M/S.texmo Precision Castings Uk Ltd.,Level v. The Commissioner Of Income Tax, International Taxation, 4[Th] Floor, Bsnl Building (Tower 1)

IN THE HIGH COURT OF JUDICATURE AT MADRASRESERVED ON : 19.01.2022 PRONOUNCED ON : 22.04.2022 CORAM THE HONOURABLE MR.JUSTICE C.SARAVANAN W.P.NO.12310 OF 2021AND WMP.NO.13097 OF 2021 (THROUGH VIDEO CONFERENCING) M/s.Texmo Precision Castings Uk Ltd.,Level 2, OXO House,4, Joiner Street,Shefield S203RWUnited Kingdom,Represented by its DirectorM/s.Damayanti Ramachandran... Petitioner vs. 1. The Commissioner of Income Tax, International Taxation, 4[th] Floor, BSNL Building (Tower 1) No.16, Greams Road, Chennai 600 006. 2. The Assistant Commissioner of Income Tax, International Taxation, Circle -2(2) Room No.410, 4[th] Floor, BSNL Building, Tower-1, No.16, Greams Road, Chennai 600 006.... Respondents Prayer: Petition filed under Article 226 of the Constitution ofIndia for issuance of a Writ of Certiorari, calling for therecords in CIT/IT/CHE/113(263)/2020-21 dated 30/03/2021 for theAssessment Year 2015-16 on the file of the 1[st] respondent andquash the same. For Petitioner : Mr.R.Sandeep Bagmar For Respondents : Mrs.Hema Muralikrishnan Senior Standing Counsel. O R D E R The petitioner has challenged impugned order dated30.03.2021 passed by the 1[st] respondent bearing reference inCIT/IT/CHE/113(263)/2020-21 for the Assessment Year 2015-16under Section 263 of the Income Tax Act, 1961. The impugnedorder is being challenged primarily on the ground that it iswithout jurisdiction as it has been passed contrary to Section263 of the Income Tax Act, 1961. 2. By the impugned order, the 1[st] respondent has set asidethe final order of the assessment dated 19.2.2018 passed by the2[nd] respondent. Relevant portion of the impugned order reads asunder:- The Assessee Company, a tax resident of UnitedKingdom filed its return of income for AY-2015-16 on 02.02.2017 admitting nil income. The caseof assessee was selected for scrutiny and theassessment was completed U/s.143(3) of IT Actan addition of Rs.4,19,86,627/- Gross tax atthe rate of 15% (6297994) was taxed on theassessed income. 2. Texmo Precision Castings UK Limited is acompany registered and incorporated in UK. TPC(UK) is engaged in the business of providingMarket and support Services in UK to the Indianfirm Texmo Precision Castings, India. Theassessee Company levies professional chargesfor the services rendered to the Indian firm.During the P.Y relevant to the A.Y 2015-16, theassessee Company received professional charges15% margin and Director’s salary to the tune ofRs.4,19,86,627/- including TDS borne by theIndian Company. The break up is as follows:Professional Charges : Rs.2,58,05,691/-15% Margin : Rs.38,70,852/-Director’s Salary : Rs.54,47,732/-TDS : Rs.70,52,015/-Exchange Rate Difference : Rs.1,89,663/- 3. The assessee Company claimed that as per IndiaUK DTAA Treaty, the receipts are not taxable inIndia and therefore claimed refund of the amount ofTDS deducted by the Indian Firm. 4. In the assessment it was concluded that, theMarketing Services’ provided by TPC UK cannot beplaced outside the bracket of Consultancy Services.The services rendered by the assessee Company hasultimately facilitated transfer of knowledge andexperience that are made available to TPC India.Hence, the contention of the assessee was rejectedand the receipts obtained towards these servicesare taxable in India as per India UK DTAA Treaty.Total receipts obtained from TPC India :Rs.4,19,86,627/- Tax payable thereon @ 15% :Rs.62,97,994/- 5. The order shows that the AO has determined thePF of the assessee in India but has not thoroughlyexamined the applicability of 115JB. The entirereceipts are held to emanate from India but theprofit has been estimated at 25% without anybasis. This was questioned to the assessee videletter No.CIT/IT/CHE/113/2020-21 dated 15.03.2021as follows:- Tax payable thereon @ 15% :Rs.62,97,994/- 5. The order shows that the AO has determined thePF of the assessee in India but has not thoroughlyexamined the applicability of 115JB. The entirereceipts are held to emanate from India but theprofit has been estimated at 25% without anybasis. This was questioned to the assessee videletter No.CIT/IT/CHE/113/2020-21 dated 15.03.2021as follows:- “ Please refer to the above subject andthe order under Section 143(3) dated19.02.2018 for A.Y.2015-16. It is observedthat the Assessing Officer has given afinding of assessee having a PermanentEstablishment in India and the assessedincome could have been taxed under Section115JB also. Since the Assessing Officerhas not examined this aspect during theassessment, please show cause as to whythe said order may not be considered aserroneous insofar as it is prejudicial tothe interest of the Revenue. 2. Your reply should reach this office onor before 22.03.2021”. 6. In response, the assessee submitted replydated 20.03.2021, which has been considered. 7. As can be seen from the perusal of theassessment order framed in this case the A.O. hasfailed to make any enquiry regarding the estimationof income and this failure makes the ordererroneous. This has been upheld in CIT vs. GK Kabra211 ITR 336 (AP). No enquiry tantamount to nonapplication of mind and the same was also held tobe prejudicial to the interest of revenue in the case of CIT v. Bhagwan Das (2005) 272 ITR 367(All.) (HC). It is not on the basis of conjectureand surmises that the order is under revision.There is concrete basis of the same as the issuehas not been looked into (Principal Commissioner ofIncome Tax, Kolkata-3 vs. India Finance Ltd) (2017)81 taxmann.com 135 (Calcutta). 