INCOME TAX ACT, 1961

Section 263

Revision under section 263 - Validity - Nothing erroneous nor prejudicial to interest of Revenue found in order of AO - None of conditions fulfilled in order to invoke provision of section 263

Assessee-company claimed deduction under section 10A as well as set-off of business loss for previous assessment year against income of the year under consideration. It also claimed carry forward of business loss pertaining to the earlier assessment year for set off in the subsequent years. AO completed the assessment in accordance with the said claim. CIT exercised his revisionery power under section 263 on the ground that the AO failed to follow the principle of carry forward and set off as brought out in section 10A. Held: Deduction under section 10A has to be allowed before set-off of unabsorbed loss and depreciation of non-eligible business unit of assessee. It was found that the order of AO was based on the above mentioned principle and thus, the same was just and proper. Therefore, there was no justification in the order passed by the CIT who had not taken into consideration such particular aspect of the matter. Further, there was nothing erroneous found in the order of the AO, nor it was prejudicial to the interest of the Revenue. Furthermore, none of the conditions was fulfilled by the order passed by CIT in order to invoke provision of section 263. Hence, the order passed under section 263 was quashed.

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2009-10

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