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2020 (10) TMI 520 - KARNATAKA HIGH COURTRevision u/s 263 - HELD THAT:- From close scrutiny of Section 263 it is evident that twin conditions are required to be satisfied for exercise of revisional jurisdiction u/s 263 firstly, the order of the AO is erroneous and secondly, that it is prejudicial to the interest of the revenue on account of error in the order of assessment. The aforesaid provision was considered in MALABAR INDUSTRIAL CO. LTD [2000 (2) TMI 10 - SUPREME COURT] and held that the phrase ‘prejudicial to the interests of the revenue’ has to be read in conjunction with an erroneous order passed by the AO and every loss of revenue as a consequence of the order of the AO cannot be treated as prejudicial to the interest of revenue. Where two views are possible and ITO has taken one view with which the Commissioner does not agree, the order passed by the AO cannot be treated as erroneous order prejudicial to the interest of the revenue. Tribunal has held that the CIT while exercising powers u/s 263 of the Act had relied on an order passed under Section 263 of the Act in respect of Assessment Year 2007-08. The aforesaid order has been quashed by the Tribunal [2011 (12) TMI 590 - ITAT, BANGALORE]. It has further been held that the AO after due application of mind and on proper consideration of the material available on record has allowed the claim for depreciation on lease hold rights. The order passed by the AO can neither said to be erroneous nor prejudicial to the interest of the revenue. Tribunal has rightly quashed the order passed by the Commissioner of Income Tax. Decided in favour of assessee.
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