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2019 (9) TMI 1399 - AT - Income TaxRevision u/s 263 - Disallowance u/s 40(a)(iib) - Electricity duty u/s. 3(1) of the KSED Act - CIT held that the amount debited towards Electricity Duty u/s. 3(1) of the KSED Act being an exclusive levy on the assessee which is a State Government undertaking by the State Government is to be disallowed u/s. 40(a)(iib) - HELD THAT:- In the present case, the Assessing Officer had not made the disallowance u/s. 40(a)(iib) - Without enquiring, the AO accepted the assessee’s claim. The failure on the part of the AO to make necessary enquiry rendered the assessment order erroneous which also resulted in loss to the revenue. PCIT had observed in his order that the electricity duty u/s. 3(1) of the KSED Act falls under the purview of section 40(a)(iib) of the Act and it is to be disallowed u/s. 40(a)(iib) - order of the PCIT cannot be held as erroneous. The PCIT’s approach was correct. PCIT exercised his power conferred u/s. 263 in setting aside the assessment. AO has not considered the issue relating to the application of section 40(a)(iib) and he had accepted the claim without applying his mind. Hence, the order of the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue, as it involves huge amount of tax - PCIT is justified in invoking the provisions of section 263. - Decided against assessee.
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