THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH) Case No. : ITA 7/2016 1:PRINCIPAL COMMISSIONER OF INCOME TAX and ANR, GOVT. OF INDIA, MINISTRY OF FINANCE, DIBRUGARH C.R. BUILDING, DIBRUGARH 786003, ASSAM 2: ADDITIONAL COMMISSIONER OF INCOME TAX RANGE-2 DIBRUGARH ASSAM VERSUS 1:M/S OIL INDIA LTD. P.O. DULIAJAN, DIST. DIBRUGARH, ASSAM. Advocate for Petitioner : MR.S SAIKIA Advocate for Respondent : SC, OIL Linked Case : ITA 9/2016 1:PRINCIPAL COMMISSIONER OF INCOME TAX and ANR GOVT.OF INDIA MINISTRY OF FINANCE DIBRUGARH C.R. BUILDING DIBRUGARH-786003 ASSAM. 2: ADDITIONAL COMMISSIONER OF INCOME TAX RANGE-2 Page No.# 2/22 DIBRUGARH ASSAM. VERSUS 1:M/S OIL INDIA LTD. P.O. DULIAJAN DIST. DIBRUGARH ASSAM. Advocate for Petitioner : MR.P SAIKIA Advocate for Respondent : MR.A SARMA Linked Case : ITA 10/2016 1:PRINCIPAL COMMISSIONER OF INCOME TAX and ANR GOVT. OF INDIA MINISTRY OF FINANCE DIBRUGARH C.R. BUILDING DIBRUGARH-786003 ASSAM. 2: ADDITIONAL COMMISSIONER OF INCOME TAX RANGE-2 DIBRUGARH ASSAM. VERSUS 1:M/S OIL INDIA LTD. P.O. DULIAJAN DIST. DIBRUGARH ASSAM. Advocate for Petitioner : MR.P SAIKIA Advocate for Respondent : SC OIL Linked Case : CO 11/2017 1:PRINCIPAL COMMISSIONER OF INCOME TAX and ANR Page No.# 3/22 GOVT. OF INDIA MINISTRY OF FINANCE DIBRUGARH C.R. BUILDING DIBRUGARH-786003 ASSAM. 2: ADDITIONAL COMMISSIONER OF INCOME TAX RANGE-2 DIBRUGARH ASSAM. VERSUS 1:M/S OIL INDIA LTD. P.O. DULIAJAN DIST. DIBRUARH ASSAM. Advocate for Petitioner : MR.A J MAHANTA Advocate for Respondent : MR.S SAIKIA Linked Case : CO 9/2017 1:PRINCIPAL COMMISSIONER OF INCOME TAX and ANR GOVT. OF INDIA MINISTRY OF FINANCE DIBRUGARH C.R. BUILDING DIBRUGARH 786003 ASSAM. 2: ADDITIONAL COMMISSIONER OF INCOME TAX RANGE-2 DIBRUGARH ASSAM. VERSUS 1:M/S OIL INDIA LTD. P.O. DULIAJAN DIST. DIBRUGARH ASSAM. Page No.# 4/22 Advocate for Petitioner : MR.S CHOUDHURY Advocate for Respondent : Linked Case : CO 10/2017 1:PRINCIPAL COMMISSIONER OF INCOME TAX and ANR GOVT. OF INDIA MINISTRY OF FINANCE DIBRUGARH C.R. BUILDING DIBRUGARH-786003 2: ADDITIONAL COMMISSIONER OF INCOME TAX RANGE-2 DIBRUGARH ASSAM. VERSUS 1:M/S OIL INDIA LTD. P.O. DULIAJAN DIST. DIBRUGARH ASSAM. Advocate for Petitioner : MR.S CHOUDHURY Advocate for Respondent : Linked Case : CO 12/2017 1:PRINCIPAL COMMISSIONER OF INCOME TAX and ANR GOVT. OF INDIA MINISTRY OF FINANCE DIBRUGARH C.R. BUILDING DIBRUGARH 786003 ASSAM. 2: ADDITIONAL COMMISSIONER OF INCOME TAX RANGE-2 DIBRUGARH Page No.# 5/22 ASSAM. VERSUS 1:M/S OIL INDIA LTD. P.O. DULIAJAN DIST. DIBRUGARH ASSAM. Advocate for Petitioner : MR.A J MAHANTA Advocate for Respondent : Linked Case : ITA 8/2016 1:PRINCIPAL COMMISSIONER OF INCOME TAX and ANR GOVT. OF INDIA MINISTRY OF FINANCE DIBRUGARH C.R. BUILDING DIBRUGARH 786003 ASSAM. 2: ADDITIONAL COMMISSIONER OF INCOME TAX RANGE-2 DIBRUGARH ASSAM. VERSUS 1:M/S OIL INDIA LTD. P.O. DULIAJAN DIST. DIBRUGARH ASSAM. Advocate for Petitioner : MR.P SAIKIA Advocate for Respondent : MR.K KALITA Page No.# 6/22 PRESENT HON BLE CHIEF JUSTICE MR. A.S. BOPANNA HON BLE MR. JUSTICE ARUP KUMAR GOSWAMI For Appellants : Mr. S. Saikia, and Ms. P. Tamuli, Advocates For Respondent : Mr. Ajay Vohra, Senior Advocate Mr. Gaurav Jain, and Mr. Anshuman Sarma, Advocates Date of Hearing : 24.01.2019 Date of Judgment & Order : 20.02.2019 JUDGMENT AND ORDER (CAV) (A.S. BOPANNA, C.J.) issue in all these appeals and cross-objections relates to returns filed by respondent assessee for Assessment Years 2005-06 and 2006-07. assessee having filed its return of income had claimed deduction under Section 80 IC(2)(b)(iii) of Income Tax Act (Act for short) by describing itself as mineral based industry as contained in Part-A of 14 th Schedule, Item 16, being industry situated in North Eastern Region. claim to that effect was made in respect of 59 oil wells. Assessing Officer through his assessment order dated 29.11.2007 rejected claim seeking for such deduction. rejection, however, was on ground that though each oil well is claimed to be undertaking, combined Form in 10CCB is filed instead of separate Form in respect of each oil well. Though issue as to whether assessee is mineral based industry, was not specifically analyzed, Assessment Officer had Page No.# 7/22 assumed it to be correct and proceeded further, but rejected claim on technical non- compliance of filing separate Forms. 