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2023 (8) TMI 278 - AT - Income TaxRevision u/s 263 - As per CIT Marked To Market (“MTM”) loss claimed by the assessee and allowed vide assessment order passed u/s 143(3) is of capital nature and therefore should not be allowed as it directly relates to capital expenses - PCIT further alleged that the assessee itself claims MTM loss but does not offer any MTM gains - HELD THAT:- We find that the MTM loss on cross currency interest rate swap claimed in the financial year ending 31/03/2015 was reversed in the financial year ending 31/03/2016. From the computation of income for the assessment year 2016-17, the submission of the assessee is duly corroborated that there is no claim of MTM loss and therefore the assessee has offered to tax the said amount in its return of income for the assessment year 2016-17. PCIT rejected this submission of the assessee merely on the basis that the assessee did not submit these details before the AO during the assessment proceedings and therefore, it cannot be said that the assessment was completed after verifying assessee’s books of accounts for the subsequent year. It is pertinent to note that the question as to the year in which deduction is allowable may be material when the rate of tax chargeable on the assessee in two different years is different. Assessee is a company, and therefore tax is leviable at a uniform rate. It is trite law that in order to invoke section 263, the assessment order must be erroneous and also prejudicial to revenue, and if one of the limbs is absent, i.e., if the order of the AO is erroneous but is not prejudicial to Revenue or if it is not erroneous but is prejudicial to Revenue, recourse cannot be had to section 263 of the Act. Since the MTM loss was duly reversed in the subsequent year and has been offered to tax, therefore, there is no prejudice to the Revenue. Therefore, the impugned revisionary proceedings invoked under section 263 of the Act cannot be upheld and thus, are set aside. Decided in favour of assessee.
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