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2017 (5) TMI 1110 - ALLAHABAD HIGH COURTScope of revision u/s 263 - erroneous order, prejudicial to the interest of Revenue - Held that:- Coming to the phrase "prejudicial to the interest of Revenue", Court said in Malabar Industrial Co. Ltd. (2000 (2) TMI 10 - SUPREME Court) that it is not an expression of art and not defined in Act, 1961. When considered with its ordinary meaning, it is of wide import and not confined to mere loss of tax. Court was of the view that scheme of Act was to levy and collect tax in accordance to the provisions of Act and this task is entrusted to Revenue. If, due to erroneous order of Income Tax Officer, Revenue is loosing tax, lawfully payable by a person, it will certainly be prejudicial to the interest of Revenue. However, every loss of revenue, as a consequence of an order of Assessing Officer, cannot be treated as prejudicial to the interest of Revenue. For example, when Income Tax Officer adopted one of the course permissible in law and it resulted in loss of revenue, or where two views are possible and Income Tax Officer has taken one view with which Commissioner does not agree, it cannot be treated erroneous order, prejudicial to the interest of Revenue, unless view taken by Income Tax Officer is unsustainable in law. Aforesaid view taken in Malabar Industrial Company Ltd. (Supra) has been followed in CIT Vs. Max India Ltd. [2007 (11) TMI 12 - Supreme Court of India], where also Court has reiterated that expression 'erroneous' should be read in conjunction with phrase "prejudicial to the interest of Revenue. ITAT was not justified in quashing the order u/s 263 and confirming the order u/s 143(3) of the Income Tax Officer, 3(2), Lucknow. - Decided against assessee.
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