Iii) Whetherthetribunalwasjustified In Law In Not Following The Decision.of Madras High Court In The Case Of Scm.creations v. Acit (2008) 304 Itr 319(Mad), But Followed The Decision Of The.tribunal In The Case Of Acit Vs. Hindustanmint And Agro Products (P) Ltd. (2009) 199Itd 107 (Dein

IN THE HIGH COURT OF KARNATAKA AT BENGALURUDATED THIS THE 12 AY OF FEBRUARY, 2021 PRESENT THE HON BLE MR. JUSTICE SATISH CHANDRA SHARMA AND. THE HON'BLE MR. JUSTICE V.SRISHANANDA ITA NO.199 OF 2018 BETWEEN: M/S.Sutures India Private Limited, (Now Heailthium Meadtecn Private LimitedRep. by its Director|Sri.Monammed Azeez,#118, 3[!%]Pnase, 13[ .]Cross,Peenya Industrial Area,Bengaluru — 560 O58.| <APPELLAN (By Sri.A.Shankar, Sr. Advocate,for Sri.M.Lava, Advocate) AND: The Assistant Commissioner of Income Tax.Circle -— 12(3), BMTC Building,80 Feet Road, 6[ .]BIOCK,Koramangala,Bengaluru — 560 O95.<RESPONDENT (By Sri.K.V.Aravind, Advocate) This Income Tax Appeal is filed under Section|260-A of Income Tax Act, 1961, arising out of orderdated 25.10.2017 passed in ITA No.486/Bang/2012,for the Assessment Year: 2003-2004, vide Annexure-A, praying tnis Hon ble Court to: (a) formulate thesubstantial questions of law stated above and answer.the same in faovur of the appellant and etc.,. This ITA coming on for Orders this day,SATISHCHANDRA SHARMA J,delivered the following: JUDGMENT The present appeal is arising out of an order|dated 25.10.2017 passed in ITA No.486/2012. 2. The undisputed facts reveal that the appellant| is a Company registered under the Companies Act,filed its return of income in respect of the assessment.year 2003-2004 on 28.11.2003 declaring a totalincome of Rs.84,06,640/- after claiming deductionunder Section 80HHC and 8OIA of the Income Tax Act,1961 to the tune of Rs.52,38,321/-. Tne return ofincome filed by the assessee was processed under the.provisions of Section 143(1) of the Act. 3 The case of the assessee was selected forscrutiny and a notice was issued under Section143(2)/142(1) of the Income Tax Act. Reply was filedin the matter and finally assessment order was passedunder Section 143(3) under tne Act on 14.6.2005|determiningtotalincomeof.theappellant|aT Rs.1,02,02,890/- by making certain additions to the|tune of Rs.32,91,600/-. 4 A snow cause notice was issued under Section|263 of the Income Tax Act by the Commissioner ofIncome Tax, Bengaluru-III stating that the order ofassessment passed under Section 143(3) of the Actdated 14.6.2005 was erroneous and prejudicial to theinterest of revenue. Tne assessee/appellant filed its.objections to the show cause notice issued under)Section 263 of the Act. The Commissioner finally has—passed an order under Section 263 of the Act on11.3.7008. 5. The undisputed facts of the case reveal that|the order dated 11.3.2008 was subjected to appealpefore tne Tribunal and tne Tribunal nas confirmed tne.order dated 11.3.2008 vide order dated 13.11.7009|and finally the matter has reached this Court and this.Court in ITA No.115/2010 nas passed an order in.favour of the assessee. The order passed by theDivision Bench of tnis Court reads as under: “This appeal under Section 260A of the Income Tax Act, 1961 (hereinafterreferred to as the Act for snort) nas been.preferred by the assessee. TJhe subject.matter of the appeal pertains to the.Assessment year 2003-04. The appeal was|admitted by a bench of this Court vide.order dated 19.04.2020 on the following|substantial questions of law: “(1) WhethertheTribunalWasjustified in holding that the Commissionerof Income Tax was fully justified in.invoking the provisions of Section 263 ofthe Income Tax Act, 1961? (ii) WhethertheTribunal|Wasjustified in holding that the deduction under|Section 