8. The above reply of the assessee has beenperused and it is observed that the applicabilityof the provisions of Section 115JB have not beenthoroughly examined since there is a finding in theAssessment Order that the assessee has a PE inIndia. The AO arrived at the estimated profit 25%without any basis. Therefore, 115JB provision wasrequired to be looked into and since the same hasnot been examined, therefore the assessment framedvide Assessment Order dated 19.02.2018 requires tobe set aside since the same is erroneous insofar itis pre-judicial to the interest of Revenue. 9. The Assessing Officer is directed to thoroughlyexamine the issue after giving opportunity of beingheard to the assessee. 3. It is submitted that the earlier a draft assessment orderdated 29.12.2017 was passed by the Deputy Commissioner of IncomeTax [International Taxation] under Section 143(3) r/w 144C ofIncome Tax Act, 1961. The case of the petitioner is that thepetitioner accepted the draft assessment order pursuant to whichthe assessment order dated 19.02.2018 came to be passed underSection 143(3) of the Income Tax Act, 1961 against which thepetitioner preferred an appeal under Section 246A of the IncomeTax Act, 1961 in Form No.35 before the CIT (Appeals). 4. Petitioner is a UK-based company engaged in services. Thepetitioner has entered into a Marketing Service Agreement dated1.4.2009 with a Indian partnership firm called Texmo PrecisionCastings (TPC), from India. The petitioner received commissionfrom the said partnership firm during 2014-15 for a sum ofRs.4,19,86,627/. While making payments to the petitioner, thesaid partnership firm deducted an amount of Rs.70,52,015/-towards tax and remitted the amount to the income tax departmentin Form 26 A S. 5. Under these circumstances, the petitioner filed refundclaim for the aforesaid amount deducted as tax and remitted bythe said partnership. The case of the petitioner was selectedfor scrutiny under CASS and a notice under section 143(2) wasissued to the petitioner on 19.9.2017. https://hcservices.ecourts.gov.in/hcservices/ 5. Under these circumstances, the petitioner filed refundclaim for the aforesaid amount deducted as tax and remitted bythe said partnership. The case of the petitioner was selectedfor scrutiny under CASS and a notice under section 143(2) wasissued to the petitioner on 19.9.2017. https://hcservices.ecourts.gov.in/hcservices/ 6. On merits the petitioner replied to the same statingthat section 9(1)(vii)(b) of the Income Tax Act, 1961 was notapplicable as it specifically excludes amount payable in respectof services utilised in the business or profession carried on bysuch person outside India or for the purpose of making orearning any income from any source outside India. It wastherefore submitted that income earned by the petitioner wouldnot be deemed to have to accrued or arise in India as same isfor carrying business/profession outside India. The petitioneralso stated that the petitioner was entitled for the benefit ofArticle 13 of India-UK DTAA signed under Section 90(2) of theIncome Tax Act, 1961. 7. The petitioner was thereafter issued to the show causenotice dated 22.12.2017 by the 2[nd] respondent to show cause as towhy the services provided by the petitioner should not betreated as a “consultancy services” and taxed under section 9(1)(vii) of the Income Tax Act, 1961. The petitioner alsoreplied to the same on 26.12.2017. 8. A draft assessment order was passed on 29.12.2017underection 143 (3) read with section 144C(1) of the Income TaxAct, 1961. The petitioner therefore requested the 2[nd] respondentto pass a final assessment order in order to take issue inappeal. Under these circumstances, the 2[nd] respondent passedfinal assessment order dated 19.2.2018. 9. The petitioner also preferred an appeal before the CIT(A). The CIT (A) also called for a remand report from the 2[nd]respondent which was issued on 12.02.2022 to which also thepetitioner appears to have given a response on 18.03.2020. 10. It is in this background, the 1[st] respondent issued anotice under Section 263 of the Income Tax Act, 1961 on15.3.2021 to revise the above Assessment Order passed on19.02.2018. The show cause notice was limited to examination ofthe committee of MAT provisions under section 115JB of theIncome Tax Act, 1961. 11. In the said notice, it was stated that the 2[nd]respondent failed to note that the petitioner is having apermanent establishment in India and therefore would have beentaxed under Section 115JB of the Income Tax Act, 1961. 12. The learned counsel for the petitioner submitted thatthe petitioner is a marketing company from UK and caters to theneed of the manufacturing partnership firm viz., Texmo PrecisionCasting, which is engaged in manufacture of casting mould formedical equipments and aerospace equipments. It is submittedthat the petitioner and the manufacturing firm in India have entered into marketing service agreement dated 01.04.2009whereby the petitioner is required to provide marketing serviceto Texmo Precision Casting company. 