2. assessee being aggrieved by said assessment order dated 29.11.2007 filed appeals to Commissioner of Income Tax (Appeals), for short CIT (A) , in Appeal Nos.23-24- Dib/2005-2006 and 28-29-Dib/2007-2008. appeals related to returns for year 2005- 2006 and 2006-2007 also. CIT (A) by order dated 29.2.2008, on consideration of appeals, allowed same and benefit of deduction under Section 80IC was allowed. When this was position, Commissioner of Income Tax (for short CIT ) assumed jurisdiction under Section 263 of Act and revision proceedings was initiated suo-moto. In notice issued to assessee, CIT had indicated that Assessing Officer had not examined or applied his mind on basic issue as to whether assessee is actually mineral based industry or not. It is in that view, revision of assessment was proposed. assessee had, in their reply, indicated reasons to claim benefit under Section 80 IC(2)(b)(iii) by contending that they are mineral based industry. threshold contention raised by assessee, however, was to question authority of CIT to initiate revision under Section 263 of Act when said issue had already been concluded on consideration made by CIT(A) through its order dated 29.2.2008. It was further contended that revision under Section 263 is permissible only in respect of issue which was not considered earlier before CIT(A) and wherein order passed by Assessing Officer is erroneous and it is also prejudicial to interest of revenue. It was contended that in present circumstance when issue was considered and one of plausible views is already taken and also when order of Assessing Officer has merged in order passed by CIT (A), there was no scope for re-examination of same in revision under Section 263 of Act, where scope is limited. Page No.# 8/22 3. In that background, CIT on adverting to issue, through order dated 22.3.2010 has held that assessee is not mineral based industry. Accordingly, Assessing Officer was directed to modify assessment in terms of order passed in said proceeding under Section 263 of Act. Pursuant thereto, Assessing Officer by order dated 7.4.2010 modified assessment order and rejected claim of assessee under Section 80 IC. assessee, in that circumstance, preferred another appeal before CIT (A) against such modified assessment order dated 7.4.2010. CIT (A), by order dated 22.7.2013, rejected appeal filed by assessee. It is in that light, assessee filed appeal before Income Tax Appellate Tribunal, Kolkata (for short ITAT ), both against order dated 22.3.2010 passed in proceedings under Section 263 of Act as also consequential assessment orders which had been upheld by CIT(A) through order dated 22.7.2013. Since issue was common and consequence of consideration of order dated 22.3.2010 under Section 263 of Act would befall on subsequent orders passed by CIT(A) dated 22.7.2013, ITAT clubbed all appeals and made common consideration of same. Though independent consideration as to whether assessee is mineral based industry was not made by ITAT, consideration was to effect as to whether proceedings under Section 263 of Act was sustainable. ITAT has, accordingly, through its order dated 7.5.2015 allowed appeals filed by assessee and order passed under Section 263 of Act was set aside. Revenue, therefore, claiming to be aggrieved by order dated 7.5.2015 has filed these appeals, while assessee has filed cross-objections/cross appeals raising grounds insofar as aspects that were not adverted to by ITAT, more particularly with regard to deductions as claimed under Section 80 IC which would become necessary for consideration if revision proceedings under Section 263 of Act is held to be sustainable. Page No.# 9/22 4. In that light, this Court while admitting appeals, had framed following substantial questions of law :- i) Whether Tribunal is correct in law in cancelling order passed by Commissioner by holding that learned Commissioner had illegally invoked jurisdiction under Section 263 of Act, 1961 ? ii) Whether Tribunal has correctly held that allowance of relief under Section 80 IC of Act to assessee on ground that it is mineral based industry even though it is engaged in business of refining mineral oil ? iii) Whether view taken by Tribunal is not sustainable in law keeping in view scheme of Act read with Union, Concurrent and State Lists of Constitution of India ? 