Commissioner Of Income Tax,Circle Xii, Chennai v. M/S.south East Construction Co.,Chennai-92

In the High Court of Judicature at Madras Coram : The Honourable Mr.Justice T.S.SIVAGNANAM and The Honourable Mr.Justice N.SATHISH KUMAR Commissioner of Income Tax,Circle XII, Chennai...Appellant/Respondent Vs M/s.South East Construction Co.,Chennai-92....Respondent/Appellant APPEAL under Section 260A of the Income Tax Act, 1961against the order dated 29.10.2010 made in ITA.No.742/Mds/2010on the file of the Income Tax Appellate Tribunal, 'D' Bench,Chennai for the assessment year 2006-07. and against the order of Commissioner of Income Tax – IXChennai-6, dated 10/03/2010 made in C.No. 12/CIT-IX/263/2009-10and against the Order of the Additional Commissioner of IncomeTax, Range-XII, Chennai-6 made in PAN/GIR.No. AAAFT0463 E dated05/12/2008 Assessment Year 2006-2007. For Appellant : Mr.M.Swaminathan, SSCFor Respondent :Mr.A.S.Sriraman for Mr.S.Srithar This appeal filed by the Revenue under Section 260A of theIncome Tax Act (hereinafter called the Act) is directed againstthe order passed by the Income Tax Appellate Tribunal, 'D'Bench, Chennai (hereinafter called the Tribunal) inITA.No.742/Mds/2010 dated 29.10.2010 for the assessment year2006-07. 2. The above tax case appeal is admitted on 25.4.2011 onthe following substantial question of law :“Whether, on the facts and in the https://hcservices.ecourts.gov.in/hcservices/ circumstances of the case, the Income TaxAppellate Tribunal was right in law insetting aside the order under Section 263when the Assessing Officer had not made anyenquiry as to whether any capital gainswould arise in terms of Section 47(iii) ofthe Income Tax Act?” 3. We have heard Mr.M.Swaminathan, learned Senior StandingCounsel assisted by Ms.V.Pushpa, learned Junior Standing Counselfor the Revenue and Mr.A.S.Sriraman, learned counsel for therespondent – assessee. 4. The short issue, which falls for consideration, is as towhether the Commissioner of Income Tax-9 (for short, the CIT)could have exercised his power under Section 263 of the Act anddirected the Assessing Officer to re-examine the facts onrecord, make enquiries, reframe the issue and recompute thegains, if any, arising under Sections 45, 48, 47(iii) and 50B ofthe Act. 5. The Tribunal, after taking into consideration thereasons assigned by the Assessing Officer, noted that theAssessing Officer had given a lawful view after considering thedetails submitted by the assessee, which were in the form ofsale documents, allotment of shares, etc. and held that sinceall the assets and liabilities of the assessee firm were takenover by the company, as per the provisions of Section 47(xiii)of the Act, no capital gains arose in the hands of the partners.The Tribunal further noted that the CIT disagreed with the viewtaken by the Assessing Officer. Since there were two viewspossible, the Tribunal held that after considering the factualposition, the Assessing Officer adopted one of the coursespossible and that therefore, the order passed by the AssessingOfficer could not be held to be erroneous or prejudicial to theinterest of the Revenue. 6. Reliance is placed on the decision of the Hon'bleSupreme Court in the case of CIT Vs. Max India Ltd. [reported in(2007) 295 ITR 282]. 6. Reliance is placed on the decision of the Hon'bleSupreme Court in the case of CIT Vs. Max India Ltd. [reported in(2007) 295 ITR 282]. 7. We are fully satisfied that the entire matter revolvesaround the factual dispute, which has been gone into by theAssessing Officer, the CIT and the Tribunal. We find that nosubstantial question of law arises for consideration.Furthermore, we are also satisfied that the Tribunal had rightlyheld that the power under Section 263 of the act could not havebeen invoked by the CIT. 8. Further, a Division Bench of this Court, in the decisionin the case of M/s.Agasthiya Granite P. Ltd. Vs. ACIT[TCA.No.450 of 2007 dated 16.4.2018], to which, one of us (TSSJ)was a party, dealt with the phrase 'prejudicial to the interestof the Revenue' under Section 263 of the Act and as to how theHon'ble Supreme Court directed the said phrase to beinterpreted. In the decision M/s.Agasthiya Granite P. Ltd., it https://hcservices.ecourts.gov.in/hcservices/ has been held as follows : “It was further pointed out that everyloss of revenue as a consequence of an orderof the assessing officer cannot be treatedas prejudicial to the interest of theRevenue. The Hon'ble Supreme Court, by wayof illustration, pointed out that when theincome tax officer adopted one of thecourses permissible in law and it hasresulted in loss of revenue; or where twoviews are possible and the income taxofficer has taken one view with which theCommissioner of Income Tax does not agree,it cannot be treated as an erroneous orderprejudicial to the interest of the Revenue,unless the view taken by the income taxofficer is unsustainable in law. The factthat the two views existed is evident fromthe order of reference passed by the Hon'bleFull Bench quoted above. Therefore, theCommissioner of Income Tax could not haveinvoked the power under Section 263 of theAct, as the income tax officer had adoptedone of the two views possible.” 9. Thus, for the above reasons, we find that there isnothing wrong in the order passed by the Tribunal and that nosubstantial question of law arises for consideration. 10. Accordingly, the above tax case appeal is dismissed. Nocosts. Sd/-Assistant Registrar(CCC)//True Copy// Sub Assistant Registrar RS To 1.The Income Tax Appellate Tribuna, D' Bench, Chennai D' Bench, Chennai 2.The Commissioner of Income Tax, Circle XII, Chennai. Circle XII, Chennai. 3.The Commissioner of Income Tax, IX, Chennai-6. IX, Chennai-6. 4.The Additional commissioner of Income Tax, Range XII, Chennai-6. Range XII, Chennai-6. +1cc to Mr.S.Sridhar, Advocate, S.R.No. 87092 TCA.No.174 of 2011 CA(CO)GN(12/02/2019)