13. It is the specific case of the petitioner that duringthe period in dispute for the relevant assessment year 2015-16[Previous year 2014-15], the petitioner received a sum ofRs.4,19,86,627/- as consideration under the aforesaid agreementfor providing marketing services. It is the further case of thepetitioner that the aforesaid amount is not taxable in India andthat the draft assessment order was passed on 29.12.2017referred to supra, pursuant to which the final assessment orderdated 19.02.2018 has been passed. entered into marketing service agreement dated 01.04.2009whereby the petitioner is required to provide marketing serviceto Texmo Precision Casting company. 13. It is the specific case of the petitioner that duringthe period in dispute for the relevant assessment year 2015-16[Previous year 2014-15], the petitioner received a sum ofRs.4,19,86,627/- as consideration under the aforesaid agreementfor providing marketing services. It is the further case of thepetitioner that the aforesaid amount is not taxable in India andthat the draft assessment order was passed on 29.12.2017referred to supra, pursuant to which the final assessment orderdated 19.02.2018 has been passed. 14. Learned Counsel for the petitioner further submits thatunder Explanation 1(c) to Section 263(1), the Commissioner isbarred to revise an order of assessment which is subject matterof appeal. It is submitted that receipt of Rs.4,19,86,627/-which was the subject matter of appeal before the Commissionerof Income Tax Appeals and therefore the Commissioner underSection 263 of the Income Tax Act, 1961 cannot revise an orderof assessment in relation to income which is subject matter ofappeal. 15. That apart, the learned counsel for the petitionersubmitted that the original draft assessment order dated29.12.2017 preceded the show cause notice dated 22.12.2017,wherein the petitioner was merely asked to explain why theservices provided by the petitioner to Texmo Precision Casting(India) [Manufacturing Partnership firm] should not be treatedas consultancy services and taxed under Section 9(1)(VII) of theIncome Tax Act, 1961. 16. The learned counsel for the petitioner further submitsthat the petitioner is from UK, the transaction between thepetitioner and the Indian Partnership Firm engaged inmanufacturing of goods for which the petitioner has providedmarketing assistance is covered by India-UK Double TaxationAvoidance Agreement dated 11.02.1994. It is submitted that asper Article 13(4) of the aforesaid agreement, the term “Fees fortechnical services” means a payment of any amount to any personin consideration for rendering of technical or consultancyservices [including provision of services of technical or otherpersonal. It is therefore submitted that the services providedby the petitioner can neither be called as technical services orconsultancy services. 17. It is further submitted that it cannot be said thatthe petitioner was having permanent establishment in India andthat the proceeding mentioned by the AC (IT) / DC (IT) which https://hcservices.ecourts.gov.in/hcservices/ culminated in the draft assessment order dated 29.12.2017 andfinal assessment order dated 19.02.2018 were beyond the scope ofshow cause notice dated 22.12.2017. It is therefore submittedthat the impugned proceedings seeking to nullify the assessmentunder Section 253 of the Income Tax Act, 1961 is withoutjurisdiction. 18. It is further submitted that the CIT(A) andCommissioner under Section 263 are officers of the same rank andhave equal powers. It is submitted that what the Commissionercan do under Section 263, is the same under Section 251 of theAct by the CIT(A).Power of CIT(A) u/s 251 – (a) in an appeal against an order ofassessment, he may confirm, reduce, enhanceor annul the assessment” “…(c) in any other case, he may pass such ordersin the appeal as he thinks fit” Power of CIT u/s 263 – “263(1)-“… pass such order thereon as thecircumstances of the case justify, includingan order of enhancing or modifying theassessment, or cancelling the assessment anddirecting a fresh assessment.” 18. It is further submitted that the CIT(A) andCommissioner under Section 263 are officers of the same rank andhave equal powers. It is submitted that what the Commissionercan do under Section 263, is the same under Section 251 of theAct by the CIT(A).Power of CIT(A) u/s 251 – (a) in an appeal against an order ofassessment, he may confirm, reduce, enhanceor annul the assessment” “…(c) in any other case, he may pass such ordersin the appeal as he thinks fit” Power of CIT u/s 263 – “263(1)-“… pass such order thereon as thecircumstances of the case justify, includingan order of enhancing or modifying theassessment, or cancelling the assessment anddirecting a fresh assessment.” 19. It is submitted that it is for this precise reason,there is a statutory bar under Section 263 to invoke provisionsof Section 263 when the same income is subject matter of appeal,as appeal is a continuation of assessment proceedings. This hasbeen confirmed by order of Division Bench of this Court inRenuka Philip v ITO, (2018) 409 ITR 567 (Mad), wherein it washeld as under: “22.The above explanation makes it clear thatwhen the appeal is pending before theCommissioner, the exercise of jurisdictionunder Section 263 of the Act is barred. TheCommissioner in the order dated 14.03.2012states that the appeal pertains to the claimmade by the assessee under Section 54 of theAct and it has got nothing to do with theorder passed by the Assessing Officer underSection 54F of the Act. The said findingrendered by the Commissioner is whollyunsustainable, since the assessee went onappeal against the re-assessment order dated31.12.2009 stating that his claim for deduction under Section 54 of the Act shouldbe accepted. 