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2019 (11) TMI 1356 - AT - Income TaxRevision u/s 263 - Regarding the brought forward losses and the unabsorbed appreciation - HELD THAT:- At the outset we note that, the Ld. AR at the time of hearing did not dispute the finding of the Ld. CIT under section 263 of the Act. Therefore, we do not find any reason to interfere in the order of the Ld. CIT to the extent of brought forward losses and the unabsorbed depreciation. Dividend income - It is settled law that the order of the AO can be held as erroneous insofar prejudicial to the interest of Revenue on the satisfaction of the twin conditions. Firstly, it has to be erroneous and secondly such error should cause prejudice to the interest of Revenue. In the instant case, there is no loss to the Revenue on account of reducing the dividend incomes against the disallowance of the expense under section 14A read with rule 8D of Income Tax Rule. In the instant case the assessee has offered the exempted income to tax which needs to be reduced from the taxable income. As such the Revenue has to allow the rightful claims to the assessee despite the same were not claimed by the assessee. If the amount of dividend income is not reduced against the disallowance of the expenses, then such income has to be treated as exempted income under section 10(34). Finally, the amount of dividend will be reduced and disallowance of the expenses will increase. Thus in effect the entire exercise will be tax neutral. Therefore, in our considered view the order passed by the AO at the most can be held as erroneous but it does not cause any prejudice to the interest of Revenue. Thus in our considered view, on this count, the order of the AO cannot be held as erroneous insofar prejudicial to the interest of Revenue. Prior period expenses - HELD THAT:- There is no error in the order of the AO as alleged by the Ld. CIT. Hence in our considered view the order of the AO cannot be held erroneous insofar prejudicial to the interest of Revenue on this reasoning. AO is erroneous in so far prejudicial to the interest of revenue to the extent of the benefit granted by the AO on account of brought forward losses and unabsorbed depreciation. The assessee on this count fails. However, the assessee on other 2 items as discussed above succeeds for the reasons elaborated hereinabove. Hence the appeal of the assessee is partly allowed.
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