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2013 (12) TMI 607 - HC - Income TaxValidity of order u/s 263 - Held that:- The Commissioner in her order under Section 263 has recorded specific findings as to why and for what reason she felt that the order passed by the Assessing Officer on two accounts was erroneous and prejudicial to the interest of Revenue - Computation of book profits u/s 115JA - Under proviso to clause (i) of the Explanation to Section 115JA reserve or provision made may relate to any period and not during the period between 1st April, 1997 and 31st March, 2001 - These two dates are relevant as Section 115JA is applicable during this period. Clause (i) operates when an amount is withdrawn from provision made or reserve created but as per the proviso adjustment can be made only when at the time of creation of reserve or the provision, the amount in question was duly accounted for by increasing the book profits by the said reserve or provision - Transfer from revaluation reserve either should have been credited to the profit and loss account or reduced from the depreciation provided in the books - The respondent-assessee had credited the same amount to the depreciation account and also the profit and loss account in the year in question. Disallownace u/s 14A - Held that:- the Assessing Officer had failed to disallow expenditure in respect of exempt income as per the mandate of Section 14A of the Act - Section 14A was introduced by Finance Act, 2001, which was tabled in the Parliament on 28th February, 2001. The said provision was introduced with retrospective effect from 1st April, 1962 - The quantum of deduction should be made on reasonable basis - The the Commissioner had rightly invoked Section 263 of the Act as the order of the Assessing Officer was erroneous and prejudicial to the interest of the Revenue - adjustment of Rs.1.35 crores should not have been allowed under clause (i) to Explanation to Section 115JA and deduction should have been also made towards expenditure to earn dividend income, which did not form part of taxable income under Section 14A of the Act. - Decided in favour of Revenue.
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