TaxTMI 
TaxTMI 
TaxTMI 
2023 (3) TMI 709
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....orbed loss brought forward from AY 15-16 to AY 16-17. (c) AO has allowed set off of unabsorbed depreciation of Rs.71,31,099/- pertaining to M-77 unit, which was not eligible for set off, since this unit commenced operation from current year, i.e., AY 2017-18 only. (d) The AO has allowed benefit of exemption u/s sec. 10(38) on the gains arising on sale of a security named "JM Arbitrage Annual Bonus Option". The AO has not examined how the sale of security was exempted. (e) The AO has not examined the applicability of sec. 14A of the Act on exempt income. In this year, the assessee has claimed interest expenses of Rs.14,47,032/- on bank loan. The claim of interest was directly related to investment which might result into earning the exempt income. This amount should have been disallowed by the AO as per CBDT Circular No.5/2014 dated 11.2.2014. The Ld A.R submitted that the above said issues pertaining to following three issues:- (i) Deduction allowed u/s 80IA (ii) Exemption granted u/s 10(38) of the Act (iii) Disallowance of expenses u/s 14A of the Act. Even though the Ld D.R submitted that the Ld PCIT has taken one more issue, yet we confine ourselves to the ab....
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.... are extracted below : "Section 263 of the Income-tax Act, 1961 empowers the Commissioner to call for and examine the record of any proceedings under the Act and, if he considers that any order passed therein, by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the Revenue, to pass an order upon hearing the assessee and after an enquiry as is necessary, enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment. The key words that are used by section 263 are that the order must be considered by the Commissioner to be "erroneous in so far as it is prejudicial to the interests of the Revenue". This provision has been interpreted by the Supreme Court in several judgments to which it is now necessary to turn. In Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83, the Supreme Court held that the provision "cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer" and "it is only when an order is erroneous that the section will be attracted". The Supreme Court held that an incorrect assumption of fact or an incorrect application of law, will satisfy the require....
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.... In the instant case, we notice that the method of claiming deduction u/s 80IA without adjusting losses of the years prior to the initial year would get support from the decision rendered by Ahmedabad bench of ITAT in the case of DCIT vs. Chhotabhai Jethabhai Patel & Co. (supra), wherein it was held as under:- 8. We have carefully considered the rival submissions. The short issue that arises for consideration in the present case is whether the assessee is entitled in law for claim of deduction of income arising from eligible business during the year under s. 80IA(1) r/w.s. 80IA(4) of the Act without making adjustments towards losses arising in the earlier assessment years prior to exercise of option of 'initial assessment year' with reference to the eligible business. Hence, the central question for consideration is whether the losses arising in eligible business, if any, prior to exercise of option towards 'initial assessment year' is required to be artificially carried forward and notionally adjusted from the profits arising from eligible business in the 'initial assessment year' and subsequent assessment years for the purposes of Section 80IA(5) of the ....
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....y CBDT. On the contrary, the deduction allowed by the AO is in accordance with the view expressed in the Circular issued by the CBDT. 7. Accordingly, we are of the opinion that the view expressed by Ld PCIT with regard to the computation of deduction u/s 80IA cannot be sustained. Accordingly, we quash the impugned revision order passed by Ld PCIT on this issue. 8. The next issue referred to by Ld PCIT relates to the exemption allowed to the assessee u/s 10(38) of the Act in respect of gains arising on sale of JM Arbitrage Advantage Annual Bonus Plan. The case of Ld PCIT is that the AO has allowed exemption without examining the above said claim. Before Ld PCIT, the assessee submitted that the above said plan is equity oriented mutual fund unit plan and the sale has suffered STT and hence the gains arising on such sale is exempt u/s 10(38) of the Act. Before us, the Ld A.R submitted that the AO has made due enquiries with regard to the above said claim. Accordingly, he contended that the Ld PCIT has initiated revision proceedings on this issue on surmises only. 9. We heard Ld D.R on this issue and perused the record. We notice that the AO has issued notice dated 20-06-2019 u/s 14....