8OHHC of the Act is to be allowedafter deduction of the amount of profitallowed as deduction under Section 80/B of|the Act? (iii) Whetherthe|Tribunal|Wasjustified in law in not following the decision.of Madras High Court in the case of SCM.Creations Vs. ACIT (2008) 304 ITR 319(Mad), but followed the decision of the.Tribunal in the case of ACIT Vs. HindustanMint and Agro Products (P) Ltd. (2009) 199|ITD 107 (Deini) 2 “(1) WhethertheTribunalWasjustified in holding that the Commissionerof Income Tax was fully justified in.invoking the provisions of Section 263 ofthe Income Tax Act, 1961? (ii) WhethertheTribunal|Wasjustified in holding that the deduction under|Section 8OHHC of the Act is to be allowedafter deduction of the amount of profitallowed as deduction under Section 80/B of|the Act? (iii) Whetherthe|Tribunal|Wasjustified in law in not following the decision.of Madras High Court in the case of SCM.Creations Vs. ACIT (2008) 304 ITR 319(Mad), but followed the decision of the.Tribunal in the case of ACIT Vs. HindustanMint and Agro Products (P) Ltd. (2009) 199|ITD 107 (Deini) 2 (iv) Whether|theTribunal|Wasjustified in Nolding that at the time of filing:audit report in form 10CCB along with the|return was mandatory in nature on the.facts and circumstances of the case?" 2.Facts leading to filing of thisappeal briefly stated are tnat the assessee_is a private limited company and isengaged in the business of manufactureand sale of surgical products. The assesseefiied Itsreturnof.incomefOr|tne Assessment Year 2003-04 and deciared atotal income of Rs.84,06,640/-. The return.was processed under Section 143(1) of the.Act. Thereafter, the case of the assesseewas selected for scrutiny. The assessment.was completed under Section 143(3)of the.Act by the Assessing Officer by order dated14.06.2005 and disallowances to the tuneof Rs.17,96,250/- were made and demandOf|Rs.9,85,514/-.WaSmade.ON)theassessee. Thereafter, the Commissioner ofIncome Tax invoked the powers underSection 263 of the Act and a snow cause.notice dated 23.10.2007 was issued by the.Commissioner of Income Tax. In the.notice, it was stated that the order dated|14.06.2005 passed by the Assessing Officerwas erroneous and was prejudicial to theinterest of revenue. Tne assessee filed a.response to the aforesaid show cause.notice and also submitted objections on.07.03.2008. The Commissioner of [IncomeTax by an order dated 11.03.2008 rejectedthe objections filed by tne assessee and.denied the deduction under Section SOIJIA othe Act and directed the Assessing Officer| to re-compute the deduction under SectionSOHHC of the Act subjecting the same to'the provisions of Section 80IA(9) of the Act.if necessary. The assessee thereupon filed.an appeal before the Income Tax Appellate|Tribunal (hereinafter referred to as the|tribunal’ for short). The tribunal by an-order dated 23.11.2009 has dismissed tneappeal preferred by the assessee. In the.aforesaid factual background, the assesseehas filed this appeal. 3.Learned Senior counsel for the.assessee submitted tnat tne assessee nad.claimed deduction of Rs.11,44,832/- under|Section|SOHHC.of.theActand|of.Rs.40,93,489/- under Section 80IA of the)Act.It|IS|further|SuDmiIttedtnat|Commissioner of Income Tax vide order.dated 11.03.7008 inter alia held tnat thededuction under Section 80IA of the act Is.not allowable as the assessee had not filedthe Form No.10CCB as required under.Section 80IA(7) of the Act along with the.return of income. It is pointed out that the|assessee had filed the aforesaid form along. 