S.J Kathawala, J.:— The above appeal is filed by the Revenue impugning the order dated August 24, 2001, passed by the Income-tax Appellate Tribunal, Mumbai Bench in I.T.A No. 2536.Mum/1999 filed by the assessee for the assessment year 1995–96.

2. The above appeal was admitted by this court on August 11, 2004 on the following substantial question of law:

“Whether on the facts and in the circumstances of the case and in law, the Income-tax Appellate Tribunal was justified in upsetting the order passed by the Commissioner of Income-tax under section 263 of the Income-tax Act, 1961?”

3. The relevant facts giving rise to the present appeal are set out hereunder.

(i) The assessee is engaged in the business of exporting garments as well as sales in the domestic market.

(ii) For the assessment year 1995–96 the assessee filed return of income on November 30, 1995 declaring the total income at Rs. 3,51,020. The return of income was processed under section 143(1)(a) on October 18, 1996. Notice under section 143(2) was issued to the assessee on August 7, 1996.

(iii) Vide the Department's letter dated October 30, 1996 the assessee was asked to file the details and to explain the reasons for increase in the expenses. The assessee by its letter dated November 5, 1996 filed details of the export sales, local sales, job work charges received, purchases, duty drawback, sale of export entitlements, job work charges paid and other expenses and also reasons for increase in the expenses. It was also explained that during the year gross profit ratio had increased as compared to earlier year. The Assessing Officer by his order dated December 13, 1996 recorded the aforesaid facts and further recorded that all the remittances out of the exports have been received by the assessee before the end of the year and there was no outstanding as on March 31, 1995. The Assessing Officer has further recorded that the copies of the audit report in Form No. 3CD, audit report in Form No. 10CCAC and working of deduction under section 80HHC have been filed along with the return of income. As the sales and purchases were supported, books of account audited, statutory audit reports in Form Nos. 3CA, 3CD and 10CCAC had been filed, the book results were accepted. After discussion the Assessing Officer computed the total income whereunder the net profit pertaining to the export business of the assessee was computed at Rs. 65,07,090 and the net profit pertaining to local business of the assessee was computed at Rs. 3,69,491 and the assessee was allowed deduction under section 80HHC of Rs. 65,07,090, i.e, the entire net profit of the assessee pertaining to its export business.

(iv) Thereafter a notice under section 263 of the Income-tax Act, 1961 was issued by the Commissioner of Income-tax to the assessee on the ground that the assessment order under section 143(3) dated December 31, 1996 was erroneous as the assessee was entitled to only proportionate deduction in the light of section 80HHC(3) of the Act, and proposing suitable action. The assessee was given an opportunity to be heard in the matter. The Commissioner of Income-tax by his order dated March 30, 1999 accepted the fact that the assessee is involved in both export and domestic sales and is maintaining separate books of account and that the export profits are clearly identifiable. However, in his opinion the deduction can be granted only as per the provisions of section 80hhc(3)(a). The Commissioner of Income-tax has, therefore, held that in order to arrive at the amount deductible under section 80HHC in the case of an assessee doing export business as well as some other domestic business the fraction of “export turnover” to “total turnover” would be applied to the profit computed by the assessee under the head “Profits and gains of business or profession”. The Commissioner of Income-tax has in his order recorded that though the assessee has quoted the decision of the Income-tax Appellate Tribunal wherein it has been held that if the export profits were clearly identifiable, then, such profits were available for deduction, he would differ with the same due to the above statutory provision. The Commissioner of Income-tax has, therefore, held that since the Assessing Officer has not followed the above provision of law in the order under section 143(3) dated March 31, 1996 while allowing the deduction under section 80HHC and as deduction allowed is higher than what is allowable, the order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of the Revenue. The Commissioner of Income-tax, therefore, recalculated the deductions under section 80HHC and held that the assessee is eligible for deduction under section 80HHC to the extent of Rs. 41,91,131 as against Rs. 65,07,090 allowed by the Assessing Officer.

(v) The assessee being aggrieved by the order of the Commissioner of Income-tax, dated March 30, 1999 appealed before the Appellate Tribunal. The Appellate Tribunal by its order dated August 24, 2001 came to the finding that the view taken by the Assessing Officer was a possible view and, therefore, it cannot be concluded that the order of the Assessing Officer was erroneous and was prejudicial to the interest of the Revenue. The Tribunal recorded that reliance was placed by the assessee before the Commissioner of Income-tax on the decision reported in the case of V.D Swami and Co. Ltd. v. Deputy CIT reported in [1993] 44 ITD 91 (Mad) and in the case of Bajaj Tempo Ltd. v. CIT reported in [1992] 196 ITR 188 (SC). The Tribunal recorded that the scope of interference under section 263 is not to set aside merely unfavourable orders and bring to tax some money to the treasury nor is the section meant to get sheer escapement of revenue. It is taken care of by other provisions of the Act. It was recorded that section 263 is to be invoked not as a jurisdictional corrective or as a review of subordinate order in exercise of supervisory powers but it is to be invoked and employed only for the purpose of setting right distortions and prejudices to the Revenue. The Appellate Tribunal after taking into consideration the entire conspectus of the case, came to a finding that since the view taken by the Assessing Officer was a possible view and considering the decisions relied upon by the assessee the condition precedent for invoking jurisdiction under section 263 did not exist and the order of the Commissioner of Income-tax was quashed.

