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2014 (11) TMI 884 - KARNATAKA HIGH COURTPower to invoke section 263 – Direction made by the Tribunal to CIT for adding back the provision for bad and doubtful debts – Whether the Tribunal was right in holding that the jurisdiction exercised u/s 263 of the Act to treat the provision declared as diminution in the value of shares/assets to be added back under Clause (c) of the Explanation to Section 115 JB of the Act - Held that:- In COMMISSIONER OF INCOME-TAX Versus MAX INDIA LTD. [2007 (11) TMI 12 - Supreme Court of India] it has been held that while dealing with the retrospective operation of amendments and the exercise of powers under Section 263 of the Act, the phrase "prejudicial to the interests of the revenue" u/s 263 has to be read in conjunction with the expression "erroneous" order passed by the AO - Every loss of revenue as a consequence of an order of the AO cannot be treated as prejudicial to the interest of the revenue - the mechanics of the section have become so complicated over the years that two views were inherently possible - Therefore, subsequent amendment in 2005 even though retrospective will not attract the provision of Section 263 - though the amendment is retrospective, in this case, the Revenue cannot have the benefit of the same while proceeding u/s 263 – Decided against revenue.
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