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2013 (10) TMI 694 - AT - Income TaxJurisdiction u/s 263 - Whether CIT is justified in setting aside the assessment order passed u/s 143 (3) for making it afresh holding it to be erroneous and prejudicial to the interest of revenue within the meaning of section 263 - Held that:- As per the notice u/s 263 of the Act, one of the issues on which the ld. CIT has sought to revise the assessment order was that the assessee ought to have written off and claimed only 1/5 of its advertisement expenditure, since the assessee had been following the concept of deferred revenue expenditure. However, a perusal of the impugned order shows that while passing the said order, the ld. CIT dropped this issue. Instead, he directed the Assessing Officer to inquire as to whether the advertisement expenditure of the assessee contained any capital expenditure or not. Therefore, evidently, there is a change in the impugned order vis-a-vis the show cause notice qua the issue of advertisement expenditure - where the show cause notice issued is on one ground and the revisional order is passed on an entirely different ground, the order cannot be sustained in law - Following decision of Asia Resort Ltd. vs. ACIT [2003 (3) TMI 269 - ITAT CHANDIGARH-A], Star India Ltd. vs. ACIT, Range 11(1) [2011 (11) TMI 117 - ITAT MUMBAI] - Decided in favour of assessee. Capital or Revenue expenditure - Advertisement expenses - CIT held expenses as capital in nature - Held that:- details were asked for of the assessee by the AO by putting a specific query, all possible details were duly furnished by the assessee in response, and no further question was asked by the AO. This conduct shows that the AO had duly considered the details called for by him and supplied by the assessee and that the AO stood satisfied from such details. Therefore, the ld. CIT, evidently, is not justified in observing that no inquiry was carried out by the AO. In this regard, the assessee is correct in contending that the ld. CIT was himself not sure that the AO had not carried out any inquiry. It is as such, that the CIT observed in the impugned order that it appeared that the AO had not caused any inquiry to ascertain the nature of the expenses. The CIT, as available from the order, had no basis for such finding of no inquiry into the nature of the expenses by the AO. Rather, instead of relying on anything in the assessment order to perceive such lack of inquiry by the AO, the CIT was swayed by his own misconceived opinion that since the incurrence of the expenditure had brought enduring benefit to the assessee, this was reason enough to disallow some part of the expenses as being capital in nature. Now this, in our considered opinion, cannot be the basis for invoking revisional jurisdiction by the CIT. As correctly contended, the mere factum of enduring benefit having accrued to the assessee is not, by itself, a decisive factor to hold the nature of the expenses incurred to be capital - The CIT was not justified in directing the AO to carry out inquiry to ascertain the nature of the expenses and to reframe the assessment by disallowing the expenses to be found to be capital in nature - Decided in favour of assessee.
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