S. 263 :Commissioner-Revision of orders prejudicial to revenue –Non mentioning in the assessment order cannot be held to be erroneous

. [S.43A, 80IA, 115JB, 143(3)]

The assessee was a company engaged in generation of power.After verifying the books of account and

information submitted by the assessee, the AO completed the assessment under section 143(3) after

allowing deduction under section 80-IA while accepting the book profit under section 115JB.

AO in course of scrutiny proceeding conducted detailed enquiry assessee also submitted its

explanation explaining why it should not be treated as income. Since in view of decision of Supreme

Court view taken by AO was possible view, only because view taken by AO did not appear to be

correct to Commissioner, it could not be said that such view was erroneous and prejudicial to interests

of revenue

Assessee treated gain derived from sale of Carbon Emission Reduction Certificates (CERCs) as

revenue receipt and claimed deduction under section 80-IA which was allowed by AO.

Commissioner, in order passed under section 263, held that gain from sale of CERCs having no direct

nexus with eligible business of assessee, it could not be part of business profit so as to allow

deduction under section 80-IA. Whether amount received on sale of CERCs was capital in nature

and, therefore, even if AO had allowed deduction on that amount under section 80-IA treating it as

revenue income, no prejudice was caused to revenue which is one of conditions for invoking

jurisdiction under section 263.

Where reimbursement of advance tax by parties was not treated as income in assessee's books of

account, same also cannot be considered under provisions of section 115JB, which is to be computed

based on profit and loss account of assessee-company.

Non-mentioning of all issues on which enquiry was made by AO in body of assessment order does not

indicate lack of enquiry or non-application of mind; non-mentioning of such facts in assessment order

would not make it erroneous and prejudicial to interests of revenue. (AY. 2008-09)(ITA No. 897

(Hyd) of 2013 dt 26-06-2014)

Lanco Kondapalli Power Ltd. .v. JCIT(2014) 33 ITR 142/50 taxmann.com 442 / (2015) 152 ITD

132 (Hyd.)(Trib.)