TMI Blog2018 (7) TMI 1173X X X X Extracts X X X X X X X X Extracts X X X X ..... say that the AO had come to a conclusion as to whether the claim was allowable as a revenue expenditure. The AO erroneously did not disallow electricity charges paid; claimed as revenue expenditure, erroneously assuming that the charges are for the subject year. There is hence erroneous assumption of facts and wrong application of law. It cannot also be said that the claim raised as revenue expenditure is a plausible view, for the reasoning already supplied by us that the electricity charges for the period prior to sale was a hidden cost which had to be settled by the assessee after the sale. We are of the opinion that there was an erroneous decision entered into by the AO which could have been revised under Section 263, provided there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 143(3) of the Income Tax Act? 2. The assessee purchased a premises with plant and machinery with an electricity connection in June, 2002. Subsequent to the purchase, in the year 2007-08 the assessee settled, pending electricity dues for the period prior to the purchase, under One Time Settlement Scheme as is seen from Annexure-D. The assessee claimed the sum as revenue expenditure, which was accepted as per the assessment order, but later suo motu revised under Section 263 of the Income Tax Act, 1961 ('Act', for short). The suo motu revision order is available at Annexure-F. The order was affirmed by the Income Tax Appellate Tribunal. Two issues were taken up in the suo motu revision order; one of which was set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a revenue expenditure; which if so treated causes prejudice to the Revenue. 5. Admittedly, the assessee purchased a plant and machinery for utilisation in its business, that too long before the electricity charges were demanded from the assessee. Obviously, the demand was settled by the assessee, since otherwise the same would be a charge created on the plant and machinery as also on the property. Only to avoid such distress on the property, the assessee settled the dues of the prior owner. According to us, this is the hidden cost of the plant and machinery, which the assessee was not aware of at the time of purchase. When the demand was raised; for further utilisation of the plant and machinery, it was necessitated that the prior ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... casioned to the Revenue. Though each and every mistake or error cannot be deemed to be an erroneous finding, it was held that an incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. (sic para 9) 8. As noticed by the Tribunal, we do not see any discussion by the AO of having accepted the claim of the assessee that the remittance of prior electricity charges under One Time Settlement Scheme was a revenue expenditure. The learned counsel for the assessee has relied on Annexure-C reply submitted before the AO to contend that the specific claim along with the demand letter received from the KSEB was produced before the AO. However, that is not to say that the AO had come ..... X X X X Extracts X X X X X X X X Extracts X X X X
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