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2013 (12) TMI 181 - ITAT CHENNAIAssessment u/s 263 – Held that:- Following Tips Cassettes and Record Co. [2000 (7) TMI 210 - ITAT BOMBAY-E] - the assessee was a dealer of music and the nature of capital or revenue vis-a-vis various expenditure has to be considered on this point. Since the assessee was dealer in music, the master plate or in turn the rights which enable the assessee to obtain the master plate (assignment of copyrights) become raw material of the assessee. The assessee sells music purchased on master plate and transmits on a different device called cassette or record. The raw material, i.e. master plate is integral part of the profit earning process and not the capital field. The Commissioner of Income-tax was not correct in holding that the assessment order is erroneous - For invoking the provisions of section 263 two conditions have to be satisfied - The order of the Assessing Officer sought to be revised is erroneous ; and The order of the Assessing Officer is prejudicial to the interests of the Revenue – Following Malabar Industrial Co. Ltd. v. CIT [2000 (2) TMI 10 - SUPREME Court] - The phrase 'prejudicial to the interests of the Revenue' has to be read in conjunction with an 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 – Decided in favour of Revenue.
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