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2012 (3) TMI 610 - AT - Income TaxRevision u/s 263 - Disallowance u/s 14A - Held that:- The order of the CIT cannot be justified. For invoking the provisions under section 263, two parameters are to be justified. One that the order is ‘erroneous’ and two it is ‘prejudice to the interests of the Revenue’. As far as the order being erroneous in nature, AO after considering that the assessee had offered some of the share transactions as business income and some of the shares held in investment which yielded short term capital gain of more than ₹ 5.79 crores, has only disallowed a portion of the total expenditure in relation to the exempt income to the total income earned by assessee. This is one way of arriving at a reasonable amount for disallowance under section 14A which cannot be faulted. AO had determined the business income at ₹ 14.76 crores and allowed carry forward of losses to be set of thereby determining the business income at Nil. The short term capital gain of ₹ 5.76 crores was to be taxed at 10%. The assessee also had suffered tax on book profit under section 115JB and the Assessing Officer determined the total book profit at ₹ 45.53 crores on which the tax payable at ₹ 7.50 crores worked out at ₹ 3.41 crores. AO had given a finding that the tax payable on book profit is more than the tax payable on the regular income and, therefore, book profit under section 115JB was assessable to tax. The consequential/re-assessment order passed by the Assessing Officer was also placed on record and noticed that the business income was still determined at Nil and the Assessing Officer again accepted the income under section 115JB. The fact is that the assessment was done invoking provisions of section 115JB in both the situations. There is no effect on ultimate assessed income/ book profit and therefore, the order of the Assessing Officer does not cause any prejudice to the Revenue. In view of this, we are of the opinion that the order of the CIT under section 263 cannot be sustained as one of the parameters for invoking the jurisdiction has not been fulfilled. Therefore, without analyzing the rival contentions on various judicial principles, which is only academic in nature, we hold that the order of the Assessing Officer passed originally under section 143 has to be upheld and order of the CIT under section 263 has to be cancelled. Accordingly the assessee’s grounds are allowed and the order under section 263 is therefore, cancelled.
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