5. From perusal of contentions urged, sequence of events that have followed and first substantial question of law raised for consideration being, as to whether jurisdiction invoked by CIT under Section 263 of Act is justified, said aspect is to be taken note at outset and other questions would arise only as consequence thereto. In that light, since consideration is common to all these appeals and cross-objections, they are taken up together and considered through this common order. 6. Heard Mr. S.Saikia, learned counsel for Revenue and Mr. Ajay Vohra, learned Page No.# 10/22 senior counsel for assessee and perused appeal papers. 7. In present facts, issue also is when order of Assessing Officer dated 29.11.2007 was subjected to appeal and had concluded with order dated 29.2.2008 passed by CIT (A), whether in that circumstance order of Assessing Officer had merged in order passed by CIT (A) and, in that light, was order of Assessing Officer dated 29.11.2007 still open and available to be revised by CIT under Section 263 of Act ? 8. perusal of provisions as contained under Section 263 of Act would indicate that it provides for Commissioner to call for and examine records of any proceeding under Act and, if he considers that any order passed therein by Assessing Officer is erroneous and it is prejudicial to interest of Revenue, Commissioner may after giving assessee opportunity of being heard, and after making such inquiry, pass order thereon including to enhance or modify or cancel assessment and direct fresh assessment. Clause (c) to Explanation-1 to sub-section (1) of Section 263 further reads as hereunder :- (c) Where any order referred to in this sub-section and passed by Assessing Officer had been subject matter of any appeal filed on or before or after first day of June, 1988, powers of Principal Commissioner or Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeals. Page No.# 11/22 9. In present facts, provision as contained in Clause (c) would also become relevant since apart from Commissioner having power to invoke jurisdiction under Section 263 of Act, it is clarified that he can invoke such powers only in respect of erroneous portion of order of Assessing Officer causing prejudicial interest to Revenue and such portion of order not being part of consideration in any appeal, having been filed in respect of such assessment order to CIT (A) and matter not being concluded therein. Therefore, in instant facts, what is also required to be taken note of is whether in Assessment Order dated 29.11.2007 and order dated 29.2.2008 passed by CIT (A) in respect of said assessment, issue as to assessee claiming to be mineral based industry was also issue which was raised and taken note of in proceedings whereunder deduction was sought. In order to take note of same, close scrutiny of assessment order dated 29.11.2007 would disclose that deduction under Section 80 IC was issue which had arisen for consideration since deduction was sought on that basis. relevant portion of contention and reply of assesee as taken note in assessment order, is as hereunder :- It is seen that in return of income filed on 31.10.2005 deduction u/s 80-IC has been claimed by way of note in respect of fifty one new wells successfully drilled for production of crude oil (including sixty-eight wells completed in earlier last seven years). amount of claim was not quantified and no deduction has been made from gross total income in computation of income. Audit report in Form No.10CCB was also not submitted along with return of income. amount of deduction claimed u/s 80-IC was subsequently quantified as Rs.369,60,15,777/- and communicated vide company s letter dated 30.03.2006. From No.10CCB was also submitted later on in course of assessment proceedings. In Annexure attached to form it is seen Page No.