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2015 (4) TMI 667 - AT - Income TaxRevision of assessment order - Deduction u/s 35D and disallowance u/s 14A - AO had verified the issues at the time of assessment proceedings - Held that:- In the present case, it is seen that Section 263 has been invoked on two grounds namely deduction u/s. 35D and disallowance u/s. 14A. With respect to deduction u/s. 35D it is an undisputed fact that the expenses were incurred by the Assessee in the year ending 31st March, 2007 relevant to assessment year 2007-08 and the first year of claim was A.Y. 2007-08 and in that year the claim of the Assessee has been accepted u/s. 143(1) and no action u/s. 147 or 263 has been taken in for A.Y. 2007-08. For the year under consideration, from the query of the A.O raised during the course of assessment proceedings, it is seen that Assessee in the revised return had claimed higher deduction from that claimed in the original return. The claim of Assessee in the revised return, after considering the submissions of the Assessee, was not found acceptable to the A.O and he therefore granted the deduction as per the original claim made by the Assessee. With respect to the disallowance u/s. 14A, it is seen that the query was raised during the course of assessment proceedings to which the Assessee had replied and after considering the reply of the Assessee, A.O had considered the disallowance u/s. 14A at ₹ 10,43,772/-. Thus it can be seen that both the issues on which ld. CIT has reported to revisionary proceedings u/s. 263 has been examined by the A.O. We find that Hon’ble Apex Court in the case of Max India Ltd. [2007 (11) TMI 12 - Supreme Court of India] had held that where two views are possible and ITO has taken one view which ld. CIT does not agree the order of A.O cannot be treated as erroneous order prejudicial to the interest of Revenue unless the view taken by the A.O is unsustainable in law. We further find that ld. CIT was of the view that Section 35D was only applicable to an industrial undertaking and activity of the Assessee cannot be regarded as an industrial undertaking and therefore not eligible for deduction u/s. 35D. We find that prior to A.Y. 2009-10, deduction with respect to 35D with respect to certain specified preliminary expenses was available to an industrial undertaking or unit. However, the word “industrial” were omitted by Finance Act, 2008 with effect from 01.04.2009. Thus it can be seen that after the amendment made by Finance Act 2008, benefit of 35D was also available to assessees who are not industrial undertaking and therefore we do not agree with the contention of ld. CIT that Assessee was not eligible for deduction u/s. 35D . Before us, Revenue has not brought any material on record to demonstrate that the view taken by the A.O was an impressible view, was contrary to law or was upon wrong application of legal principles initiating the exercising of revisionary powers u/s/ 263. In view of the aforesaid facts, we are of the view that in the present case Ld. CIT was not justified in resorting to revisionary powers u/s. 263 of the Act, we therefore set aside the order of CIT cancelling the order dated 26.12.2011 passed u/s. 143(3) of the Act.- Decided in favour of assessee.
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