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2019 (10) TMI 709 - AT - Income TaxRevision u/s 263 - disallowance of Nano Project related to expenses by treating the same as capital in nature - HELD THAT:- The company, however, has claimed only the revenue expenses incurred in relation to day to day operations at Singur, as deduction in its return of income and the relocation expenses have not been claimed as deductible expense. During the course of assessment proceedings these were examined by the assessing officer, the company has further furnished the details on the relocation expenses. Assessee made submissions that the AO had formed an opinion that these are revenue expenditure and assessee has rightly claimed the same. The AO has not disallowed these expenses while framing assessment under section 143(3) of the Act on this very reason and complete details were examined on various occasions as noted above. Hence, Revision on this count is bad. Disallowance of expenses relatable to exempt income by invoking the provisions of section 14A of the Act read with rule 8D - HELD THAT:- We noted that complete details in respect to this filed before the AO during the course of assessment proceedings and the AO after examining the exempt income vis-a-vis expenses relatable to the same are already disallowed. In regard to propose exercise of revision with respect to working of disallowance made under section 14A of the Act Read with Rule 8D of the Rules relates to interest expenses paid for borrowings for R&D expenses. We noted from the above details in respect to expenses related to Nano project and disallowance of expenses relatable to exempt income by invoking the provisions of section 14A of the Act read with Rule 8D of the Rules relates to interest expenses paid for borrowings for R&D expenses already examined by the AO during the course of assessment proceedings under section 143(3) of the Act. We noted that the provisions of section 263 of the Act for revising the assessment can be invoked only in a case wherein twin conditions i.e. order being erroneous and prejudicial to the interest of Revenue are cumulatively satisfied. This proposition has been settled by the Hon’ble Supreme Court in the case of Malabar Industries Co. Ltd. vs. CIT [2000 (2) TMI 10 - SUPREME COURT] and CIT vs. Gabriel India Ltd. [1993 (4) TMI 55 - BOMBAY HIGH COURT] . Similarly, where two views are possible and AO has adopted the one of the two possible views, even then the order cannot be held to be erroneous so as to prejudicial to the interest to the Revenue. Revision exercise carried out by the CIT is bad in law and hence, quashed. We quash the revision order passed by CIT under section 263 of the Act and allow the appeal of the assessee.
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