# 12/22 that deduction has been claimed for 59 wells. assessee was asked to justify its claim of deduction u/s 80-IC vis- -vis provisions of Act. assessee stated that detailed reply given for A.Y. 2006-07 vide letter dated 15.10.2007 may be treated as reply given for A.Y. 2005-06 also as facts and circumstances of case are same. assessee s reply vide letter dated 15.10.2007 is reproduced as verbatim below : (a) Evidence of fulfilling conditions laid down U/S 80IC(2)(a) of 80IC(b) as case may be : M/s Oil India Ltd. (Assessee), is engaged in business of Exploration, Production & sale of crude Oil & natural gas. In course of such business activities assessee running/increasing its business strength by way of existing/new eligible Production Centres (Oil/Gas Wells) producing articles as specified in part of Schedules XIV of Income Tax Act 1961 i.e. Gas Based Intermediate Products under Items No.13 and Mineral Based Industry under Item of 16, are mostly spread over North East Region as well as some part of India with its Regional Office Situated at Duliajan in district of Dibrugarh. 10. Assessing Officer after taking note of reply and contention has concluded as hereunder : It may be true that assessee s wells are spread over North Eastern States and that these wells are producing articles of things specified in Fourteenth Schedule of I T Act. issue is whether these wells would qualify as undertakings or enterprises as envisaged in section 80- IC. assessee has claimed deduction u/s 80-IC in respect of 59 wells by treating each well as new independent production centre. single Form 10CCB has been submitted wherein all profits of these so called independent production centres have been clubbed together. profits of Page No.# 13/22 these wells have been computed by taking sales value of output from these wells and reducing therefrom drilling costs and proportionate production costs. These wells started production on various different dates starting from year 1997-98 till upto 2004-05. Just because profits of plant can be proportionately worked out does not necessarily mean that it became undertaking or enterprise . . They are not undertakings or enterprises. assessee s claim for deduction u/s 80-IC by treating these oil/gas wells as undertakings or enterprises is, therefore, not allowable. requirement of accounts of undertaking to be audited by accountant in order to be admissible for deduction u/s 80-IC is also not satisfied. .. For all these reasons discussed above assessee s claim for deduction u/s 80-IC is disallowed. 11. It is against such conclusion of Assessing Officer in not allowing deduction which was claimed under Section 80 IC, assessee was before CIT (A). CIT (A) took note of claim for deduction as provided in Section 80 IC and, in that light, having considered each oil well as enterprise, has given benefit of deduction as claimed under Section 80 IC, by concluding as hereunder : Applying above tests, each oil well appears to satisfy test of undertaking for purpose of Section 80IB/80IC of Act. Each oil well is distinct, separate and integrate unit for which capital is separately employed and expenses incurred are separately accounted for. Each oil Page No.# 14/22 well produces crude oil and natural gas and therefore it satisfies also one of tests for purpose of claiming benefit of Section 80IB & 80IC. .. For reasons aforesaid it was submitted by AR that benefit under Section 80IB for assessment years 2003-04 and 2004-05 and benefit u/s 80IC for assessment years 2005-06 and 2006-07 are to be allowed. I have considered both assessment order of A.O. as well as written submissions and arguments of Ld. A/R. written submissions of appellant are specific and deal with each issue as raised by A.O. two(2) grounds of appeal, pressed by appellant regarding disallowance of claim of Appellant u/s 80IB and 80IC of Act for A.Y. 2003-04, 2004-05, 2005-06, 2006-07 and also disallowance of discount allowed by Appellant on account of under-recovery of oil marketing company for A.Y. 2005-06 and 2006-07 have been factually explained by appellant and buttressed by relevant case law on issues raised. I have gone through assessment order of A.O. and put across revenues point of view as well as issues involved to A/R s of appellant company. They were asked to submit para-wise rebuttal of A.O s observations etc. Their written submissions dated 27.2.06 explains appellant s appellant s position and clarifies issues involved. This have been summarized by me above. arguments of appellant as well as case law cited by A/R s are persuasive and factual and after careful consideration of merits of both sides I am of considered opinion that grounds relating to disallowance of claim of Appellant u/s 80IB and 80IC of Act for A.Y. 2003-04, 2004-05, 2005- 06, 2006-07 and disallowance of discount allowed by Appellant on Page No.