3.Learned Senior counsel for the.assessee submitted tnat tne assessee nad.claimed deduction of Rs.11,44,832/- under|Section|SOHHC.of.theActand|of.Rs.40,93,489/- under Section 80IA of the)Act.It|IS|further|SuDmiIttedtnat|Commissioner of Income Tax vide order.dated 11.03.7008 inter alia held tnat thededuction under Section 80IA of the act Is.not allowable as the assessee had not filedthe Form No.10CCB as required under.Section 80IA(7) of the Act along with the.return of income. It is pointed out that the|assessee had filed the aforesaid form along. with the written submissions before the|Commissioner of Income Tax, which wasduly acknowledged in the order dated11.03.7008. It Is also Submitted tnat the.deduction under Section 80IA of the Act.Sshnouldqd be allowed even In cases as sSection|SOIA(7).doesnotCast.anyobligation on tne assessee that return mustbe accompanied by the audit report. It is.further submitted that there Is no bar In.claiming the deduction under Section 80IAas well as Section SOHHC of the Act.simultaneously. It is furtner submitted that.the invocation of Section 263 of the Act.was impermissible in the fact situation ofthe case and the Commissioner of Income.Tax ougnt to nave appreciated tnat the!Assessing Officer had taken one of the.plausible views . In support of aforesaid.Submissions, reliance has been placed onGeciISIONS In‘SRILB.R.MURTHY (HUF) VS. ITOINITA|NO.686/2009°DATED30.11.2009,"CITVS.A.N.ARUNACHALAM, (1994) 208 ITR481 (MADRAS), CIT VS. MILLIPOREINDIA P. LTD., 341 ITR 219 (KAR.),— ‘ACIT VS. MICRO LABS LTD., (2016)380 ITR 1, MALABAR INDUSTRIAL CO.LTD.VS.CIT|24:3ITR|83|(SC),"‘'COMMISSTONER OF INCOME-TAX VSG.M,MITTALSTAINLESSSTEEL(P. )LTD, 263 ITR 255 (SC) AND CIT VS.M/S SARAVANA DEVELOPERS IN ITANOS.68/2014C/W67/2017(KARNATAKA). 4On the other hand, learned.counsel for the revenue submitted tnat the.controversy is pending before the larger.bench of the Supreme Court, which is.evident from perusal of 380 ITR 1 (SC) and.therefore, hearing of tnis appeal should be.deferred till the matter is adjudicated by.the larger bench of the Supreme Court. It.is further submitted that Section 263 of the.Act provides for revisional order by the.Commissioner if the same Is erroneous and.iS prejudicial to the interest of the revenue.In the instant case, the assessee had not!filed Form No.10CCB as required under.Section 8OIA(7) of the Act along with the.return of income which is mandatory and. therefore, assessee is not entitled todeduction under Section S8OIA of the Act.However, the Assessing Officer without.examining the aforesaid aspect permittedthe deduction and therefore, the orderpassedDYtne|ASSeSSINGgOfficerISerroneous and is prejudicial to the interestof the revenue. It is also urged that SectionSOIA (9) of the Act mandates deduction to.the extent of such profits and gains which.Nas peen allowed under the!neading‘deductions in respect of certain incomes’.|The Assessing Officer had allowed the.deduction under Section 8OHHC of the Act.witnout reducing tne deduction allowed.under Section 80IA of the Act, which is.mandated under Section 8QOIA(9) of theAct. It is further submitted that the order|OT|assessmentISerronedus|anc|IS|prejudicial to the interest of the revenue.| 5.It is also argued that as tneassessee is questioning the invocation of.power of revision under Section 263 of the|Act, the correctness of the order subjectedto tne revision nas to be tested on the. 5.It is also argued that as tneassessee is questioning the invocation of.power of revision under Section 263 of the|Act, the correctness of the order subjectedto tne revision nas to be tested on the. basis of situation and position of law and.compliance of the same by the assessee. It.is submitted that audit report in Form.No.10CCB which was mandatorily required|to be filed was not filed in the course of.assessment proceeding. The order passedby