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2022 (9) TMI 283 - AT - Income TaxRevision u/s 263 by CIT - capital gain computation - book profit computation u/s. 115JB - Scope of order prejudicial to the interest of Revenue - PCIT has revised the order of the AO for the reason that the AO has not examined the fact that the sale consideration has not been reflected in the books of account resulting in understatement of book profits and the resultant tax - whether the AO during the course of assessment has examined the details relating to the capital gains? - HELD THAT:- AO has called for the details pertaining to the long term capital gain along with supporting documents and proof and the assessee vide letter had furnished the computation, copy of purchase deed, communication from BMRCL and ledger abstract showing cost including stamp paper, registration charges etc. The assessee has also furnished the details of tax deducted along with reconciliation as per P&L account and Form 26AS before the AO where the details of TDS done by BMRCL was furnished. The AO has verified these details and has passed the assessment order making a disallowance u/s. 14A of the Act r.w. Rule 8D. Though there is no mention specifically on the verification of capital gains by the AO, the same cannot be a reason for coming to the conclusion that the AO has not made any enquiry. Also the enquiry made by the AO need not be extended to the verification of the P&L Account of the assessee based on which computation u/s. 115JB was prepared as the assessee being a public limited company has prepared the accounts as per the Companies Act and the same was approved by the share holders in the AGM of the company. The contention of the PCIT that the decision APOLLO TYRES LTD. [2002 (5) TMI 5 - SUPREME COURT] is not applicable in assessee’s case as the accounts are not prepared as per Companies Act has no merits, since the accounts are audited and certified by the auditors in this regard. The Hon’ble Supreme Court in the case of Malabar Industrial Co. Ltd. [2000 (2) TMI 10 - SUPREME COURT] had observed that phrase ‘prejudicial to the interest of Revenue’ has to be read in conjunction with an erroneous order passed by the AO. Every loss of Revenue as a consequence of an order by the AO cannot be treated as prejudicial to the interest of the Revenue. In the given case the AO has perused the materials and have come to the conclusion accepting the book profit computation of the assessee. Further the assessee has also submitted before the AO/PCIT the fact that the compensation/ consideration is accounted in the FY 2015-16 and offered to tax in the year under consideration. We are of the considered view that the AO has correctly accepted the book profit computation u/s. 115JB - We therefore set aside the impugned order of the PCIT passed u/s. 263 and restore the assessment order. The issue is allowed in favour of the assessee.
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