TMI Blog2017 (1) TMI 1635X X X X Extracts X X X X X X X X Extracts X X X X ..... ute his own conclusions upon the view taken by the assessing officer at the time of assessment. This is impermissible in the context of section 263. As in the case of Malabar Industrial Co Ltd vs CIT (2008 (2) TMI 579 - KARNATAKA HIGH COURT) has settled the position that if the assessing officer has taken a view at the time of assessment based on materials, the CIT cannot seek to revise the view taken merely because he disagrees with it. This does not constitute an ‘error’ for the purposes of section 263. Where two views are possible in relation to a matter, and the assessing officer has adopted one such view, the CIT cannot, by exercise of power u/s 263 impose the other view upon the assessing officer. - Decided in favour of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce under section 143(2) dated 05.09.11 as well as a questionnaire under section 142(1) dated 07.02.12 were issued. Specific queries were raised with respect to expenditure incurred on renovation amounting to ₹ 1,09,81,000/- treated as deferred revenue expenditure and preliminary and pre-operative expenditure of an amount of ₹ 9,48,000/- claimed in the computation of income. The assessee filed detailed replies on 09.02.12, 27.02.12, 05.03.12 and 11.02.12, explaining the claims and filing material in support of thereof. Account copies were filed setting out the nature and details of the expenses, the narration in respect of each item of expenditure and details of the entities to which payments were made. 3. Upon a detailed cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Mr.J.Narayanasamy appearing for the Department and Mr.Sandeep Bagmar appearing for the assessee/respondent and perused the appeal as well as the supporting documents carefully. 7. The power conferred under section 263 of the Act can be exercised by the CIT only upon concurrent satisfaction of the twin statutory conditions contained in the provision. The section states thus: 263. Revision of orders prejudicial to revenue.- (1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e above we submit that we have been asked to furnish information relating to the following:- 1. Renovation Expenses - Allowability 2. Deferred Revenue Expenditure - Allowability 3. Payment details of PF, ESI, VAT and Service Tax Etc. In connection with is this we submit as follows:- 1.Account copy of Renovation Expenses is enclosed. As can be seen from the renovation expenses, no new Asset is created. It is only a renewal and replacement of asset. All these expenses are revenue expenditure only. No New Asset is included in the above expenditure. It is an allowable expense, since it is for the purpose of maintaining the standards and upkeep of assets. We also submit that the renovation expenses are current repairs only. Our ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 380 (Bom) 4. C.R. Corera and Brotheres v Commissioner of Income-tax 5. Jagadisan and Srinivasan JJ 6. Senapathy Synams Insulations (P) Ltd v. CIT (2001 248 ITR.656 (Kar). 2. Deferred Revenue Expenditure:- This head of account represents the renovation/lease rentals expenses, while preparing the Profit Loss a/c under Companies Act we have been following, a consistent method of accounting under which 1/3rd of renovation expenses are written off to Profit Loss a/c every year and 2/3rd is carried forwarded to next years, which is transferred to deferred revenue expenditure to be debited to Profit and Loss a/c in the next 2 years. While for Income Tax Purposes we have been claiming 100% of expenses as Revenue Expenditure. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the CIT cannot seek to revise the view taken merely because he disagrees with it. This does not constitute an error for the purposes of section 263. 13. The Bench, at page 88 states thus: The phrase prejudicial to the interests of the Revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of Revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the Revenue. For example, when an Income-Tax Officer adopted one of the courses permissible in law and it has resulted in loss of Revenue; or where two views are possible and the Income-Tax Officer has taken one view with which the Commissioner does not agree, it cannot be tre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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