2023 (10) TMI 835

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....SSED BY PR. CIT U/S 263 OF THE ACT AY 2017-18 On the facts and circumstances of the case and in law the Pr. CIT: On validity of initiation of revision proceedings 1. Erred in initiating the revision proceedings under section 263 of the Act, without appreciating that section 263 cannot be invoked unless the conjunctive conditions that assessment order passed is erroneous in law as well as prejudicial to the interests of the revenue, are satisfied; 2. Erred in passing order under section 263 of the Act, by setting aside with a direction to AO to re-examine the Appellant's claim of deduction in respect of Royalty expenses of Rs. 16,69,36,844 and Legal and Professional Fees of Rs. 17,18,57,600; 3. Er....

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....on under section 263 of the Income Tax Act, 1961 on the ground that the Assessing Officer (AO) has erred in not verifying the legal and professional fees paid of Rs. 17,18,57,600/-. The Ld. Pr.CIT has opined that the Assessing Officer has also failed to verify assessee's claim of royalty expenses of Rs. 16,69,36,844/-. The ld.Pr.CIT has observed that assessment order dated 22.04.2021 passed under section 143(3) r.w.s 144C was erroneous and prejudicial to the interest of the Revenue. Submission of ld.AR : 3. The ld. Authorised Representative filed paper book containing 672 pages. At the outset, the ld.AR argued that ld.Pr.CIT has erred in invoking provisions of section 263 of the Act. The ld.AR read out para 9.5 of the order under sect....

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.... has decided the issue in favour of the assessee in A.Y.2004-05 to AY 2011-12 and the Revenue has filed an appeal before the Hon'ble Bombay High Court. The Hon'ble Bombay High Court for A.Y. 2004-05 has dismissed the appeal of the revenue on the ground of Low Tax effect. Similarly, the ld.Pr.CIT has categorically mentioned in the order under section 263 that Tribunal has decided the issue of payment of Legal professional fees in favour of the assessee for A.Y. 2010-11 and 2011-12. The Department has filed an appeal before the Hon'ble High Court. 6. Thus, it is an admitted fact that both the issues have been decided by the ITAT in favour of assessee for A.Y. 2010-11, ITA No. 1261/Pun/2018, 1309/PUN/2018 and AY 2011-12, ITA 823/PUN....

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....iews are possible and it is not the case of the Revenue that the view taken by the Assessing Officer is not permissible in law, the CIT is not justified in invoking the jurisdiction under section 263 of the Act." Unquote. 8.3 The Hon'ble Bombay High Court in the case of CIT Vs. Future Corporate Resources Ltd in IT Appeal No. 1275 of 2017 vide order dated September 29, 2021 held as under: Quote ," 7. In the order of PCIT it is stated "in paragraph 4.3 of the assessment order, the Assessing Officer has recorded that from the details submitted by the assessee and the explanation given by him, it was observed that assessee had regular business connection with the company in which investment had been made and also there was business ....

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....e said to be erroneous for the ld.Pr.CIT to invoke jurisdiction u/s 263. In this case the AO has taken one of the possible Legal View. Hence, the Assessment Order is not erroneous and prejudicial to the interest of the revenue. 9. In this case, the ld.Pr.CIT though has discussed in the order u/s. 263 of the Act, the Order of the ITAT for earlier years in the case of the assessee on the impugned issues, errored in taking a divergent view. The ld.Pr.CIT is a quasi- judicial authority, and hence the ld.Pr.CIT is duty bound to follow the Judicial Precedence. Merely, because the Department has filed an appeal before the Hon'ble High Court does not give an authority to the ld.Pr.CIT to take a divergent view. In this context observation of Hon'....