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2021 (2) TMI 1113 - HC - Income TaxRevision u/s 263 - disallowance under Section 40(a)(ia) - Tribunal hold that assumption of jurisdiction under Section 263 was correct - HELD THAT:- From close scrutiny of Section 263 it is evident that twin conditions are required to be satisfied for exercise of revisional jurisdiction under Section 263 of the Act firstly, the order of the Assessing Officer is erroneous and secondly, that it is prejudicial to the interest of the revenue on account of error in the order of assessment. The aforesaid provision was considered by the Supreme Court in ‘MALABAR INDUSTRIAL COMPANY VS. CIT’ [2000 (2) TMI 10 - SUPREME COURT] and it was held that the phrase ‘prejudicial to the interests of the revenue’ has to be read in conjunction with an erroneous order passed by the Assessing Officer and every loss of revenue as a consequence of the order of the Assessing Officer cannot be treated as prejudicial to the interest of revenue. It was further held that where two views are possible and the Income Tax Officer has taken one view with which the Commissioner does not agree, the order passed by the Assessing Officer cannot be treated as erroneous order prejudicial to the interest of the revenue. it is the claim of the assessee that the assessee has not claimed the benefit of the disallowance under Section 40(a)(ia) of the Act for the Assessment Year in question ie., 2008-09 and the same was claimed in the previous Assessment Year ie., 2007-08. Therefore, in our opinion, the matter requires factual adjudication. The Tribunal has not adverted to the aforesaid aspect of the matter and has not considered the submission made by the assessee that the amount of ₹ 2,36,07,661/- was not a real amount but only the provision that was directly reversed. In view of the preceding analysis, the matter requires factual adjudication. We are inclined to remit the matter. Therefore, it is not necessary for us to answer the substantial questions of law framed in the appeal. The impugned order of tribunal is hereby quashed and the matter is remitted to the Tribunal for decision afresh in accordance with the observations made in this order.
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