INCOME TAX ACT, 1961

Section 263

Revision under section 263 - Erroneous and prejudicial order - AO having taken note of assessee's submission on the matter though not specifically called for under section 142(1) -

Pr.CIT held assessment order as erroneous and prejudicial to the interest of revenue on the ground that submissions made by assessee during the course of assessment proceedings with respect to taxability of interest on arbitration awards were not called for by AO in notice under section 142(1) and the submissions were purely suo moto voluntary submissions which would clearly demonstrate that AO did not apply his mind to this aspect while framing assessment. Held: Computation of income filed by assessee clearly demonstrated that arbitration awards received during the year were offered to tax whereas interest on arbitration award was reduced while computing the taxable income. The revenue recognition policy being followed by the assessee to recognize interest income was fully disclosed in Notes to the account. Assessment orders for earlier years were specifically called for vide notice under section 142(1) and same were also furnished by assessee. Upon perusal of the same, AO made. Specific disallowance being conscious of the fact that certain arbitration income was not offered to taxation by the assessee. Accordingly, it could not be said that there was non-application of mind and no view was taken by AO on the concerned matter and, therefore, assessment order could not be termed as erroneous or prejudicial.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

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