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TMI Blog2015 (1) TMI 241X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the mercantile system of accounting. Calculation of deduction u/s 80HHC – Held that:- Since the deduction claimed by the assessee and accepted by the AO is in accordance with the interpretation of Section 80HHC, the CIT was not justified in setting aside the order of the AO – in Commissioner of Income Tax v. Max India Ltd. [2007 (11) TMI 12 - Supreme Court of India] it has been held that the phrase “prejudicial to the interests of the Revenue” in section 263 of the Act 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 interests of the Revenue – thus, the CIT committed serious error in law in cancelling t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the return filed for A.Y. 1994-95, the assessee claimed deduction of ₹ 17,45,430/being income already considered in A.Y. 1993-94. The CIT required the assessee to clarify the position regarding the claim of amount of ₹ 17,45,430/as export benefits in A.Y. 1993-94 when the same were actually received in the A.Y. 1994-95. From the details furnished by the assessee it was noticed that the amount of ₹ 17,45,430/comprised of two components; A. Export Incentive ₹ 7,43,894/- B.Licence Premium Rs.10,01,536/- 2. According to the CIT, the profit on sale of licence can be considered only when the licence is actually sold and profits are received in terms of S.28(ii)(a) and the same cannot be considered on mercantile bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g and that export incentives are linked to and springs from the exports made by the assessee. In the case of an assessee who follows mercantile system of accounting, it is necessary that even if by the end of the year export incentives were not realized, the assessee should evaluate the benefits and take the same in its Profit and Loss Account, which can later on be adjusted on the basis of actual receipt. 6. Therefore, in our view, the assessee was justified in including the amount of export incentive and licence premium in the A.Y. 1993-94 and the A.O was justified in accepting the revised return filed by the assessee wherein, the sum of ₹ 17,45,430/was included as income of the A.Y. 1993-94 on the basis of assessee having followed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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