COMMISSIONER OF INCOME TAX Vs. G M MITTAL STAINLESS STEEL PVT LTD
SUPREME COURT OF INDIA (FROM: MADHYA PRADESH)
G.M. MITTAL STAINLESS STEEL (P) LTD.
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(1.)The assessment years in question are 1985-86 and 1986-87. The assessing officer had, by assessment orders dated 22-12-1988 and 28-3-1989 in respect of the respective assessment years, inter alia, allowed power subsidy to be treated as capital receipt instead of revenue. This was also the law as laid down by the jurisdictional High Court in the decision of CIT v. Dusad Industries.
(2.)The Commissioner in exercise of powers under Section 263 of the Income Tax Act, 1961 sought to revise the assessment orders by two identical but separate orders dated 25-3-1991. In each of the orders the Commissioner has merely stated that the assessing officer had erred while assessing the income of the assessee without setting out the reasons why the Commissioner was of the view that the assessing officer had been erroneous in following the decision in Dusad Industries. The assessee preferred an appeal to the Tribunal. The Tribunal found that the Commissioner had wrongly exercised his power under Section 263 of the Income Tax Act on the ground that no reasons had been given by the Commissioner for his conclusion that the assessment order was erroneous and prejudicial to the interest of the Revenue and also on the ground that in view of the decision of the High Court in Dusad Industries the assessing officer could not be said to be in error in making the assessment while following the judgment.
(3.)The High Court on a reference made under Section 256(2) of the Income Tax Act answered the question framed, viz.:
"Whether on the facts and in the circumstances of the case, the Tribunal was justified in partly cancelling the order of CIT passed under Section 263 -
against the Revenue and in favour of the assessee.
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