23.Therefore, in the process of considering asto what relief the assessee is entitled to,the Assessing Officer held that the assesseeis entitled to claim deduction under Section54F of the Act and assigned certain reasonsfor that. Therefore, the larger issue waspending before the Commissioner of Appeals,and in such circumstances, the Commissionercould not exercise power under Section 263 ofthe Act on account of the statutory bar.Therefore, on this ground also, the assumptionof jurisdiction under Section 263 of the Actwas wholly erroneous.” 20. It is therefore submitted that invocation of Section 263is prohibited in view of specific bar under Explanation 1(c) toSection 263(1) of the Act. It is submitted that for invokingprovisions of Section 263, the Commissioner has to satisfy twinconditions that the order of the Assessing Officer is‘erroneous’ and ‘prejudicial to the interest of the revenue’.It is submitted that the order dated 19.02.2018, AssessingOfficer was not prejudicial to the interest of revenue. 21. In the present case, if the revision is sought to bemade, the tax to be levied is much lesser than what wasoriginally sought to be demanded by the Assessing Officer inOriginal Assessment Order. This plea was raised before theCommissioner in reply to Show cause notice that the order is notprejudicial to the interest of the revenue by providingcomputation of taxes. The learned counsel has referred to thefollowingparticulars:- ParticularsReceipts treatedReceipts treated asas Fees forincome fromTechnicalbusiness orServicesprofessionTax Liability higher ofRs.62,97,994Rs.42,41,489the Minimum AlternateTaxorNormalprovisions of the Tax 22. However, in the impugned order, the Commissioner hasnot dealt with this issue and neither has come to any finding asto how the order dated 19/02/2018 is prejudicial to the interestof revenue. A reference was also made from the followingpassages which is reproduced below [CIT v Gabriel India Ltd.(1993) 203 ITR 108 (Bom)] :- ParticularsReceipts treatedReceipts treated asas Fees forincome fromTechnicalbusiness orServicesprofessionTax Liability higher ofRs.62,97,994Rs.42,41,489the Minimum AlternateTaxorNormalprovisions of the Tax 22. However, in the impugned order, the Commissioner hasnot dealt with this issue and neither has come to any finding asto how the order dated 19/02/2018 is prejudicial to the interestof revenue. A reference was also made from the followingpassages which is reproduced below [CIT v Gabriel India Ltd.(1993) 203 ITR 108 (Bom)] :- 11. From the aforesaid definitions it isclear that an order cannot be termed aserroneous unless it is not in accordancewith law. If an Income-tax Officer acting inaccordance with law makes a certainassessment, the same cannot be branded aserroneous by the Commissioner simplybecause, according to him, the order shouldhave been written more elaborately. Thissection does not visualise a case ofsubstitution of the judgment of theCommissioner for that of the Income-taxOfficer, who passed the order, unless thedecision is held to be erroneous. Cases maybe visualised where the Income-tax Officerwhile making an assessment examines theaccounts, makes enquiries, applies his mindto the facts and circumstances of the caseand determines the income either byaccepting the accounts or by making someestimate himself. The Commissioner, onperusal of the records, may be of theopinion that the estimate made by theofficer concerned was on the lower side andleft to the Commissioner he would haveestimated the income at a figure higher thanthe one determined by the Income-taxOfficer. That would not vest theCommissioner with power to re-examine theaccounts and determine the income himself ata higher figure. It is because the Income- tax Officer has exercised the quasi-judicialpower vested in him in accordance with lawand arrived at a conclusion and such aconclusion cannot be termed to be erroneoussimply because the Commissioner does notfeel satisfied with the conclusion. It maybe said in such a case that in the opinionof the Commissioner the order in question isprejudicial to the interests of the Revenue.But that by itself will not be enough tovest the Commissioner with the power of suomotu revision because the first requirement,viz., that the order is erroneous, isabsent. Similarly, if an order is erroneousbut not prejudicial to the interests of theRevenue, then also the power of suo moturevision cannot be exercised. Any and everyerroneous order cannot be the subject-matterof revision because the second requirementalso must be fulfilled. There must be someprima facie material on record to show thattax which was lawfully exigible has not beenimposed or that by the application of therelevant statute on an incorrect orincomplete interpretation a lesser tax thanwhat was just has been imposed. 23. It was submitted that the Assessing Officer has examinedthe aspect of permanent establishment in the Assessment orderdated 19/02/2018 and concluded that the receipt ofRs.4,19,86,627/- is to be taxable as Fees for Technical Servicesin view of specific provision under Article 7(9) of the India-UKDTAA, where profits include items of income with are dealt withseparately in other Articles of this convention, then theprovisions of those Articles shall not be affected by theprovisions of this Article. Therefore, the Assessing Officerhas taken legally tenable position to tax the income under thehead fees for technical services. Therefore, it is not known asto how order of the Assessing Officer is erroneous. 