AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (2) TMI 406
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....ce proposing revision u/s. 263 of the Act of the order passed by AO u/s. 143(3) of the Act dated 04.08.2014. In such notice the Ld. Pr. CIT proposed the revision on three counts viz. (i) during the FY 2010-11 the assessee engaged in retail trading of food items and they had debited salary, wages and bonus of Rs. 99,47,04,000/- under the head 'personnel expenses' which includes a sum of Rs. 3,38,99,000/- relating to some earlier year and since the assessee is maintaining the books of account on the basis of mercantile system of accounting, expenses pertaining to earlier year was neither permissible nor was admissible as such, such amount should have been disallowed and added back to the total income of the assessee, (ii) the assessee debited a sum of Rs. 23,22,39,000/- under the head 'advertisement and selling expenses' and when compared to the figures that were debited for AY 2008-09 which were Rs. 2,68,62,000/-, there is an increase by ten times for two years, which fact was not considered by the AO as such there needs reappraisal of facts and (iii) that the assessee debited Rs. 78,67,14,000/- under the head 'rent' which includes a sum of Rs. 3,67,21,865/- ....
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....onus to be false or untrue and in that view of the matter the CIT was not justified in setting aside the assessment only for the sake of exercise of powers u/s. 263 of the Act. 6. For that on the facts and in the circumstances of the case, the CIT's order directing AO to re-examine the details of advertisement expenses be held unsustainable since the CIT did not point out any specific infirmity in the claim of advertisement expenses of Rs. 23,22,39,000/- so as to hold the allowance of such claim by the AO to be erroneous and prejudicial to the interests of the revenue. 7. For that on the facts and in the circumstances of the case, the CIT's order directing AO to re-examine the details of advertisement expenses be held unsustainable since the direction was in the nature of directions to conduct roving & fishing enquiries afresh which was impermissible under Section 263 of the Act. 8. For that on the facts and in the circumstances of the case, the appellant having submitted before the AO as well as before the CIT the relevant documents & evidences to substantiate that service tax payable on rent was contractual liability and not assessee's statutory liability, the CIT ....
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....ntion. (a) CIT v. Shewbux Jahurilal [1962] 46 ITR 688 (Cal.) (b) CIT v. Roberts McLean & Co. Ltd. [1978] 111 ITR 489 (Cal.) and (c) CIT v. Todi Tea Co. Ltd. 1999 (5) TMI 18 - CALCUTTA High Court 7. He further contended that in so far as the advertisement expenses and the service tax liability are concerned, AO made specific enquiries during the proceedings u/s. 143 of the Act and on furnishing the particulars thereof and having been satisfied with the submissions made by the assessee, the AO allowed such expenses as such, it cannot be said that AO did not make any enquiries in that respect. He further contended that it is the settled proposition of law that when the comparison had to be made in respect of any expenses of a concern such comparison has to be done with reference to the expenses incurred in the immediately preceding years but not with the two or three years' earlier figures. In this matter the Ld. Pr. CIT committed a grave mistake in resorting to compare the figures of the FYs 2010-11 with the figures of FY 2007-08 and in all fairness the Ld. Pr. CIT should have compared the same with the figures for the FY 2009-10 and 2008-09. Ld. Counsel for the assessee furt....
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....clearly shows that what was intended to be revised was order u/s. 143(3) of the Act dated 31.03.2014 and rectification thereof u/s. 154/143(3) of the Act dated 04.08.2014 and mentioning of the date as 04.08.2014 in column no. 8 is only an error. He submitted that the decisions submitted by the assessee on this aspect cannot help their case inasmuch as the focus of all these decisions was on the doctrine of merger and consequent point of reckoning the limitation - whether it is from the date of original order which was time barred or whether it was from the date of order u/s. 154 of the Act. The sum and substance of his submission is that there is no necessity for the Ld. Pr. CIT to deal the aspects of the original assessment order through the order u/s. 154 of the Act because as on the date of the order u/s. 154 of the Act it was well within the limitation for him to revise the order u/s. 143(3) of the Act. 11. Further contention of the Ld. DR is that before the due date for submission of the return of income the assessee could have completed the exercise of payment of the performance bonus and since the payment of performance bonus will be on clearly delineated policies and param....
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....t the date of assessment order was 04.08.2016 obviously it is a mistake. The intention of the Ld. Pr. CIT was amply clear that it is only the original assessment order that was proposed to be revised. Too much reliance on technicality will attribute redundancy to the adjudicatory proceedings and reduce the process to the level of hide and seek game. Clerical or typographical mistakes will not give rise to any new rights and more particularly when such mistakes are apparent on the face of record. Further, as on the date of either notice or passing of the order u/s. 263 of the Act, it was well within the period of limitation for the Ld. Pr. CIT to directly deal with the order passed u/s. 143(3) of the Act. There is no necessity for him to revise the contents of the order u/s. 143(3) of the Act ostensibly dealing with the order u/s. 154 of the Act. As a matter of fact, we find that the intention of the Ld. Pr. CIT is clear from the record that what he proposed to revise was the order u/s. 143(3) of the Act but not the order u/s. 154 of the Act and any discrepancy in mentioning the date thereof will not be of any help to the case of the assessee to seek annulment of the order passed u/....
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....ng to earlier year were permissible not admissible in the relevant assessment year, the Ld. Pr. CIT shifted this stand in his order and directed the AO to verify. 15. On a careful consideration of the matter, we find that it was only by the end of July, 2010 the assessee company could quantify the performance bonus, and could pay it only alongwith the salary for the Month of August, 2010 payable in the month of September, as such by no stretch of imagination could we say that the assessee could have crystallized the liability during the FY 2009-10 itself or before the due date of filing of return. Following the decision reported in Laxmi Devi Sugar Mills (supra) and Swadeshi Cotton & Flour Mills (P.) Ltd.'s case (supra) and other cases we find that the stand taken by the Ld. Pr. CIT on this aspect is not correct. 16. Now coming to the "advertisement expenses". Ld. Pr. CIT compared the expenses of the FY 2010-11 with the figures relating to FY 2007-08. The Ld. AR submitted that in respect of the FY 2009-10 such expenses were Rs. 19,91,51,000/- whereas in respect of FY 2010-11 those were Rs. 23,22,39,000/-. According to him, such expenses constitute 2.18% in FY 2009-10 whereas ....
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....ical wisdom dawned over the head of the assessee or his Ld. AR at a later point of time, the same cannot become unworthy of consideration or should be looked with suspicion. Ld. Pr. CIT is under a statutory obligation to verify the liability of service tax components in the hands of the assessee and in the hands of the landlord and since the landlord is under a statutory obligation to remit it to the government, section 43B of the Act is applicable only in respect of landlord. Ld. Pr. CIT should have taken the view that in the hands of the assessee such a liability assumes the character of contractual liability as such, sec. 43B of the Act has no application. 18. Now coming to the last contention of the assessee that initially in the notice dated 17.02.2016, Ld. Pr. CIT had taken the view that the component of performance bonus for FY 2009-10 was not permissible and liable to be added back, so also the disallowance u/s. 43B of the Act, having dealt with the submissions of the assessee he did not take it to a logical conclusion, but shifted his stand to direct the AO to cause a de novo enquiry. Clearly it is not permissible in view of me decisions reported in Vesuvius India Ltd. v.....