AI Drafter 
TaxTMI 
TaxTMI 
2025 (4) TMI 328
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.... assessment sought to be revised is neither erroneous nor prejudicial to the interest of revenue. 1. (b) The Ld. PCIT erred in invoking the revisionary power under section 263(1) of the Income Tax Act, 1961 without appreciating the fact that the Ld. Assessing officer (AO) after making specific enquiry, examining the facts and proper application of mind, completed the assessment u/s 143(3) of the Income Tax Act, 1961 by accepting the claim of the appellant, which was in accordance with the provisions of law. 1. (c) On the facts and in the circumstances of the case and in law the Ld. PCIT erred in deciding the issue of allowability of contribution to Core SGF by himself instead of setting aside the order and directing the Ld. AO to make fresh assessment and as such the order u/s. 263 of the Income Tax Act, 1961 is illegal and bad in law needs to be quashed. 1. (d) On the facts and in the circumstances of the case and in law, the appellant prays that the order of the Ld. PCIT passed u/s. 263 of the Income Tax Act, 1961 may be quashed being void ab-initio and bad in law as it seeks to substitute the view of the Ld. PCIT in place of the view of the Ld. AO. ....
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.... income of the assessee. It was alleged that the assessee has contributed an amount of Rs. 170 crore towards Contribution to NSCCL Core Settlement Guarantee Fund ("Core SGF") and debited the same in the Profit & Loss account under the head "Office Expenses", which is a contingent liability of the assessee, and therefore is not permissible deduction under section 37 of the Act. Accordingly, it was alleged that the assessment order passed allowing the contribution to the Core SGF is erroneous insofar as it is prejudicial to the interest of the revenue, as the AO failed to make relevant and meaningful inquiry as warranted by the facts of the present case. 6. In response to the notices issued under section 263 of the Act, the assessee submitted that during the assessment proceedings, the AO examined the issue of deduction of contribution to the Core SGF claimed by the assessee and framed the assessment order after being fully satisfied with the submissions of the assessee. The assessee further submitted that during the assessment proceedings, the AO raised the query regarding the contribution to the Core SGF and the same was duly responded to by the assessee with all necessary docum....
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....orporation towards contribution to the Minimum Required Corpus of Core SGF as per Circular dated 27/08/2014 issued by the Securities and Exchange Board of India ("SEBI"). The assessee debited the contribution to the Core SGF amounting to Rs. 170 crore to the Profit & Loss account for the year ending 31/03/2015. We find that in this regard, the assessee duly made the declaration in its audited financial statement for the year under consideration, which is reproduced as follows for ready reference: - "35. a) In accordance with Regulation 33 of Securities Contracts (Regulations) (SECC) Regulations, 2012 (The Regulations) issued on June 20, 2012, every recognized stock exchange is required to transfer twenty five percent of its annual profits every year to a fund of the recognized clearing corporation(s) which clears and settles trades executed on that stock exchange to guarantee settlement of trades. Subsequently, the Securities and Exchange Board of India (SEBI) in its Press Release No.66/2012 dated June 21, 2012, has said that an expert Committee is being formed which will inter-alia "look into the norms for adequacy of the core corpus of the Settlement Guarantee Fund (SGF)....
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.... AO asked the assessee to furnish the details, inter alia, on the issue of other large expenses claimed in the Profit & Loss account. Responding to the aforesaid notice vide submission dated 23.09.2017, forming part of the paper book from pages 47-60, we find that the assessee, inter alia, furnished a detailed note on the allowability of contribution amounting to Rs. 170 crore made to Core SGF. We find that the assessee also submitted the complete copy of the Circular dated 27.08.2014 issued by the SEBI in respect of Core SGF. 10. Therefore, from the perusal of the notices issued by the AO during the assessment proceedings and the reply filed by the assessee thereto, we find that the issue of the claim of contribution to Core SGF was specifically raised during the scrutiny assessment proceedings, and the same was duly replied to by the assessee. Therefore, we do not find any basis in the findings of the learned PCIT that the claim of the assessee was allowed without conducting a proper inquiry and verification. Accordingly, the reliance placed on the provisions of clause (a) of Explanation 2 to section 263(1) of the Act is completely misplaced in the present case. 11. As rega....