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2015 (10) TMI 1750 - HC - Income TaxRevision u/s 263 - whether AO allowing deduction under Sections 36(1) (viia) (c) and 36 (1) (viii) in favour of the Assessee was erroneous as well as prejudicial to the interest of the Revenue? - Held that - The Court is satisfied that in terms of the law explained by the Supreme Court in Malabar Industrial Co.Ltd. v. CIT (2000 (2) TMI 10 - SUPREME Court) as followed in CIT v. Honda Siel Power Products Ltd. (2010 (7) TMI 38 - HIGH COURT OF DELHI) the view taken by the AO in the present appeal is a possible one and there was no occasion for the CIT to have exercised jurisdiction under Section 263 of the Act. The impugned order of the ITAT therefore does not suffer from any legal infirmity. - Decided in favour of assessee.
Issues: Appeal against ITAT order for AY 2007-08; Validity of CIT order under Section 263; Interpretation of deductions under Sections 36(1)(viia)(c) and 36(1)(viii).
Analysis: 1. The appeal before the Delhi High Court was against the ITAT order for the Assessment Year 2007-08. The main issue was the validity of the Commissioner of Income Tax's order under Section 263, which concluded that the AO's order allowing deductions under Sections 36(1)(viia)(c) and 36(1)(viii) was erroneous and prejudicial to the Revenue's interest. 2. The ITAT examined whether the total income for Section 36(1)(viia)(c) should be computed after allowing the deduction under Section 36(1)(viii). The ITAT noted conflicting views in previous decisions but ultimately found that both deductions could be independent of each other, leading to further interpretations. 3. The High Court, following the law explained by the Supreme Court in Malabar Industrial Co. Ltd. v. CIT and its own decision in CIT v. Honda Siel Power Products Ltd., held that the AO's view was a possible interpretation. The Court found no legal infirmity in the ITAT's order and concluded that the CIT had no grounds to exercise jurisdiction under Section 263. 4. Ultimately, the High Court dismissed the appeal, stating that no substantial question of law arose from the case. The judgment reaffirmed the importance of considering different interpretations in tax matters and upheld the principle that the AO's decision was within the bounds of the law, thereby supporting the ITAT's order.
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