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2013 (1) TMI 621 - AT - Income TaxValidity of assessment made u/s 263 by CIT - Order of A.O. sought to be revised is erroneous and also prejudicial to the interests of the Revenue Held that:- The role of the Assessing Officer under the Income-tax Act, is not only that of an adjudicator, but also of an investigator. He cannot remain passive in the face of a return which apparently may be in order but calls for further enquiry. He must discharge both the roles effectively. The assessment order passed by the A.O. should reveal that there is proper investigation and enquiry made by the A.O. and he has applied his mind to the material available before him before coming to his conclusions. In favour of revenue Tonnage Taxation - Chapter XIIG Whether gain on account of foreign exchange fluctuation is related to the activity of operating qualifying ships has to be taxed under the Tonnage Tax Scheme or income from other sources - Held that:- Following the decision in case of Dredging Corporation of India Ltd. (2011 (7) TMI 584 - ITAT VISAKHAPATNAM) the gains realized on the foreign exchange fluctuation normally take the colour of the primary transactions. The assessee has entered into certain transactions in foreign currency in connection with its core activity. Accordingly the exchange difference arising out of such activities should be treated as related to the core activity In favour of assessee Disallowance of Gratuity CIT doubting the credibility of the report of the actuary Revenue argued that there is no evidence of accrual of the liability by the close of the relevant accounting year, the expenditure cannot be allowed in terms of Sec.43B Assessee had deposit said amount in gratuity fund with bank before the due date of filling of return - Held that:- The CIT was not justified in discarding the evidences produced before him, on doubts and presumptions only without properly verifying them. If the fact of payment of gratuity is established from the evidence available on record, then the deduction claimed by the assessee cannot be disallowed invoking the provisions of Sec.43B. Direct the A.O. to verify the bank account Remand back in favour of assessee Disallowance of expenses for issuing Foreign Currency Convertible Bonds (FCCB) Revenue or capital expenditure - Assessee has issued the FCCBs giving an option to the bond-holders for converting the bonds into shares Held that:- A.O. has enquired about the issue of FCCB and the expenditure claimed in that regard, however, in the assessment order there is not even a whisper on this issue. Nothing is also available on record before us which reveals that the Assessing Officer has applied his mind to this issue and has made an in depth enquiry to find out the exact nature of the expenses claimed - Remand back to A.O.
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