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2018 (8) TMI 1628 - AT - Income TaxRevision u/s 263 - deduction u/s 80IC claim - initial assessment year - erroneous assessment order and prejudicial to the interest of the Revenue - Held that:- The initial year of the assessee for the purposes of deduction u/s 80IC is A.Y. 2010-11. Deduction was actually claimed for the first time in A.Y. 2011-12 and then in A.Y. 2012-13. Such a deduction was allowed by the Revenue albeit without making a regular assessment u/s 143(3). Since the stage for carrying out investigation for ascertaining if the unit was newly set up or reconstructed, was the initial year, in which the assessee’s claim was not disputed, the assessment order for the year under consideration, accepting fulfillment of this eligibility condition, cannot be construed as erroneous. Going by the above interpretation of the provision, the AO was precluded from examining as to whether the assessee set up its new unit or it was a reorganization of the existing unit in the relevant year. The assessment order not discussing the examination of such a condition cannot be termed as erroneous. Once an assessment order cannot be held as erroneous, the CIT cannot exercise revisional power u/s 263, which requires a cumulative satisfaction of the twin conditions, viz., the erroneous assessment order and the same being prejudicial to the interest of the Revenue. We are confronted with a situation in which the assessment year under consideration is the third year of the claim of deduction u/s 80IC of the Act. Having allowed such deduction in the immediately preceding two assessment years, the AO was not supposed to re-examine the eligibility condition of the new unit having been set up in the current year as well. The impugned order setting aside such an assessment order on the ground that the AO did not examine such eligibility condition in the third year, which ought to have been examined in the initial year, cannot be sustained. - decided in favour of assessee.
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