On appeal by the revenue the Court held that the Assessing Officer had allowed the expenses without application of mind and allowed the setoff of carryforward of loss. This was also not a case where the Commissioner had failed to undertake inquiry in the course of the exercise of revisional jurisdiction. It was only in pursuance of such inquiry that the Commissioner had recorded a categorical finding that the assessee had not even claimed payment of any fees from P Ltd. in respect of any technical or management services said to have been rendered by it. This was not a case of some plausible view but a case where the decision was a result of non-application of mind to the materials on record. The Commissioner was justified in setting aside the assessment order under section 263. Ratio in Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR 83 (SC) is explained. (AY.2009-10)