# 15/22 account of under-recovery of oil marketing company for A.Y. 2005-06 and 2006-07 have been adequately explained by appellant company and are deserving of relief. In circumstances, appellant succeeds on both above mentioned grounds. other grounds being withdrawn appeal is treated as allowed. 12. learned senior counsel for assessee in order to substantiate contention that power under Section 263 of Act cannot be invoked when order of Assessing Officer has merged in order in appeal, has relied on decision in cases of :- (1) Oil India Limited Vs. Commissioner of Income-tax, 138 ITR 836 (Calcutta), wherein while considering claim of assessee regarding depreciation on bungalows, which was disallowed by Assessing Officer, and on appeal, appellate authority allowed appeal, but had not given any direction as to quantum of depreciation and when Commissioner subsequently issued show cause notice under Section 263 inviting assessee s objection to his proposal to set aside assessment order insofar as it was prejudicial to interest of Revenue, issue arose as to whether order passed by Commissioner under Section 263 of Act was sustainable. In that context, it was held that in appeal preferred before appellate authority, whole assessment is open for review and when matter raised in appeal is subject matter before Commissioner in revision, Commissioner has no jurisdiction to issue notice under Section 263 of Act and to pass any order. As such, it was held that where appeal is preferred and subject matter of appeal, particularly raised, is subject matter before AAC, that order cannot be subject of order of revision by Commissioner. Such conclusion was reached as what was Page No.# 16/22 urged was quantum of depreciation which was subject matter of appeal and, in that circumstance, Commissioner had no jurisdiction in facts and circumstance of case. (2) Commissioner of Income-tax Vs.- Shashi Theatre (P) Ltd., 248 ITR 126 (Gujarat), wherein assessee had claimed investment allowance and Assessing Officer had allowed claim on plant and machineries, but had not granted investment allowance for remaining items. assessee had preferred appeal and same was decided in his favour and investment allowance was granted on all items. Subsequently, another Commissioner took up matter in revision under Section 263 of Act and ordered that grant of investment allowance by Assessing Officer was erroneous. On appeal, it was held that revision under Section 263 of Act was not justified as order of Assessing Officer had merged in appellate order. Gujarat High Court in addition to question of merger had also kept in view Clause (c) of Explanation to Section 263(1) and has held that Section 263 could not have been invoked. (3) Commissioner of Income-tax Vs.- Mehsana District Co-op. Milk Producers Union Ltd., 263 ITR 645 (Gujarat), wherein similar issue as to whether powers under Section 263 can be invoked when order sought to be revised was already subjected to appeal was considered and it was held that power under Section 263 cannot be exercised. 13. learned senior counsel for Revenue, on other hand, has relied on Page No.# 17/22 decision of Hon ble Supreme Court in case of Commissioner of Income Tax, Gujarat-I, Ahmedabad Vs.- Shri Arbuda Mills Ltd., Ahmedabad, (1998) 9 SCC 702, wherein on issue of merger, it has been held that powers of Commissioner under Section 263 of Act shall extend to such matters as has not been considered and decided in appeal. In facts therein, ITO while making certain additions and disallowances, also accepted claim of assessee in respect of three items. In appeal filed by assessee, three items were not subject matters of appeal. In respect of those three items, CIT exercised his powers under Section 263. It is in that context, it was held that in respect of said three items, there was no merger. 14. From decisions cited on either side, law as enunciated would be clear that in order to consider position as to whether order of Assessing Officer had merged in order of CIT (A) and, in that context, whether subject matter which was issue in assessment proceedings as also in appellate proceedings before CIT (A), and that in revision proceedings before CIT is same, facts involved in each case will have to be taken note so as to arrive at conclusion whether invocation of power under Section 263 of Act to revise such assessment order is in respect of same subject matter and issue which had concluded in assessment as also appellate proceedings. In that background, present facts will have to be noticed. 