23. It was submitted that the Assessing Officer has examinedthe aspect of permanent establishment in the Assessment orderdated 19/02/2018 and concluded that the receipt ofRs.4,19,86,627/- is to be taxable as Fees for Technical Servicesin view of specific provision under Article 7(9) of the India-UKDTAA, where profits include items of income with are dealt withseparately in other Articles of this convention, then theprovisions of those Articles shall not be affected by theprovisions of this Article. Therefore, the Assessing Officerhas taken legally tenable position to tax the income under thehead fees for technical services. Therefore, it is not known asto how order of the Assessing Officer is erroneous. 24. It is submitted that a specific plea was raised by thepetitioner in its reply to Show cause notice. However, thesame was not considered by the Commissioner in the impugnedorder and it was erroneously assumed jurisdiction and concludedthat the order dated 19/02/2018 is erroneous. CIT v GabrielIndia Ltd. (1993)203 ITR 108 (Bom), it was observed as under:- “14.We may now examine the facts of thepresent case in the light of the powers of theCommissioner set out above. The Income-tax https://hcservices.ecourts.gov.in/hcservices/ Officer in this case had made enquiries inregard to the nature of the expenditureincurred by the assessee. The assessee hadgiven detailed explanation in that regard by aletter in writing. All these are part of therecord of the case. Evidently, the claim wasallowed by the Income-tax Officer on beingsatisfied with the explanation of theassessee. Such decision of the Income-taxOfficer cannot be held to be “erroneous”simply because in his order he did not make anelaborate discussion in that regard. Moreover,in the instant case, the Commissioner himself,even after initiating proceedings for revisionand hearing the assessee, could not say thatthe allowance of the claim of the assessee waserroneous and that the expenditure was notrevenue expenditure but an expenditure ofcapital nature. He simply asked the Income-taxOfficer to re-examine the matter. That, in ouropinion, is not permissible. Further inquiryand/or fresh determination can be directed bythe Commissioner only after coming to theconclusion that the earlier finding of theIncome-tax Officer was erroneous andprejudicial to the interests of the Revenue.Without doing so, he does not get the power toset aside the assessment. In the instant case,the Commissioner did so and it is for thatreason that the Tribunal did not approve hisaction and set aside his order. We do not findany infirmity in the above conclusion of theTribunal. In the light of the foregoingdiscussion, we answer the question referred tous in the affirmative, that is, in favour ofthe assessee and against the Revenue.” 25. Learned counsel also placed reliance on the followingdecision in Commissioner of Income Tax v. Sunbeam Auto Ltd.,(2011) 332 ITR 167 (Del), wherein it was observed as under:- “19.Thus, even the Commissioner conceded theposition that the Assessing Officer madeinquiries, elicited replies and thereafterpassed the assessment order. The grievance ofthe Commissioner was that the AssessingOfficer should have made further inquiriesrather than accepting the explanation.Therefore, it cannot he said that it is a caseof “lack of inquiry”. 25. Learned counsel also placed reliance on the followingdecision in Commissioner of Income Tax v. Sunbeam Auto Ltd.,(2011) 332 ITR 167 (Del), wherein it was observed as under:- “19.Thus, even the Commissioner conceded theposition that the Assessing Officer madeinquiries, elicited replies and thereafterpassed the assessment order. The grievance ofthe Commissioner was that the AssessingOfficer should have made further inquiriesrather than accepting the explanation.Therefore, it cannot he said that it is a caseof “lack of inquiry”. 20.Having put the record straight on thisaspect, let us proceed further. Is it a casewhere the Commissioner has concluded that theopinion of the Assessing Officer was clearlyerroneous and not warranted on the factsbefore him and, viz., the expenditure incurredwas not revenue expenditure but should havebeen treated as capital expenditure? Obviouslynot. Even the Commissioner in his order,passed under section 263 of the Act, is notclear as to whether the expenditure can betreated as capital expenditure or it isrevenue in nature. No doubt, in certain cases,it may not be possible to come to a definitefinding and therefore, it is not necessarythat in all cases the Commissioner is bound toexpress a final view, as held by this courtinGee Vee Enterprises, [1975] 99 ITR 375.But, the least that was expected was to recorda finding that the order sought to be revisedwas erroneous and prejudicial to the interestof the Revenue (seeSeshasayee Paper, [2000]242 ITR 490 (Mad)). No basis for this isdisclosed. In sum and substance, theaccounting practice of the assessee isquestioned. However, that basis of the ordervanishes in thin air when we find that thisvery accounting practice, followed for anumber of years, had the approval of theincome-tax authorities. Interestingly, evenfor future assessment years, the same veryaccounting practice is accepted. 