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2023 (2) TMI 1109 - AT - Income TaxRevision u/s 263 - Scope of audit objection - licence fee payments to the Municipal Corporation, Ambala during the year under consideration was not properly verified by the AO - HELD THAT:- The assessee, in this case, has been subjected to multiple litigation only because of non-settlement of audit objection. Firstly, the audit party mistook the figures and held that 2/3 of the expenditure was a deferred revenue expenditure which was to be disallowed. However, the said objection was not admitted by the Assessing Officer. Since, the said audit objection was not settled by the audit party, therefore, the assessee was subjected to reassessment proceedings. Even no addition was made in the reassessment proceedings and the Assessing Officer time and again wrote letters to the CCIT to settle the audit objection. However, since the ITO(Audit) did not agree to settle the objection, the ld. PCIT initiated the revision proceedings u/s 263 of the Act stating that the expenditure pertained to the earlier year as against earlier objection that the 2/3 of the total expenditure booked on account of the municipal fees was not allowable being deferred revenue expenditure. Even, since the assessee had to litigate as the agreement did not mature and arbitration award has been passed, about which the assessee has claimed that the award amount will be offered for taxation. Any expenditure incurred by the assessee has also to be deducted and to be allowed. The assessee explained that the agreement with municipal corporation was entered on 28.02.2011 and that no amount was incurred in the financial year 2010-11 and the expenditure was rightly booked in the year 2011-12, therefore, we do not find justification on the part of the ld. PCIT in exercising his revision jurisdiction u/s 263 of the Act in this case. The entire exercise seems to have been done because of audit objection only. Since, the Assessing Officer had duly enquired about the matter and was satisfied with the explanation given by the assessee, the ld. PCIT, in our view, has wrongly exercised his revision jurisdiction on the issue which is nothing but change of opinion, that too, at the instance of audit party. In this case, even the AO did not admit to the audit objections rather requested to settle the audit objection. Therefore, the revision jurisdiction exercised by the ld. PCIT cannot be held to be justified. The revision order passed u/s 263 of the Act is, therefore, quashed. Appeal of assessee allowed.
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