Debatable capital expenditure claim cannot be disallowed through summary processing unless inadmissibility is obvious on record.

A disallowance treating expenditure as capital in nature cannot be made in summary processing under section 143(1)(a) where the character of the expenditure is debatable and requires examination. An adjustment is permissible only when inadmissibility is apparent on the face of the return and accompanying material. Where the claim is not clearly and obviously prima facie inadmissible, it falls outside the scope of such processing. The disallowance made while processing the return was therefore not sustainable and was set aside.

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Issues: Whether a disallowance treating an expenditure claim as capital in nature could be made in an intimation under section 143(1)(a) of the Income-tax Act, 1961 when the issue was debatable.

Analysis: The adjustment was based on a characterisation of the expenditure as capital expenditure. On the facts placed before the authority, the nature of the expenditure required examination and was not capable of being rejected as a clear and obvious prima facie inadmissible claim in summary processing. A debatable issue cannot be converted into an adjustment under section 143(1)(a) unless the inadmissibility is apparent on the face of the return and accompanying material.

Conclusion: The disallowance made in processing the return was not sustainable and was set aside in favour of the assessee.

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