Commissioner of Income Tax-LTU vs Power Finance Corporation Ltd.

This appeal by the Revenue is directed against the order dated November 28, 2014, passed by the Income-tax Appellate Tribunal ("the ITAT") in I.T.A. No. 2598/Del/2012 for the assessment year ("the AY") 2007-08. The question of law before the Income-tax Appellate Tribunal was whether the order dated March 30, 2012, passed by the Commissioner of Income-tax ("the CIT") under section 263 was justified in law.

The Commissioner of Income-tax by the said order concluded that the order dated September 29, 2009, passed by the Assessing Officer ("the AO") allowing deduction under section 36(1)(viia)(c) and 36(1)(viii) of the Act in favour of the assessee was erroneous as well as prejudicial to the interests of the Revenue.

The Income-tax Appellate Tribunal in the impugned order noticed on the question whether the total income for the purposes of section 36(1)(viia)(c) should be computed after allowing the deduction under section 36(1)(viii) of the Act, there were at least two possible views as reflected in the orders of the Income-tax Appellate Tribunal Delhi in Rural Electrification Corporation Ltd. v. MAX. CIT [2009] 34 SOT 159 (Delhi) and of the Chennai Bench of the Income-tax Appellate Tribunal in Infrastructure Development Finance Co. Ltd. v. Asst. CIT (order dated March 29, 2007, in I.T.A. Nos. 747, 748/Mds/2005.)

During the course of hearing today it transpired to the court that, independent of the aforementioned two decisions, the stand of the Revenue as set out in its memorandum of appeal, and that of the assessee before us, viz., that both deductions (under section 36(1)(viia)(c) and section 36(1)(viii)) are independent of each other, give rise to two further possible interpretations.

The court is satisfied that in terms of the law explained by the Supreme court in MALABAR INDUSTRIAL CO. LTD. Vs. COMMISSIONER OF INCOME TAX, as followed by this court in its recent decision dated July 5, 2010, in I.T.A. No. 1376 of 2009 Commissioner of Income Tax Vs. Honda Siel Power Products Ltd., the view taken by the Assessing Officer in the present appeal is a possible one and there was no occasion for the Commissioner of Income-tax to have exercised the jurisdiction under section 263 of the Act. The impugned order of the Income-tax Appellate Tribunal, therefore, does not suffer from any legal infirmity. No substantial question of law arises. The appeal is dismissed.