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2022 (3) TMI 612 - AT - Income TaxRevision u/s 263 by CIT - Total power subsidy and TUF subsidy were wrongly declared by the assessee - As per CIT nowhere it was mentioned in the assessment order by the AO that he has conducted necessary enquiry with regard to the above issues, such as, power subsidy and TUF subsidy and the AO failed to discuss the above two issues in the assessment order - AR contended that assessee is following mercantile system of accounting and has accounted the income received during the year in the profit & loss account and amount receivable in the balance sheet and the power subsidy and TUF subsidy is granted by the Ministry of Textiles based on the interest payment made by the assessee-company to the banks - HELD THAT:- We find force in the argument of the ld.AR who has demonstrated that the income accruing each year is accounted in the profit & loss account under the head “other income”. Similarly,where the receivable of the subsidy is shown under short term loans and advances. Since the assessee is maintaining the books under mercantile basis, interest subsidy receivable under TUF scheme and the power subsidy receivable for the A.Y. 2014-15 represent the balance receivable from the Ministry of Textiles as on the date of balance sheet. Based on the merits and facts of the case, there is no escapement of any income and the amount of claim of subsidy made in the profit & loss account is income accrued to the assessee for that particular accounting year. The ld.AR also explained that the following entries were passed in the books of accounts. Looking at the second limb as to whether the actions of the AO can be termed as prejudicial to the interest of Revenue, one has to understand what is prejudicial to the interest of the revenue - 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 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 - there is no escapement of income which is prejudicial to the interest of the revenue as contemplated under section 263 of the Act and the impugned order of ld.PCIT under section 263 of the Act is quashed. The appeal of the assessee is allowed.
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