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2023 (4) TMI 234 - AT - Income TaxRevision u/s 263 by CIT - claim of deduction on account of bad debt actually written off in the books of the assessee - Assessee stated that in the year under consideration he had actually written off the amount of bad debts in the books of account and thus the same was claimed as deduction from the computation of income which was allowed by the AO after due examination and verification of the records and application of mind - HELD THAT:- AO has duly examined and verified the records in respect of claim made by the assessee in the relevant disclosures were made in the audited financial statements of the assessee for AY 2011-12, placed on record. Assessee had given advance in earlier years for supply of raw material to Greysham Co. Pvt. Ltd. Supplies were made to the assessee in the earlier years. Subsequently, dispute arose between the assessee and the supplier company resulting in the claim of bad debts by the assessee towards the balance advance lying with the supplier. The said advance against the supply of raw material is claimed by the assessee as a business loss and is allowable in computing the income of the assessee under the Act. From the above noted facts and observations, we find that the revisionary proceeding invoked by Ld. CIT did not meet the twin criterion enunciated in section 263 of the Act. Hon'ble Supreme Court in the case of Malabar Industries [2000 (2) TMI 10 - SUPREME COURT] held that this phrase i.e. "prejudicial to the interest of the revenue'' has to be read in conjunction with an erroneous order passed by the AO. Their Lordships held that every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interest of the revenue. When the AO adopted one of the courses permissible in law and it has resulted in loss to the revenue, or where two views are possible and the Assessing Officer has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interest of the revenue unless the view taken by the AO is unsustainable in law. Thus we are convinced to quash the impugned revisionary order passed u/s. 263 - Decided in favour of assessee.
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