the Assessing Officer suffers from the.vice of non application of mind. It is furthersubmitted that twin conditions for invokingpowers under Section 263 of the Act are.satisfied due to incorrect application of law|and without any application of mind. It is.furtner submittedthat failure conductenquiry into the issues would also justify.invoking powers of revision under Section.263 of the Act. In support of aforesaidSubmissions, reliance has been placed on|GeCISIONSIn|"NATURALSTONESEXPORTSLID,VS,ASSISTANTCOMMISSIONEROF|INCOME-TAX,CIRCLE11(1),(2014)47TAXMANN,COM46/7(KARNATAKA),‘INCOMETAXOFFICERVS.SMT,MANDIRA D. VAKHARIA, (2001) 117'|TAXMAN|236(KARNATAKA),‘COMMISSIONER|OF|INCOME|TAX, MUMBAIVS.AMITABHBACHCHAN,(2016) 69 TAXMANN.COM 170 (SC),"MALABAR INDUSTRIAL COMPANY VS, |CIT’, 243 ITR 83 6.We|Nave|consideredtneSubmissions made by learned counsel! forthe parties and nave perused the record.Before proceeding further it is apposite to|deal with the submission made Dy learnedcounsel for the assessee made with regard.to deferment of hearing of the appeal. A.bench of this court by an order dated.20.11.2018 in view of submission made by jearned counsel for tne revenue tnat§question of law which would arise for.consideration in this appeal has been|referred to a larger bench of the Supreme.Court, directed that the appeal be listed.after disposal of the special leave petition.Tnereafter tne counsel for tne assessee.filed an application for modification of the.order dated 20.11.2018 on the aforesaid.application the following order was passedby this court on 04.12.2020 the relevant.extract of WnIichn reads as under “Learned counsel for the assesseesubmits that by order dated 20.11.2018,the hearing of the appeal was deferred on-the ground that the substantial question of.law involved in tne appeal is pendingconsideration before the Larger Bench of|the Hon'ble Supreme Court. However, it issubmitted that the learned counsel for theassessee does not Intend to adaressarguments on the issue whicn is pendingbefore the Hon’ble Supreme Court and it is—contenaed that the appeal may be disposedof as tne Assessing Officer nas aadopted oneOf|the|VIEWSWNICN1S|possible andtherefore, the invocation of Section 263 of|the Income Tax Act by the Commissioner ofIncome Tax In the facts and circumstances was not justified. The aforesaid fact has not.been aisputed by the learned counsel for.the Revenue. For the aforesaid reason andin view of the statement made by the.learned counsel for the assessee, we qeemit appropriate to modify the ad interimorder dated 70.11.7018 and adirect that theappeal be listed for hearing”| The aforesaid order has not been)challenged by the Revenue before the|Supreme Court. Therefore the aforesaid.order binds us and the submission made bylearned counsel for the Revenue that the|hearing of the appeal needs to be deferreddoes not deserve acceptance. | /.The conditions precedent forinvocation of power under Section 263 ofthe Act namely that an order passed by an.assessing officer must be prejudicial to the|interest of the Revenue and must be'erroneous nave to be fulfilled before power|Under section 263 of the Act Is invoked. It|is equally well settled legal proposition that.where the view taken Dy assessing officer|is one of the possible views the powers.Under section 263 of tne Act would not be!invoked [See:"MALABAR INDUSTRIAL CO~OLID.VY,COMMISSIONEROF|INCOME TAX, 243 ITR 83 (SC), CIT V..MAX INDIA LTD., 295 ITR 282 AND|ULTRATECH CEMENT LTD, V. STATE OF|RAJASTHAN,(2020) Li/ZTAXMANN.COM 807 (SC)j. /.The conditions precedent forinvocation of power under Section 263 ofthe Act namely that an order passed by an.assessing officer must be prejudicial to the|interest