24...........Likewise,whethertheCommissioner should have recorded a definitefinding or not, may not be very relevant factorin the present case where on the facts of thiscase we have found that the opinion of theAssessing Officer in treating the expenditureas revenue expenditure was plausible and thusthere was no material before the Commissionerof Income-tax to vary that opinion and ask forfresh inquiry. 26. The learned counsel also referred to the decision ofthis Court in Principal Commissioner of Income Tax v. AbhijitBhandari (2009) 414 ITR 485 (Mad), it was observed as under:- https://hcservices.ecourts.gov.in/hcservices/ “57.In view of the reasons stated above, wefind no reason to interfere with the order ofthe learned Single Judge. The issues raised onfacts have been finally decided. A “possibleview” had been arrived at stating that therewas only one single residential unit. Theappellant herein had not provided anyadditional material for us to hold a contraryview to the view held by the learned SingleJudge.” 27. It is further submitted that when two views arepossible, Section 263 of the Income Tax Act, 1961 cannot beinvoked. In this connection, the decision of the Court in.Malabar Indusrtial Co. Ltd. v Commissioner of Income Tax, (2000)2 SCC 718, was referred to wherein it was held that when thereare two view possible for same subject matter of income, and theAssessing Officer has resorted to tax the said income bychoosing one of the possible views, in such scenarios provisionsof section 263 cannot be invoked. A reference was made to paraNo.11, which reads as under:- 27. It is further submitted that when two views arepossible, Section 263 of the Income Tax Act, 1961 cannot beinvoked. In this connection, the decision of the Court in.Malabar Indusrtial Co. Ltd. v Commissioner of Income Tax, (2000)2 SCC 718, was referred to wherein it was held that when thereare two view possible for same subject matter of income, and theAssessing Officer has resorted to tax the said income bychoosing one of the possible views, in such scenarios provisionsof section 263 cannot be invoked. A reference was made to paraNo.11, which reads as under:- “11.In the instant case, the Commissionernoted that the Income Tax Officer passed theorder of nil assessment without applicationof mind. Indeed, the High Court recorded thefinding that the Income Tax Officer failedto apply his mind to the case in allperspective and the order passed by him waserroneous. It appears that the resolutionpassed by the Board of the appellant Companywas not placed before the Assessing Officer.Thus, there was no material to support theclaim of the appellant that the said amountrepresented compensation for loss ofagricultural income. He accepted the entryin the statement of the account filed by theappellant in the absence of any supportingmaterial and without making any inquiry. Onthese facts the conclusion that the order ofthe Income Tax Officer was erroneous isirresistible. We are, therefore, of theopinion that the High Court has rightly heldthat the exercise of the jurisdiction by theCommissioner under Section 263(1) wasjustified.” 28. Learned counsel for the petitioner further submittedthat the impugned order was beyond the scope of Show causenotice. The Commissioner of Income Tax under Section 263 of the Income Tax Act, 1961 issued Show cause notice with the followingreason: “… It is observed that the Assessing Officerhas given a finding of assessee having aPermanent Establishment in Indi and theassessed income could have been taxed u/s.115JB also.” 29. However, in the impugned order, it supplied new reasonaltogether to sustain the impugned proceedings, which areotherwise wholly without jurisdiction as stated above. In theimpugned order, the Commissioner of Income Tax for the firsttime has observed that the Assessing Officer has failed to makeenquiry regarding the estimation of income and this failuremakes the order erroneous and concluded that the AssessingOfficer arrived at the estimated profits of 25% without anybasis. Whereas as seen from the reasons provided in SCN, theCIT, nowhere calls upon the Petitioner to show-cause on theaspect of estimation of income at 25% being erroneous. 30. It is therefore submitted that the impugned order hastravelled beyond the scope of show-cause notice and is liable tobe quashed. [Oryx Fisheries Private Ltd. v. Union of India andOthers, (2010) 13 SCC 427].31. Finally, it was submitted that the impugned order wasissued without Document Identification Number. It is submittedthat Circular No. 19 of 2019, states that income-tax authoritiesshall not issue orders manually and without documentidentificationnumber(DIN),exceptinexceptionalcircumstances. In these exceptional cases, the authority has torecord reasons in the format provided in the circular as to whyorder is issued manually and without DIN . 32. In the present case impugned order dated 30/03/2021 wasissued without DIN and no reasons have been stated as isrequired by the said Circular. It is after the passing andreceipt of the impugned order, the Petitioner receivedcommunication dated 31/03/2021, stating that order u/s 263purportedlydated31/03/2021ishavingaDINITBA/REV/M/REV5/2020-21/1032062505(1). This communication is anafter thought because the impugned order is dated 30/03/2021 andissued in contravention to Circular No.19 of 2019. 