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2020 (9) TMI 565 - AT - Income TaxRevision u/s 263 - AO without making inquiries or verification with respect to the claim of deduction towards gratuity which is not debited to the P & L Account of the assessee and the amount debited towards provision for warranty while arriving at the book profit of the assessee company under the provisions of section 115JB - HELD THAT:- In the case of the assessee the assessee itself has recaste its P & L Account and Balance sheet in accordance with the provisions of the Companies Act. All the material facts have to be taken into account in order to arrive at the correct profit earned by the entity during the relevant financial year. Hence, in the case of the assessee it had rightly redrawn the P & L Account disclosing the actual loss accrued to it during the relevant AY by way of making provision towards gratuity, bad debts and warranty which is in accordance with the provisions of the Companies Act. It is not a method adopted by the assessee to understate the book profit of the company in order to avoid tax as per the MAT provisions of the Act. In fact, it epics the correct state of affairs of the assessee company based on the qualified audit report of the Statutory Auditors of the assessee company. Since these facts were brought to the notice of the Ld. AO subsequent to the filing of the return of income it appears that the Ld. AO had accepted the same while passing orders U/s. 143(3) this action of the Ld. AO has not resulted in any error in so far as it is prejudicial to the interest of the Revenue - quash the orders passed by the Ld. CIT invoking his powers u/s.263 - Decided in favour of assessee.
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