of the Revenue and must be'erroneous nave to be fulfilled before power|Under section 263 of the Act Is invoked. It|is equally well settled legal proposition that.where the view taken Dy assessing officer|is one of the possible views the powers.Under section 263 of tne Act would not be!invoked [See:"MALABAR INDUSTRIAL CO~OLID.VY,COMMISSIONEROF|INCOME TAX, 243 ITR 83 (SC), CIT V..MAX INDIA LTD., 295 ITR 282 AND|ULTRATECH CEMENT LTD, V. STATE OF|RAJASTHAN,(2020) Li/ZTAXMANN.COM 807 (SC)j. 8.In the backdrop of aforesaid wellsettied legal position, we may advert to thefacts of the case. The assessee had filed.Form No.10CCB of the Act along with.writtenSUDMISSIONS beforetneCommissioner of Income Tax (Appeals),which was acknowledged by him in tneorder dated 11.03.2008. A bench of this.court|in"CITY_ACEMULTIAXESSYSTEMS (P.) LTD., (2009) 317 ITR207 (KAR.)Nas taken ae view!tnat|assessee is entitied to deduction under|Section SOIA of the Act even if the audit.report is filed at the appellate stage.Similar view has been taken by MadrasHigh Court in A.N. Arunacnalam (Supra).Thus, tne view taken by the assessingofficer with regard to eligibility of the.assessee to claim deduction under section>SOIA of the Act was one of the possibileviews. We are fortified In our aforesaid.conclusion in view of the order passed by|tne Commissioner of [Income Tax undersection 263 of the Act. The relevant extract.of whnicn reads as under: “The order u/s. 143(3) dated 14-06-2005 is, therefore, modified to the extentthatdeductionclaimedU/S.SOIA1S|withdrawn|andforthe|DUFDOSEof.computingdeduction|U/S.SOHHC, deduction allowable U/s. 80IA has to be'reduced from the business profits. Since:deauctions u/s. 80IA is being denied, therewill be no change in the computation ofdeduction u/s. 8QHHC for the time being.However, in case it is nela by the appellateauthority that the assessee is entitled to'geduction u/s. 80IA, the deduction u/s.|SOHHC will nave to be recomputed Keepingin mind the provisions of section 80IA(9)”. OQ.Thus the order passed by tneCommissIonerOT|IncomeTax.itself|discloses tnat two views are possibile.Therefore it is not necessary for us to deal|with various contentions made Dy learned.counsel for the parties. In the result the.substantial questions of law are answered|in favour of the assessee and against the|revenue. In the result, the order dated| 11.03.2008 passed by the Commissioner ofIncome Tax and order dated 23.11.2009.passedDYtne|Tribunal|afeCnerepy.quashed.| In the result, the appeal is allowed.” 6.Tnejearnecdcounselfor|tneassessee/appellant has fairly states before this Courtthat once the order dated 11.3.2008 is no longer in.existence, the present appeal has to be allowed. | 7. Sri.Aravind, learned counsel appearing for|the Revenue, at this stage, nas stated tnat theDepartment is under the process to prefer a review in.the matter. However, the fact remains that the review.has not been filed so far and there is an order against.tne Revenue passed in ITA No.115/2010.| 8. In the lignt of the fact that the very basic|foundation has been set aside, consequently, theassessment order and tne otner orders of all the! authorities below are required to be set aside for theadvancement of substantial cause of justice. — 9. In lignt of the aforesaid, the appeal isallowed in favour of the assessee and there is no necessity toanswer the questions of law framed in the matter.However, in case the Department succeeds in the'Review Petition, tne parties snall be free to seekreview of the matter. The parties are certainly at a jiberty to approacnthis Court again subject to the out come of the review.petition.| The appeal stands disposed off accordingly. Sd/-JUDGE Sd/-- JUDGE| ap|