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2016 (5) TMI 1569 - AT - Income TaxRevision u/s 263 by CIT - AO while completing the assessment proceeding did not make enquiries which he ought to have made - HELD THAT:- It is clear from the submissions and material available on record with regard to the sundry income credited in the profit and loss account the AO made the required inquiries. Though there is no specific reference by the AO on this aspect, yet the fact remains that the AO got the details of the sundry income and in the absence of any adverse observations in the order of AO it is to be presumed that he was satisfied that the income in question had nexus with the business of the assessee and therefore had to be recorded as income from business. There cannot also be any dispute with regard to the fact that the income from sale of scrap, foreign exchange fluctuation gain are inextricably linked to the profession income and have to be regarded as income from profession. With regard to the payment of service charges to Price Waterhouse Coopers again the required details were filed by the assessee and AO had raised specific queries on these charges. As pointed out by the learned counsel for the assessee similar charges had been allowed as deduction in the past. There was no reason for the AO to doubt the nexus of these expenses with the business of the assessee. With regard to the payment of policy premium to cover the risk of damages owing to professional negligence it cannot be disputed that the same was in relation to the business of the assessee. It is no doubt true that the AO while completing the assessment did not make any specific inquiries with regard to this item of expenditure, the fact, however, remains that these expenses have direct nexus with the business of the assessee and had to be recorded as expenses wholly and exclusively incurred for the purpose of the business of the assessee. Besides the above as rightly pointed out by the learned counsel for the assessee the CIT has not set out as to why this item of expenditure need to be investigated and as to what type of inquiry ought to have conducted by the AO. A mere observation that no proper details have been obtained, cannot be sufficient to come to a conclusion that the AO did not make proper and adequate inquiries which he ought to have made in the given facts and circumstances of this case. In the conclusion we are of the view that none of the reasons set out by the CIT for invoking the jurisdiction u/s 263 of the Act are sustainable. The impugned order of the CIT-A has to be quashed for the reason that order of the AO sought to be revised in the impugned order was neither erroneous nor prejudicial to the interest of the revenue for the reason of any law of inquiry that the AO ought to have made in the given facts and circumstances of the case. We accordingly quash the order u/s 263 of the Act and allow the appeal of the assessee.
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