S. 263 : Commissioner-Revision of orders prejudicial to revenue-Book profit-Decapitalization of interest-Failure of Assessing Officer to examine computation of book profits-Order of Tribunal affirming the revision order of Commissioner is affirmed. [S. 32AB, 115J, 260A]
The Assessing Officer accepted the assessee’s computation of book profits under Section 115J off the Act. The CIT invoked Section 263, stating that the assessment order was erroneous and prejudicial to revenue as the AO failed to examine the issue of decapitalization of interest while computing book profits. The Tribunal upheld the CIT’s order, affirming the validity of revisional jurisdiction. On appeal, the High Court dismissed the assessee’s challenge, holding that the AO had not applied his mind to key aspects, making the order erroneous. It further held that, the CIT’s observations were not a final finding but a direction to recompute the book profits and the assessee failed to challenge the reassessment order, making it final and precluding further contestation. Accordingly, the court held that the CIT’s exercise of jurisdiction under Section 263 was justified, and the appeal is dismissed. Followed CIT, Nagpur v. Ballarpur Industries Ltd( 2017) 85 taxmann.com 10 (Bom)((HC). Court has not expressed any opinion on merits. (ITA No. 324 of 2003 dt. 30-1-2025) (AY. 1998-99)
KEC International Ltd. v. DCIT (Bom.)(HC)(www.itatonline.org
[Coram : Hon’ble Shri Justice M. S. Sonak & Hon’ble Shri Justice Jitendra Jain]