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TMI Blog2011 (1) TMI 1571X X X X Extracts X X X X X X X X Extracts X X X X ..... e business of job work of drainage and water supply line for the Government of Gujarat. The assessment order under section 143(3) was finalised on 19-12-2007 on a total income of ₹ 2,42,353/- against the returned NIL income. The learned Commissioner on going through the record noticed that the assessment order is erroneous and prejudicial to the interest of the Revenue, because the order was passed without making relevant inquiries with reference to the method of accounting of the assessee. Therefore, the correctness of the method of accounting is considered on routine basis. The learned Commissioner referred to some of the decisions in support of his invoking jurisdiction under Section 263 of the Income Tax Act and issued show cause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee was granted deduction and interest would also be covered by the provision. Therefore, the income of the assessee is exempt. The learned CIT however did not accept the contention of the assessee and noted that the AO has completed assessment in a cavalier manner without verifying whether the decision of the ITAT in A.Y.1994-95 and 1997-98 were accepted, wherein the deduction under section 80P(2)(a)(vi) have been allowed. The learned CIT has also noted that the exemption should not be allowed to the assessee, accordingly, the assessment order was found to be erroneous and prejudicial to the interest of the Revenue and the AO was directed to make fresh assessment accordingly after verifying the facts on record. 3. The learned cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of CIT Vs. Max India Ltd., 295 ITR 282 considering its earlier decision in the case of Malabar Industries Company Ltd., 243 ITR 83 held as under: The phrase prejudicial to the interests of the Revenue in section 263 of the Income-tax Act, 1961, has to be read in conjunction with the expression erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the Revenue. For example, when the Assessing Officer adopts one of two courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Assessing Officer has taken one view with which the Commissioner does not agree, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad granted concession under section 80-IB. The claim of the assessee had been found to be genuine. The Assessing Officer had also examined the various workers of the assessee and then recorded the finding. The Assessing Officer was justified in granting the special deduction under section 80-IB. The order of revision disallowing the special deduction was not valid. Considering the facts of the case, in the light of the above decisions, we are of the view that the learned Commissioner should not have exercised jurisdiction under Section 263 of the I.T.Act on the matter in issue, because the order of the AO is not erroneous and prejudicial to the interest of the Revenue. It is admitted fact that in A.Y.1994-95, the CIT(A) allowed the cla ..... X X X X Extracts X X X X X X X X Extracts X X X X
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