Facts: Assessee-company, engaged in garment manufacturing and export, sold its land to settle encumbrances to pay off its shareholders. The company claimed encumbrance charges as a cost of improvement while calculating LTCGs, which was accepted by the AO. The Commissioner invoked revisionary powers under section 263, setting aside the assessment order, as the claimed expenses did not qualify as capital expenditure, and there was no compliance with relevant tax provisions.
Decision: The SC upheld the Commissioners decision, ruling that the order passed by the AO allowing the expenses was erroneous and prejudicial to the revenues interest. It dismissed the review petition, finding no error in the earlier decision, and declined the stay application while disposing of any pending applications. The Court reiterated the Commissioners rightful exercise of jurisdiction under section 263, emphasizing the erroneous nature of the AOs decision and the serious error committed by the HC in setting aside the Commissioners order.