2010 (3) TMI 1136

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....his common order. 2. In both the years the learned CIT, by invoking power under s. 263 of the Act, directed the AO to revise the income computed under s. 115JA of the Act by making certain additions. Aggrieved against the order of the learned CIT, the assessee is in appeal before us. 3. The facts of the case are stated in brief. The assessee company, a public sector undertaking, is engaged in the business of ship building and ship repairs. The company had borrowed loans from Government of India for the purposes of its business in earlier years. During the year relevant to the asst. yr. 1999-2000 the assessee company received waiver order vide Ministry's letter No. SY11018/34/90-IISL(Vol. III), dt. 21st March, 1999 in respect of those ....

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....der passed under s. 263 for the asst. yr. 1999-2000, learned CIT felt that the addition of above said sum of ₹ 158.25 crores will considerably reduce the amount of unabsorbed depreciation to be carried over in the next succeeding year, i.e., asst. yr. 2000-01. Consequently, the learned CIT-I also directed the AO, by invoking revision proceedings under s. 263 of the Act, to recompute the book profit for the asst. yr. 2000-01 also. Aggrieved by both the orders of learned CIT, the assessee is in appeal before us. 4. We have heard the parties and carefully perused the record. The power of learned CIT to revise the order by invoking the s. 263 of the Act has been lucidly explained by the Hon'ble Bombay High Court in the case of Grasim....

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.... of the Revenue', the Supreme Court held, it is of wide import and is not confined to a loss of tax. What is prejudicial to the interest of the Revenue is explained in the judgment of the Supreme Court (head-note) : 'The phrase 'prejudicial to the interests of the Revenue' has to be read in conjunction with an erroneous order passed by the AO. Every loss of revenue as a consequence of an order of the AO cannot be treated as prejudicial to the interests of the Revenue, for example, when an ITO adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the ITO has taken one view with which the CIT does not agree, it cannot be treated as an erroneous order prejudi....