TaxTMI 
TaxTMI 
2025 (8) TMI 585
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....the order under section 263 of the IT Act, 1961 because the assessment order passed by the AO on 18.07.2019 was neither erroneous nor prejudicial to the interest of revenue. 2. The Ld. PCIT grossly erred in law and on facts in not appreciating that there was no ground to invoke his jurisdiction under section 263 of the Act. 3. a) The Ld. PCIT grossly failed to appreciate that the amount of defect liability debited to the P&L Account of the year under reference was subsequently spent in the following years to meet such liability and surplus, if any, was offered to tax by crediting the P&L Account accordingly. b) The Ld. PCIT grossly failed to appreciate that the appellant has already paid due taxes on the surplus s....
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....defect liability was fixed by the VMC it could not be classified as contingent liability. 7. The Ld. PCIT grossly erred in law and on facts in appreciating that the impugned amount was debited to the Profit and Loss account of the relevant period was neither a personal expense nor a capital expenditure and was purely for business expediency therefore allowable under the provisions of section 37 of the Act. 8. It is prayed that the order of the Pr. CIT passed under section 263 of the IT Act 1961 be set aside and the order of the AO passed under section 143(3) be restored. 9. The appellant craves permission to add, withdraw, alter, amend withdraw grounds of appeal at any time before the completion of appellate proce....
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....ability and thus the expenses claimed on account of provision for defect liability of Rs. 90,03,270/- is not allowable under Section 37(1) of the Act as observed by the PCIT. A show cause notice under Section 263 of the Act was issued on 03.01.2022 and subsequently the assessee filed reply dated 29.01.2022. The PCIT after giving finding, directed the Assessing Officer to make requisite enquiry and proper verification with regard to the said issue and set aside the Assessment Order. Being aggrieved by the order under Section 263 of the Act passed by the PCIT, the assessee file appeal before us. 4. The Ld. AR submitted that the PCIT failed to appreciate that the amount of defect liability debited to the Profit & Loss Account of the year un....
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....for defect liability was fixed by the Vadodara Municipal Corporation, it cannot be classified as contingent liability. The impugned amount was debited to the Profit and Loss Account of the relevant period was neither a personal expense nor a capital expenditure and was purely for business expediency, therefore, allowable under the provisions of Section 37 of the Act. Thus, the ld. AR submitted that the PCIT has not invoked Section 263 of the Act rightly. 5. The Ld. DR submitted that the PCIT has categorically mentioned in paragraph no.6.3 that admittedly, provisions in this regard has been made by mechanically applying 5% flat rate on the work certified at the year end. Thus, there was no thinking in respect of making the said provision.....
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.... 2015-16 27,00,212 49,77,320 0 0 76,77,532 2016-17 15,63,766 33,95,976 4,64,654 35,78,874 90,03,270 2017-18 11,80,836 36,72,493 60,81,633 66,27,521 1,75,62,483 Total A 71,74,534 1,27,15,694 65.46,287 1,02,06,395 3,66,42.910 B Break up of Defect Liability (refer Note below) Structural Liability 30% of DLP for 10 years 21,52,360 38,14,708 19,63,886 30,61,919 1,09,92,873 Öther Liability 70% of DLP for 5 years 50,22,174 89,00,986 45,82,401 71,44,477 2,56,50,037 Total B 71,74,534 1,27,15,694 65,46,287 1,02,06,395 3,66,42,910 ....
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....02.580 2028-29 0 O 3.06,192 3,06,192 3,06,192 2029-30 O 0 3.06,192 3,06,192 3,06,192 Total C 71,74,534 1.27,15,694 65,46,287 1,02,06,395 3,66,42,910 3,66,42,910 1,47,73,065 2,04,35,079 Note: Structural Liability to be written off in 10 years. Lift, Tubewell, Submersible, DG Set Solar Panel, Street Light and Common Light to be written off in 5 years. 6.1 From the perusal of the order of the PCIT under Section 263 of the Act, the observation ....