15. extracted portion supra relating to contention and consideration of assessment proceedings leading to Assessment Order dated 29.11.2007 will disclose that claim for deduction as contemplated under Section 80 IC of Act was predicated on claim that Page No.# 18/22 assessee is mineral based industry located in North Eastern State and reference was also made to Item 16 in Part-A of Schedule XIV of Act. Assessing Officer during course of consideration has stated that it may be true that it is producing articles specified in Schedule XIV of Act. However, claim was disallowed since Assessing Officer was of view that wells regarding which claim for deduction was made cannot be considered as undertaking or enterprise and despite claiming that wells to be independent production centre, single Form 10 CCB was submitted. Hence, claim for deduction under Section 80 IC as made by assessee was disallowed. When appeal was filed to CIT(A) against such disallowance, CIT(A) has reversed conclusion of Assessing Officer and allowed claim by accepting that each oil well appear to satisfy test and it is further held that each oil well produces crude oil and natural gas and, therefore, it satisfies also one of tests for purpose of claiming benefit of Section 80 IB and 80 IC. Accordingly, claim was allowed. 16. In that backdrop, perusal of revision proceedings under Section 263 of Act will disclose that very issue which was considered by CIT(A) and concluded was re- opened, which is indicative by observation of CIT, wherein he has stated that perusal of record shows that Assessing Officer had not examined or applied his mind on basic issue as to whether assessee is actually mineral based industry or not. As noticed, question of considering wells of assessee as undertaking was not accepted by Assessing Officer though claim of mineral based industry was not rejected. Whether such acceptance was erroneous and whether CIT(A) has committed error in allowing claim will lose its relevance when it is to be noticed only to extent of finding out whether same issue could have been examined in subsequent revision proceeding under Section 263 of Act. When in revision proceedings CIT accepts during course of order that Page No.# 19/22 assessee had claimed deduction under Section 80 IC claiming to be mineral based industry and in that background when claim was disallowed by Assessing Officer but allowed by CIT(A), issue would stand concluded and there would be no scope for re-examination in jurisdiction under Section 263 of Act as assessment order has merged in appellate order. matter not having been examined in same manner or to same extent and depth is immaterial. When claim for deduction was on that basis, exception as contained in Clause-(c) to Explanation-1 to sub-section (1) of Section 263 of Act would not apply nor will circumstance stated by Hon ble Supreme Court in case of Shri Arbuda Mills Ltd., Ahmedabad (supra) be relevant to present fact situation. In that view, revision proceedings under Section 263 of Act in present context was not sustainable. 17. contention urged on behalf of assessee is also that ITAT has appropriately decided issue of proceeding under Section 263 of Act not being maintainable and it is contended that it does not satisfy twin test of Assessment order being erroneous and also being prejudicial to interest of revenue. learned Senior Advocate for assessee has relied on decision of Hon ble Supreme Court in case of Malabar Industrial Co. Ltd. Vs. Commissioner of Income Tax (243 ITR 83-SC) = (2000) 2 SCC 718, which was also relied upon by learned Advocate for revenue. In said decision, it is held as hereunder : 5. To consider first contention, it will be apt to quote Section 263(1) which is relevant for our purpose : 263. Revision of orders prejudicial to Revenue. (1) Commissioner may call for and examine record of any proceeding under this Act, Page No.# 20/22 and if he considers that any order passed therein by Assessing Officer is erroneous insofar as it is prejudicial to interests of Revenue, he may, after giving assessee opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as circumstances of case justify, including order enhancing or modifying assessment, or cancelling assessment and directing fresh assessment. Explanation.