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2016 (1) TMI 1287 - AT - Income TaxRevision u/s 263 - receipt of development fund - claim of exemption u/s 11 - Held that:- The issue of receipt of development fund was duly examined by the Assessing Officer in the AYs 2007-08 and 2009-10 while completing the assessment u/s 143(3) of the Act. Moreover, the CIT(Exemption) has observed in a show cause notice that the development fund was not routed through income and expenditure account and was directly taken to the balance sheet. The observations of the CIT(Exemption) is not correct as the assessee has taken this amount as income in the income and expenditure account and thereafter it was credited to the balance sheet and having applied its income to the chargeable purpose, the assessee has claimed exemption u/s 11 of the Act. For invoking the provision of Section 263 of the Act, the assessment is required to be held as erroneous and prejudicial to the interest of the Revenue. If the assessment order is only erroneous and not prejudicial to the interest of the Revenue the provision of Section 263 of the Act cannot be invoked. Since the assessee has taken the development fund to the income and expenditure account after treating it to be income, the assessment order cannot be called to be prejudicial to the interest of the Revenue, though it may be erroneous for certain reasons. Assessment order is neither erroneous nor prejudicial to the interest of the Revenue, the provisions of Section 263 cannot be invoked. - Decided in favour of assessee.
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