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2011 (11) TMI 117 - AT - Income TaxLegality of revision proceedings in view of different legal position prevailing at time of assessment and at time of revision orders- set off of loss from eligible profits of business for the purpose of computing deduction u/s 80 HHF of the Act- deductibility of expenses incurred in foreign currency from export turnover and total turnover for computing deduction u/s 80HHF- allowability of bad debts- Held that:- What is to be seen is the legal position prevailing as on the point of time when revision order is passed, particularly when there is significant difference in the legal position between the point of time when assessment is framed and when it is revised. Such invoking of revision powers is upheld . Thereby, It is held that brought forward business losses should be reduced before computing the deduction under section 80 HHF. See IPCA Laboratories Ltd Vs. Dcit (2004 - TMI - 6141 - Supreme court). Regarding deductibility of expenses incurred in foreign currency for rendering technical services outside India from export turnover and total turnover, for the purpose of computing deduction u/s 80 HHF , this point was picked up for revision during the revision proceedings. The show cause notice is issued on the ground that the computation is incorrect. On submission by the assessee there are no findings by the CIT to the effect that any of these contentions are incorrect.The reason which can be inferred from the revision order (that the AO has not verified the issue) is different from the reason set out in the show cause notice (that such expenses cannot be allowed). Unless the CIT points out any defect in the stand of the Assessing Officer, it cannot be open to him to exercise the revision powers. With regard to allowability of bad debts, it is held that :-it is no longer necessary for the assessee to establish that the debt has actually become unrecoverable and as long as the assessee has actually written off the debt in the books of accounts, and upon fulfillment of other necessary preconditions. See TRF Ltd Vs CIT(2010 - TMI - 76626 - Supreme Court ). Decided partly in favor of the Assessee.
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