- * * * 6. bare reading of provision makes it clear that prerequisite to exercise of jurisdiction by Commissioner suo motu under it, is that order of Income Tax Officer is erroneous insofar as it is prejudicial to interests of Revenue. Commissioner has to be satisfied of twin conditions, namely, (i) order of Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to interests of Revenue. If one of them is absent if order of Income Tax Officer is erroneous but is not prejudicial to Revenue or if it is not erroneous but is prejudicial to Revenue recourse cannot be had to Section 263(1) of Act. 7. There can be no doubt that provision cannot be invoked to correct each and every type of mistake or error committed by Assessing Officer; it is only when order is erroneous that section will be attracted. incorrect assumption of facts or incorrect application of law will satisfy requirement of order being erroneous. In same category fall orders passed without applying principles of natural justice or without application of mind. 8. phrase prejudicial to interest of Revenue is not expression of art and is not defined in Act. Understood in its ordinary meaning it is of wide import and is not confined to loss of tax. High Court of Calcutta in Dawjee Dadabhoy & Co. V. S.P. Jain, High Court of Page No.# 21/22 Karnataka in CIT v. T. Narayana Pai, High Court of Bombay in CIT v. Gabriel India Ltd. and High Court of Gujarat in CIT v. Minalben S. Parikh treated loss of tax as prejudicial to interests of Revenue. 9. Mr. Abraham relied on judgment of Division Bench of High Court of Madras in Venkatakrishna Rice Co. v. CIT interpreting prejudicial to interests of Revenue . High Court held : in this context, (it must) be regarded as involving conception of acts or orders which are subversive of administration of revenue. There must be some grievous error in order passed by Income Tax Officer, which might set bad trend or pattern for similar assessments, which on broad reckoning, Commissioner might think to be prejudicial to interests of Revenue Administration. In our view this interpretation is too narrow to merit acceptance. scheme of Act is to levy and collect tax in accordance with provisions of Act and this task is entrusted to Revenue. If due to erroneous order of Income Tax Officer, Revenue is losing tax lawfully payable by person, it will certainly be prejudicial to interests of Revenue. 18. learned Advocate for Revenue has relied on decision of Hon ble Supreme Court in case of Commissioner of Income Tax, Mumbai Vs. Amitabh Bachchan, (2016) 11 SCC 748, wherein revision proceeding under Section 263 of Act was upheld. It is noticed that decision in case of Malabar Industrial Co. Ltd. (supra) was referred therein. issue considered therein was whether revision of assessment was in violation of natural justice and was it beyond scope of show cause notice. In instant case, it is noticed that Assessment Officer had in fact disallowed claim. Even if order was Page No.# 22/22 erroneous in so far as considering or not considering aspect of mineral based industry, same did not suffer from second vice of causing financial prejudice to revenue, which was in fact disallowed by Assessing Officer but ultimately allowed by CIT(A) which in any event cannot be corrected in revision proceeding under Section 263 of Act. 19. Though elaborate contentions have been addressed by learned senior counsel on either side with regard to other aspects including to contend with regard to postulates of mineral based industry, in view of above conclusion, other aspects need not to be adverted to in detail by us. 20. In view of above discussion, order passed by ITAT does not call for any interference. Accordingly, substantial questions of law raised herein are answered against Revenue. 21. In result, appeals bearing Income Tax Appeal Nos.7/2016, 8/2016, 9/2016 and 10/2016 are dismissed. Consequently, C.O. Nos. 9/2017, 10/2017, 11/2017 and 12/2017 are disposed of without specific order. There shall be no order as to costs. JUDGE CHIEF JUSTICE Comparing Assistant Principal Commissioner of Income-tax and Anr, Dibrugarh / Additional Commissioner of Income-tax, Range-2, Dibrugarh v. Oil India Ltd