(vi) Being aggrieved by the order of the Appellate Tribunal dated August 24, 2001 the above appeal was filed by the Revenue which was admitted on August 11, 2004 on the substantial question of law set out in paragraph 2 above.

4. The advocate appearing for the Revenue conceded before us that the view taken by the Assessing Officer was a possible view.

5. However, he contended that the Assessing Officer has not given any reasons for allowing deduction to the assessee under section 80HHC in respect of the entire net profit of Rs. 65,07,090 pertaining the export business of the assessee. The order is, therefore, passed without application of mind. The advocate for the Revenue stated before us that except for this submission he has no other submission to make.

6. The advocate for the assessee on the other hand contended that there is no substance in the contention of the advocate for the Revenue that the Assessing Officer has not applied his mind at the time of allowing the deduction of Rs. 65,07,090 under section 80HHC of the Act. He has pointed out that the Assessing Officer has sought particulars from the assessee and after the assessee provided all the particulars required by the Assessing Officer and after discussion the Assessing Officer took a view that the assessee is eligible to reduction of the entire export profit amounting to Rs. 65,07,090 under section 80HHC of the Act. The advocate for the assessee has also relied upon a decision of this court in the case of Commissioner Of Income-Tax v. Gabriel India Ltd. reported in [1993] 203 ITR 108. In that case the Commissioner of Income-tax had disagreed with the conclusion arrived at by the Income-tax Officer namely that the expenditure was revenue in nature. The Commissioner of Income-tax had reopened the matter under section 263 and after hearing the assessee had directed the Income-tax Officer to rehear the matter. This court has in that decision held that in order to exercise the powers under sub-section (1) of section 263 of the Act there must be material before the Commissioner to consider that the order passed by the Income-tax Officer was erroneous in so far as it is prejudicial to the interest of the Revenue. It must be an order which is not in accordance with law or which has been passed by the Income-tax Officer without making any inquiry in undue haste. This court has in the said decision also set out that the Income-tax Officer in that case had made the inquiries in regard to the nature of the expenses incurred by the assessee. The assessee had given a detailed explanation in that regard by a letter in writing. Evidently the claim was allowed by the Income-tax Officer on being satisfied with the explanation of the assessee. It was held by this court that such a decision of the Income-tax Officer cannot be held to be “erroneous” simply because in his order he did not make elaborate discussion in that regard.

7. We have considered the arguments advanced by the advocates appearing for the Revenue as well as the assessee. In the instant case as recorded earlier, the Income-tax Officer had by his order dated October 30, 1996, sought details/explanation from the assessee which the assessee had given by his letter dated November 5, 1996. It is evident from the order of the Assessing Officer that he has considered all detailed particulars filed before him and after discussion allowed the deduction of the entire profit earned by the assessee pertaining to its export business. We are in complete agreement with the decision of this court in the case of Commissioner Of Income-Tax v. Gabriel India Ltd., [1993] 203 ITR 108 and we reject the submission of the Revenue that the order of the Assessing Officer is erroneous or is passed without application of mind because in his order he has not made elaborate discussion in that regard. In any event the Revenue has admittedly not argued before the Commissioner of Income-tax or before the Tribunal that the order passed by the Assessing Officer was without application of mind. The Commissioner of Income-tax has set aside the order of the Assessing Officer only on the ground that the Commissioner of Income-tax did not agree with the view taken by the Assessing Officer and took a view different than that taken by the Assessing Officer. In our view it cannot be said that the Assessing Officer has not applied his mind while granting deduction to the assessee under section 80HHC as regards net profit earned by the assessee pertaining to its export business. In our view, the Tribunal is correct in its view that the view taken by the Assessing Officer was a possible view and that the condition precedent for invoking jurisdiction under section 263 by the Commissioner of Income-tax did not exist.

8. In view of the above, we hold that the Income-tax Appellate Tribunal was justified in upsetting the order passed by Commissioner of Income-tax under section 263 of the Income-tax Act, 1961. We, therefore, answer the question of law raised in this appeal in favour of the assessee and against the Revenue. The above appeal, therefore, stands dismissed. However, there will be no order as to costs.