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2019 (5) TMI 991 - ITAT BANGALORERevision u/s 263 - ‘no enquiry’ v/s ‘lack of enquiry’ - HELD THAT:- CIT has not exercised jurisdiction u/s 263 of the Act on the ground of ‘no enquiry’ made by the AO or ‘lack of enquiry’ made by the AO. CIT has held that conclusions drawn by the AO in allowing expenditure set out in the show cause u/s 263 of the Act ought not to have been allowed as deduction. We, therefore, hold that the jurisdiction u/s 263 of the Act was validly invoked by the CIT. Contribution to Bellary DC for formation of ring road - even though it was shown as donation in the profits and loss account can be considered as contribution for formation of roads and has to be held as ‘revenue expenditure’ allowable as a deduction keeping in mind commercial expediency - assesses’s plea is that the development of roads would help transportation of iron ore from mine by the assessee - HELD THAT:- Keeping in mind the decision of Lakshmiji Sugar Mills Co. Pvt. Ltd. [1971 (8) TMI 13 - SUPREME COURT] we are of the view that this expenditure was rightly allowed by the AO while concluding the assessment and exercise of jurisdiction u/s 263 of the Act which is not justified as far as this sum is concerned. Other items of expenditure for which jurisdiction u/s 263 of the Act is invoked, we do not find any material which can justify the action of the AO in allowing these items of expenditure as deduction.Therefore, the CIT was justified in directing the AO to examine the allowability of these items of expenditure. The assessee is always at liberty to show as to how items of expenditure made in cash were not hit by the provision of sec. 40A(3) of the Act and as to how the personal expenses of salary wages and bonus is not in the nature of provision. The assessee is also at liberty to show as how the prior period expenses is in fact liability which crystallized only during the relevant previous year. In the given circumstances of the case, we are of the view that the order u/s 263 of the Act in so far as aforesaid 3 items of expenditure are concerned is valid and deserves to be sustained. AO was directed to do denovo assessment, the same can be only be in respect of item set out in the order u/s 263 of the Act. We accordingly modify the order u/s 263 of the Act by restricting the enquiry in respect of items other than the expenditure incurred for payment of ₹ 10 cores for formation of road. - Decided partly in favour of assessee.
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