TaxTMI 
TaxTMI 
2025 (12) TMI 790
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....ts and circumstances of the case and in law, the Ld. PCIT: 2.1. Revision of assessment order on the issue which was not forming part of reasons for selection of scrutiny under CASS (a) Erred in assumption of jurisdiction u/s. 263 to revise the assessment order issued under section 143(3) read with section 144B of the Act, on the issue which was beyond the scope of reasons for scrutiny as per CASS. 2.2. Selection for scrutiny was only for deduction under section 80G of the Act and refund out of self-assessment tax and not for repairs and maintenance or its nature as to whether it is a capital expenditure or revenue expenditure (a) Failed to appreciate that the case was selected for scrutiny only for verification of claim of deduction under section 80G of the Act and claim of refund out of self-assessment tax. The learned Assessing Officer ('Ld. AO') has not only examined the above issues but has also conducted complete scrutiny vis-a-vis these points. (b) In view of the above, the impugned assessment order cannot be held as erroneous and prejudicial for alleging lack of enquiry by the Ld. AO in respect of nature of repairs and mai....
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....se is capital or revenue in nature and, therefore, the order of the Ld. AO cannot be faulted as erroneous and prejudicial. 2.8. The Ld. PCIT erred in alleging high proportion of repairs & maintenance expenses (a) Erred in holding that the appellant has incurred high proportion of repairs & maintenance expenses vis-à-vis total value of assets without pointing out any benchmark for holding high proportion of repairs & maintenance expense. 2.9. When details were submitted the case cannot be regarded as lack of enquiry (a) Failed to appreciate that all the details were provided to the Ld. AO and the attention of the Ld. PCIT was also drawn to the same vide submission dated 17.03.2025 and, therefore, it is not a case of lack of enquiry. 3. Erred in invoking explanation 2 to section 263 (a) On the facts and circumstances of the case and in law, the Ld. PCIT erred in invoking explanation 2 to section 263 when none of the clauses i.e. clause (a) to (d) of the said explanation is applicable to deem the assessment order as erroneous and prejudicial. 4. The order cannot be regarded as erroneous and prejudicial just because ....
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....is not applicable when income is computed under normal provisions of the Act. 7. The Ld. PCIT erred in alleging short recovery of expenses from group companies (a) On the facts and circumstances of the case and in law, the Ld. PCIT erred in holding that there is under recovery of expenses from the group companies and further holding that the Ld. AO has not conducted the enquiry which is factually incorrect. 8. The Ld. PCIT erred in directing fresh assessment (a) On the facts and circumstances of the case and in law, the Ld. PCIT erred in restoring the matter to the Ld. AO for doing fresh assessment. 9. In view of the various above grounds, the order passed by Ld. PCIT may kindly be held as bad in law. The appellant craves leave to add, alter, omit, delete, all or any of the grounds of appeal on or before hearing. For UBS Business Solutions (India) Private Limited (Formerly known as Credit Suisse Services (India) Private Limited)." Submission of ld.AR : 2. Ld.Authorised Representative(ld.AR) for the Assessee submitted paper book. 2.1 Written Submission filed by the Assessee is as under : "Brief backgrou....
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......... 6.2 The Ld. PCIT has made second averment that on perusal on profit and loss account in ITR it is noticed that the appellant has debited an amount of Rs. 21.02,01,617 towards repairs to machinery which according to the PCIT is an exorbitant amount. The Ld. PCIT perused the block of asset as per clause no 18 of Tax Audit Report furnished by the appellant in form no. 3CA. The Ld. PCIT has held that the appellant does not have high opening value of block of machinery. Therefore, he raised a suspicion that as the company has claimed huge refund it would be pertinent to verify genuineness of expenditure and its nature whether it is a capital expenditure of revenue expenditure. The Ld. PCIT invoking explanation 2 of section 263(1) proposed revision of assessment order. The Ld. PCIT had issued second notice on 10.03.2025 (Please refer page no. 118 of the Paper Book). ...................... 14. The L.d. PCIT has held that the expenses on computer peripherals and furniture etc. are contrary to accounting policy as per annual report of the company. First of all, your honour's attention is invited to the details of repairs, please refer page no. 26 to 32 o....
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....is a not case of lack of enquiry but case of inadequate enquiry. The said case cannot be taken a for revision u/s. 263 by invoking explanation 2 of section 263(1). 20. The Ld. PCIT has pointed out that expenses on computer peripherals and Mat under furniture need to be capitalized as per the accounting policy. He has not cited. It is submitted that the accounting policies cannot override the law. Even when the question came of before the Delhi High Court in the context of ICDS-II regarding valuation of inventories it was held that if the ICDS is ultra virus of the Act, the ICDS has to be struck down. Refer decision of Chamber of Tax Consultants vs. UOI (2017) 87 taxmann.com 92 (Delhi), Further your honour is aware that accounting entries are not relevant for allowability of claim under the Income Tax Act. The provision of law has to be followed and the accounting entry which is of course in pursuance of accounting policy cannot be decisive factor for allowability of expenses under the law. Please refer the landmark decisions that entries as well as method of accounting could not be regarded as conclusive Godhra Electricity Company Ltd Vs. CIT (1997) 91 taxman 351 (SC), CIT....
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.... passed u/s. 143(3) r.w.s 144B of the Act on 06.09.2022 assessing the total income at Rs. 3,78,52,32,060/-. 6. The Principal Commissioner of Income Tax(Pr.CIT)-1, Pune after verifying the record issued notice u/s. 263 of the Act on 20.02.2025. The Assessee filed elaborate submission before Pr.CIT- 1, Pune. However, Pr.CIT-1, Pune passed an order u/s. 263 of the Act on 31.03.2025. The Pr.CIT held that assessment order dated 06.09.2022 was erroneous and prejudicial to the interest of the Revenue. The main issue in the order of Pr.CIT is that according to the Pr.CIT the Assessing Officer has not verified the details of repairs and maintenance expenditure amounting to Rs. 21,02,01,615/-. Ld.Pr.CIT after going through the replies filed by the Assessee, came to the conclusion that certain items called Computer Peripherals like Headsets, Mouse etc, should have been capitalised as per the accounting policy of the assessee mentioned in the Audit Report. The Assessee pleaded that in the ITES Industry, computer peripherals have to be replaced frequently due to wear and tear. Therefore, Assessee pleaded that these expenditures were revenue in nature. Ld.Pr.CIT also held that the expenditure....