32. In the present case impugned order dated 30/03/2021 wasissued without DIN and no reasons have been stated as isrequired by the said Circular. It is after the passing andreceipt of the impugned order, the Petitioner receivedcommunication dated 31/03/2021, stating that order u/s 263purportedlydated31/03/2021ishavingaDINITBA/REV/M/REV5/2020-21/1032062505(1). This communication is anafter thought because the impugned order is dated 30/03/2021 andissued in contravention to Circular No.19 of 2019. 33. It is submitted that when a statute describes orrequires a thing to be done in a particular manner; it should bedone in that manner or not at all. [Taylor v Taylor (1876) Ch.D426, followed in Ramchandra Keshav Adke v Govind Joti (1975) 1 https://hcservices.ecourts.gov.in/hcservices/ SCC 559, Para 25] 17. 34. It is submitted that as per Circular in para 4 if anorder is issued without following procedure in para 2 and 3, thesame shall be treated as invalid and shall be deemed to havenever been issued. Therefore, it is submitted that the impugnedorder is non-est and is liable to be quashed. 35. It is further submitted that the 1[st] respondent videimpugned order has set-aside the assessment order dated.19/02/2018 which was subject matter of appeal and thereforeimpermissible. It is submitted that there cannot be twoparallel proceedings under the statue for the same subjectmatter. 36. Learned counsel for the petitioner in the alternativesubmitted that if the assessment order is set aside, then thetax demand and the findings of the Assessing Officer insofar asreceipt taxable as Fees for Technical Services is also set asideand the Respondents do not seek to contest the taxability ofreceipt as Fees for Technical Services. For the above reasons,it is prayed that the writ petition be allowed. 37. Opposing the prayer, Mrs.Hema Muralikrishnan, learnedSenior Standing Counsel for the respondents submits that thepetitioner has not challenged the finding of the DeputyCommissioner of Income Tax in the draft assessment order dated29.12.2017 as confirmed by the assessment order dated 19.02.2018and therefore, the scope of the appeal of the petitioner wasonly relating to the consultancy charges on which a tax ofRs.62,97,994/- has been demanded from the petitioner. Thelearned Senior Standing counsel for the respondents furthersubmits that the submission of the the petitioner is devoid ofmerits. It is submitted that the petitioner has an alternateand efficacious remedy and therefore the jurisdiction of thisCourt under Article 226 of Constitution of India not be invoked. 38. The learned counsel for the respondents submits thatboth under Section 246A r/w 251 of the Income Tax Act, 1961, theAppellate Commissioner as also the Commissioner of Income Taxunder Section 263 of the Income Tax Act can nullify theassessment, save that in the appellate proceedings, theAppellate Commissioner can pass fresh order of assessment, as ifit were the assessment order against which the remedy liesbefore the Tribunal. In this case, the petitioner's appeal hasbeen allowed indirectly and the matter has been remitted back tothe second respondent to pass fresh assessment order andtherefore, there is no case made out for interference underArticle 226 of the Constitution of India. 39. In this connection, a reference was made to the decisionof the Honourable Supreme Court in Assistant Collector ofCentral Excise, Chandan Nagar, West Bengal vs. Dunlop India Ltd& Others, (1985) 1 SCC 260. Learned Senior Standing Counsel forthe respondents also placed reliance on the decision of theHonourable Supreme Court in CIT versus Vijaybhai N Chandrani,(2013) 357 ITR 713 and the decision of this Court inDr.Nedunchezian versus Dy. CIT, (2005) 279 ITR 342 (Mad) . 39. In this connection, a reference was made to the decisionof the Honourable Supreme Court in Assistant Collector ofCentral Excise, Chandan Nagar, West Bengal vs. Dunlop India Ltd& Others, (1985) 1 SCC 260. Learned Senior Standing Counsel forthe respondents also placed reliance on the decision of theHonourable Supreme Court in CIT versus Vijaybhai N Chandrani,(2013) 357 ITR 713 and the decision of this Court inDr.Nedunchezian versus Dy. CIT, (2005) 279 ITR 342 (Mad) . 40. It is submitted that the petitioner has admitted thatthe petitioner has denied that it has a permanent Establishmentin India vide letter dated 13.10.2017. It is submitted that anissue regarding the visit of Mr.Arujnan Ramachandran,incidentally, the director of the petitioner who is a partner inthe partnership firm was raised. Therefore, it cannot be saidthat the petitioner had no notice of the aforesaid proposal. 41. It is submitted that in the assessment, the 2[nd]respondent has assessed the income towards fees for technicalservices at the concessional rate of tax as per DTAA and 15% andnot as a separate business income and therefore it is submittedthat the allegation of the petitioner that the finding of the 2[nd]respondent with regard to permanent Establishment was madewithout putting the petitioner to any notice cannot becountenanced particularly in the light of the fact that thepetitioner had raised an issue in his reply. 42. It is further submitted that the issue relating toapplication of Section115JB was never subject matter of theproceedings before the 2[nd] respondent. It is submitted that inthe appeal before the CIT (A) a remand report was given by the2[nd] respondent. It was however confined to taxability ofreceipts as fees for technical services only because thepetitioner herein has agitated the said issue before the CIT (A). 