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2022 (10) TMI 453 - AT - Income TaxRevision u/s 263 by CIT - Exclusion of agricultural income while computing the book profit under the provisions of section 115JB - Treatment to compensation received on account of compulsory acquisition of land - case was selected under complete scrutiny through CASS which included claim of large exempt income as one of the grounds for selection - HELD THAT:- AO based on the submission placed on record taken a plausible view on the calculation exempt income and thereby the computation of tax under section 115JB - Whereas the ld. Pr. CIT considered that the same has not been seen by the AO in light of the observations made by him in the proceedings before him. It is not disputed that the assessee is holding agricultural land and accordingly received the agricultural income which is also not disputed by the revenue in the proceedings. AO also raised the issue about the exempt income and the assessee has submitted all relevant proof in relation to compensation in question and has after considering the submission and evidence placed on record, the ld. AO taken plausible view which is not controverted that why the view taken by the ld. AO is not correct view, considering the compensation received by the assessee company as the agriculture income and also exempt. DR merely argued that section 10(1) exclude only agriculture income and it does not include compensation but he has not referred the definition of section 2(14)(iii) of the Act which exclude the agriculture land as a capital asset and these facts is also not disputed that the assessee is having land which is agriculture land when the ld. AO and ld. PCIT accepted that the assessee earns agriculture income the compensation received on account of compulsory acquisition of land why cannot be considered as part of agriculture income. He has not pointed out any provision of the law to support their views so as to show that the same is required to be excluded while computing the book profit u/s. 115JB of the Act. An incorrect assumption of the fact or an incorrect application of law will satisfy the requirement of the order being erroneous. The phrase 'prejudicial to the interest of the Revenue has to be read in conjunction with an erroneous order passed by the AO. Every loss of revenue as a consequence of the order of the AO cannot be treated as prejudicial to the interest of the Revenue. It is pertinent to mention that if the AO has adopted one of the two or more courses permissible in law and it has resulted in loss of revenue, or where two views are possible and AO has taken one view with which the Pr. CIT does not agree, it cannot be treated as an erroneous order and it is prejudicial to the interest of the Revenue, unless the view taken by the AO is totally unsustainable in law. In this regard, we draw strength from the decision of the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT [2000 (2) TMI 10 - SUPREME COURT] Thus, when it is very much evident and clear from the record that compensation that the assessee has received is on account of agriculture land on which the agriculture income is already considered and therefore, the action of the assessee and thereby the ld. AO is in accordance with provision of the Act and there is no mistake apparent on record on account of exclusion of the same while computing the book profit under the provisions of section 115JB of the Act. These views are fortified by the Cochin Bench and in fact decisions relied upon by the ld. AR of the assessee. Being consistent with that order of M/s. The Nilgiri Tea Estate Limited [2014 (6) TMI 774 - ITAT COCHIN] we hold that the order passed by the ld. PCIT u/s. 263 is neither erroneous and not prejudicial to the interest of the Revenue and therefore, the same is required to be quashed. Appeal of assessee allowed.
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