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2021 (3) TMI 478 - AT - Income TaxRevision u/s 263 - AO has not caused any enquiries with regard to financial adjustment charges though the same was reduced from the profit in the P&L account - HELD THAT:- As per explanation (1 )of Clause (c) of the provisions of 115JB, the amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities required to be increased by such amount for MAT purpose. In the instant case, the AO has neither verified the liability nor the expenditure under MAT provisions u/s 115JB of the Act. Merely because the balance sheet and P&L account are placed before the AO at the time of assessment, it cannot be construed that the AO had verified the entire issues unless specific information is called by the AO. Therefore, there was an error which is prejudicial to the interest of revenue with regard to non-verification of financial surcharge adjustment in the assessment made u/s 143(3). Hon’ble Bombay High court in Sesa Starlite Ltd.v .Commissioner of Income Tax, Panaji, Goa [2020 (11) TMI 102 - BOMBAY HIGH COURT] flowing the order of Apex court in Malabar Industrial Co. Ltd. [2000 (2) TMI 10 - SUPREME COURT] held that where Assessing Officer sought information from assessee regarding its claim of deduction under section 10B, however, without considering such information produced by assessee and without application of mind to same, allowed such claim for deduction, it was a case of inadequate inquiries and, therefore, exercise of revision jurisdiction by Commissioner under section 263 was justified. This view is supported by the decision of Hon’ble Supreme court in Malabar Industrial Co. Ltd(Supra). Therefore we are inclined to hold that the Ld.CIT(A) has rightly invoked the provisions of section 263 of the Act. Expenditure debited to P&L account or reduced from the profit before tax as exceptional item needs to be verified on the facts and merits and also in view of the judicial precedents relied upon by the assessee. Therefore, we set aside the order of the Ld.Pr.CIT and remit the matter back to the file of the AO to examine the issue in the light of the submissions made by the Ld.AR and the case laws relied upon by the Ld.AR during the appeal proceedings and decide the issue afresh on merits. The order of the Ld.Pr.CIT passed u/s 263 is modified accordingly. Appeal of the assessee is allowed for statistical purpose.
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