43. It is submitted the fact that the 2[nd] respondentfailed to examine the issue from the perspective of 115JB andthus it shows that the order passed by the 2[nd] respondent waserroneous and prejudicial to the interest of the revenue andtherefore the invocation of Section 263 cannot be questioned. Itis submitted that where permanent Establishment is determined inIndia, tax has to be determined on the basis and the tax rate inthe case of non-resident at the rate of 40% whereas the case ofa non-resident having no permanent Establishment taxes to bepaid at 15% as per Article 13 of the UK-India DTAA. It issubmitted that once there is finding of fact regarding permanentEstablishment in India, the assessment has to be completed underSection 115JB of the Income Tax Act, 1961. 44. It is submitted that the profit that was required to beworked out valid estimation or from the books of the petitionerwas not done. It is therefore submitted that the order waserroneous and prejudicial to the interest of the revenue andtherefore the jurisdiction has been rightly invoked Section 263of the Income Tax Act, 1961 45. The issue that arises for consideration in this writpetition whether the notice issued to the petitioner underSection 263 of the Income Tax Act, 1961, pursuant to which, theimpugned order dated 30.03.2021 was without jurisdiction ornot . Explanation Section 1(c) of the Income Tax Act, 1961,Explanation 1(c) to Section 263 reads as under:- “1(c) : Where any order referred to in this sub-section and passed by the Assessing Officer hadbeen the subject matter of any appeal (filed on orbefore or after the 1[st] day of June 1988), thepowers of the (Principal Commissioner or )Commissioner under this sub-section shall extend( and shall be deemed always to have extended) tosuch matters as had not been considered anddecided in such appeal).” 45. The issue that arises for consideration in this writpetition whether the notice issued to the petitioner underSection 263 of the Income Tax Act, 1961, pursuant to which, theimpugned order dated 30.03.2021 was without jurisdiction ornot . Explanation Section 1(c) of the Income Tax Act, 1961,Explanation 1(c) to Section 263 reads as under:- “1(c) : Where any order referred to in this sub-section and passed by the Assessing Officer hadbeen the subject matter of any appeal (filed on orbefore or after the 1[st] day of June 1988), thepowers of the (Principal Commissioner or )Commissioner under this sub-section shall extend( and shall be deemed always to have extended) tosuch matters as had not been considered anddecided in such appeal).” 46. A reading of the above Explanation, makes it clear thepower of the Principal Commissioner or Commissioner under sub-section extends to such matters as had not been considered anddecided in an appeal. The appeal has not been considered anddecided. Thus, there is no embargo under Section 263 of theIncome Tax Act, 1961 for the 1[st] respondent to pass order. 47. The scope of appeal before the Appellate Commissioner isconfined to tax ability of receipts towards technical servicesonly. The Assistant Commissioner has not been considered theissue from the point of view Section 115 JC of the Income TaxAct, 1961. 48. Whether the facts on merits warrants invocation ofSection 11JB of the Income Tax Act, 1961 or not would render theproceedings without jurisdiction. Invocation of Section 263 ofthe Income Tax Act, 1961 by the first respondent on 15.03.2021vide notice bearing Reference No.CIT/IT/CHE/113/2020-21 whichhas culminated in the impugned order dated 30.03.2021 cannot besaid to be without jurisdiction merely because the intimation ofDIN to the order passed under Section 263 was one day after theorder was passed. Para No.5 of the CBDT Circular No.19/2019dated 14.08.2019 makes it clear that communication issuedmanually can be regularised within 15 days of the issuance.Para 5 of Circular reads as under:- “The communication issued manually in the threesituations specified in para 3- (i), (ii) or(iii) above shall have to be regularised within15 days of its issuance, by- i) uploading the manualcommunication on the system.ii) compulsorily generating the DINon the System. iii) communicating the DIN sogenerated to the assessee/any otherperson as per electronically generatedpro-forma available on the system. 49. Para 7 of the said Circular reads as under:- “7. Further, in all pending assessmentproceedings, where notices were issuedmanually , prior to issuance of thisCircular, the income-tax authoritiesshall identify such cases and shallupload the notices in these cases on theSystems by 31[st] October, 2019.” 50. As the scope of judicial review under Article 226 of theConstitution of India is limited, I am refraining for discussingon merits of the case. Suffice to state that the proceedinginitiated by the 1[st] respondent was not without jurisdiction. 51. The argument of the petitioner that the assessmentorder was not prejudicial to the interest of revenue andtherefore the proceeding under Section 263 was liable to bequashed cannot be countenanced. A proceeding under Section 263of the Income Tax Act, 1961 cannot be scuttled. Further, thepetitioner participated in the proceeding initiated underSection 263 of the Income Tax Act, 1961. Therefore, it is notopen to the petitioner to turn around to state that theproceeding was without jurisdiction. 50. As the scope of judicial r