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2014 (8) TMI 1183 - AT - Income TaxRevision u/s 263 - AO has not examined the issue as to whether these expenses pertaining to handling charges relatable to exempt income or taxable income - AO’s decision not to properly examine such expenses as above amounts to failure to examine the applicability of provisions of section 14A and has rendered the assessment erroneous and prejudicial to the interests of revenue - HELD THAT:- The total transport and handling charges appears in the accounts is inclusive of transport and service charges. The total handling charges appearing on expenditure side is the actual sum paid to various contractors (After considering the TDS). Thus, there is a direct nexus of expenditure incurred and income reflected in the accounts. Since this activity pertains to taxable income, the expenditure was deducted from transport and handling receipt. The expenditure and handling charges do not pertained to deriving any of the exempted income. The various working submitted during the course of assessment have been verified by the concerned assessing Officer at relevant point of time and there is nothing on record to conclude that handling charges pertains to income from exempt activities as well as taxable activities. AO has passed the order after applying his mind to the facts of the case. In such a situation, the order of Assessing Officer cannot be said to be erroneous so as to prejudicial to the interests of revenue to invoke the provisions of section 263. So, the same is set aside. - Decided in favour of assessee.
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