In Brief
A company sold property and claimed Rs. 31.05 crores as a deduction for 'cost of improvement,' representing payments made to shareholders to settle family litigation and remove alleged encumbrances. The assessing officer allowed this deduction, computing capital gains accordingly. The tax commissioner invoked revisional powers under Section 263, finding the order erroneous and prejudicial to revenue, as such payments do not qualify as 'cost of improvement' under the Income Tax Act. The ITAT and High Court set aside the commissioner's order, applying the principle that when two plausible views exist, the commissioner cannot revise merely due to disagreement. The Supreme Court reversed, holding the AO's view was unsustainable in law and the order resulted in loss of lawfully payable tax, justifying the commissioner's exercise of revisional jurisdiction.
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