (P) Ltd. v. A. Chowdhury, Addl. CIT (supra), the Hon'ble Calcutta High Court held that :
"The power of revision under section 263 of the Income Tax Act, 1961, can be exercised only if the following conditions are satisfied-firstly, the Commissioner must call for an examination the records of the proceedings under the Act and, secondly, the Commissioner must consider the order passed by the Income Tax Officer to be erroneous in so far as it is prejudicial to the interest of the revenue. However, where there is a decision of a higher appellate authority the subordinate authority is bound to follow such decision. Hence, an order passed by the Income Tax Officer following the decision of the Tribunal cannot be held to be erroneous and such an order cannot be revised."
4.5 Similarly, the Hon'ble Allahabad High Court in the case of K.N. Agrawal v. CIT (supra) has held as under :
"The orders of the Tribunal and the High Court are binding upon the assessing officer and since he acts in a quasi-judicial capacity, the discipline of such functioning demands that he should follow the decision of the Tribunal or the High Court, as the case may be. He cannot ignore it merely on the ground that the Tribunal's order is the subject-matter of a reference in the High Court. Hence, where the assessing officer follows the decision of an appellate authority, it cannot be said that his decision is erroneous. Such a decision cannot be revised by the CIT under section 263."
A similar view has been expressed by the Hon'ble Orissa High Court in the case of CIT v. Orissa State Financial Corporation (supra) by holding that "Order of Income Tax Officer following decision of Tribunal in earlier year is not erroneous and could not be revised under section 263 of the Income Tax Act, 1961.
From the above discussions, it is crystal clear that the view taken by the assessing officer was in conformity with the decision of the various Benches of the Tribunal and thus, the view taken by the assessing officer which was subject-matter of learned Commissioner's revision, was a reasonable view and, therefore, the Commissioner was denuded of his powers to revise the order on this issue. Accordingly we set aside the impugned order of the learned Commissioner (Appeals) and the appeal is allowed.
5. In the result, the appeal of the assessee is allowed.