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2011 (3) TMI 1041 - AT - Income TaxJurisdiction power u/s 263 by CIT(A) - whether this surplus arising out of prepayment of sales tax loan and credited to the profit and loss account constitutes capital receipt or revenue receipt - as per CIT(A) since this amount of Rs.34.35 Crores [remission of trading liability] has been held as taxable, the Assessing Officer failed to tax - Held that:- The view taken by the A.O. is one of the possible view and it is not a case to invoke section 263 of the Act. It is not even revenue's case that Assessing Officer not applied the mind with regard to taxability on account of remission of liability, but all that it is contended before us is Assessing Officer reached incorrect conclusion. However, not only that the Assessing Officer had formed a possible view of the matter but also the view so formed by him in the light of the Special Bench decision in the case of Sulzer India Limited (2010 (11) TMI 728 - ITAT, MUMBAI) which is binding precedent for us reflects correct legal position. In view of the facts and circumstances of the case and also following the aforesaid decisions of Malabar Industrial Co. Ltd. Versus Commissioner of Income-Tax [2000 (2) TMI 10 - SUPREME Court] we set aside the order passed by the Commissioner u/s.263 and restore the order of the Assessing Officer. Deferred sales tax liability credited by the assessee under the capital reserve account in its books of account is a capital receipt and cannot be termed as remission/cessation of liability and consequently no benefit has arisen to the assessee in terms of section 41(1)(a) of the Income-tax Act, 1961 - Decided in the favour of the assessee
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