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2013 (10) TMI 6 - HC - Income TaxRevision u/s 263 appropriate or not – method of determination of international income - ITAT has held that 10 per cent thereof assessed as taxable income will establish that the Revenue was not prejudiced in the instant case and, accordingly, exercise of power under Section 263 of the Act was inappropriate - Held that:- the method referred to in paragraph 5 of Article 7 of the Treaty is a method known to the domestic law of the contracting State, in the instant case, India. The Assessing Officer and the Tribunal have failed to record anywhere that the method, that was adopted by the Assessing Officer to attribute profit of the assessee, is recognised by any law in India. This aspect of the matter goes to the root. There is no question, when the assessee has represented that it has maintained accounts, either in cash or in mercantile system, but has failed to establish that it has, in fact, maintained any such accounts, of applying best judgment method of assessment. In other words, if the assessee has maintained the accounts and has established that its expenses are more than its income or receipt, it is not liable to pay any tax in India. In the event, however, it fails to establish all or any of its expenses, the expenses shown to have been incurred, which could not be established, will be treated as the income of the assessee. - matter remanded to AO for reconsideration - Decided in favor of assessee.
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