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2005 (2) TMI 447 - AT - Income TaxChallenged the revision order passed u/s 263 - erroneous and prejudicial to the interest of Revenue - reducing the DEPB entitlements from profits of the business - HELD THAT - We are of the view that on the given facts and circumstances of the case, it cannot be said that the order of the AO is erroneous and prejudicial to the interest of Revenue. The AO has passed the order under s. 143(3) after taking all the necessary details and after discussing the case with the representative of the assessee. Now, the learned CIT has a different view on the issue involved. Under the circumstances, the decision of Hon'ble Supreme Court in the case of Malabar Industries Co. Ltd. 2000 (2) TMI 10 - SUPREME COURT , comes to the help of the assessee. Thus, we hold that on the given facts and circumstances of the case, the learned CIT was not justified in invoking the jurisdiction u/s 263. Accordingly, the order of the learned CIT is quashed. In the result, the appeal filed by the assessee is allowed.
Issues involved:
The appeal is against the order of CIT u/s 263 for asst. yr. 2000-01. Summary: Issue 1: Revision of assessment order under s. 263 The assessee appealed against the CIT's order u/s 263, challenging the revision of the assessment order for asst. yr. 2000-01. The grounds included errors in revising the assessment order under s. 263 of the IT Act, particularly regarding the treatment of DEPB entitlements under s. 80HHC. The appellant argued that the assessment order was not prejudicial to the interest of Revenue, requesting either to quash the order under s. 263 or to compute the deduction under s. 80HHC without reducing the DEPB entitlements from profits of the business. Issue 2: Nature of export incentives and deduction under s. 80HHC The brief facts leading to the appeal highlighted that the AO allowed excess deduction under s. 80HHC, leading to the CIT issuing a notice for revision under s. 263. The dispute revolved around the treatment of export incentives, specifically DEPB credits, and whether the AO's actions were erroneous. The CIT directed the AO to restrict the allowable deduction under s. 80HHC, which the appellant contested, arguing that the AO's decision was based on necessary details and documents provided during scrutiny proceedings. Issue 3: Jurisdiction under s. 263 and legal interpretations The appeal involved a legal battle over the jurisdiction under s. 263 and conflicting interpretations of the law regarding the treatment of DEPB licenses and export incentives for deduction under s. 80HHC. The appellant relied on precedents and legal provisions to support the AO's decision and argued that the CIT's view was not sustainable in law. The decision of the Hon'ble Supreme Court in Malabar Industrial Co. Ltd. vs. CIT was cited to support the appellant's position. Conclusion: After considering the submissions and facts, the Tribunal held that the AO's order was not erroneous and prejudicial to the interest of Revenue. Citing the decision in Malabar Industries Co. Ltd. case, the Tribunal quashed the CIT's order under s. 263. The appeal filed by the assessee was allowed, emphasizing the importance of sustainable legal interpretations in tax matters.
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