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TMI Blog2021 (9) TMI 349X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 28.09.2018 and the issue of exemption of CER is also decided by Hon'ble Rajasthan High Court in favour of assessee." 2. Briefly, the facts of the case are that the assessment for the impugned assessment year was completed u/s 143(3) vide order dated 28.12.2018 and thereafter, the ld PCIT issued a show-cause and passed the order u/s 263 dated 31.03.2021 setting aside the assessment order so passed by the AO with a direction to pass a fresh assessment order after considering the issued raised in the impugned order. Against the said order and findings of the ld PCIT, the assessee is in appeal before us. 3. During the course of hearing, the ld. AR submitted that the assessee is a State Government undertaking engaged in the business of mining. It filed its return of income declaring income of Rs. 184.20 crores on 14.10.2016 which was selected for scrutiny by the AO. The AO vide notice u/s 142(1) dt. 30.07.2018, in Q. No.10(x) required the assessee to provide details of any carbon emission receipts received during the year & whether the same has been shown as income and in Q. No.15(ii) required the assessee to justify the claim of expenses on account of payment to Resurgent Rajastha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) The amount paid by the assessee to organize the event 'Resurgent Rajasthan' was in the nature of assistance/ contribution and no details/ nature of expenditure/ utilization by the nodel agency was available. Thus, expenditure of Rs. 20,26,50,000/- incurred as 'assistance/ contribution' to organize an event cannot be said to be laid out or expended wholly and exclusively for the purpose of the business or profession of your company was to be disallowed. 6. The ld. AR submitted that against this notice assessee filed detailed reply vide letter dt. 22.03.2021. The Ld. CIT, however, held that the order passed by AO u/s 143(3) is erroneous in so far as it is prejudicial to the interest of revenue as the said order has been passed in a routine and perfunctory manner without properly examining the veracity and allowability of claim of exemption of Rs. 2,58,48,598/- credited in the P&L A/c and not examining the veracity of the expenses of Rs. 20,26,50,000/- debited by the assessee company in the P&L A/c. The AO failed to examine the exemption of income claimed and the expenses incurred. The order of AO is therefore, liable to revision under clause (a) & (b) of Explanation 2 to sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s approved by the Hon'ble Rajasthan High Court in DBITA No.313/2017 dt. 28.11.2017. The payment of sponsorship fees of Rs. 20,26,50,000/- to Resurgent Rajasthan Summit 2015 is wholly and exclusively for the purpose of business in as much as the participation is such summit helps the assessee in finding joint venture partners in PPP mode or otherwise towards mineral development in Rajasthan which is step forward for the objectives of the assessee. Hence, it is an allowable expenditure which is also covered by the principle laid down in various decisions of Supreme Court, High Court and Tribunal relied by the assessee in reply dt. 11.10.2018. The AO after considering the reply and the case laws relied by the assessee allowed the claim. It is a settled law that where two views are possible (though in the present case there are no two views) and the AO has taken one view, assessment order cannot be treated as erroneous or prejudicial to the interest of revenue. For this reliance is placed on the following cases:- * CIT Vs. Kwality Steel Suppliers Complex (2017) 395 ITR 1 (SC) * CIT Vs. Max India 295 ITR 282 (SC) * Malabar Industrial Co. Ltd. Vs. CIT 243 ITR 83 (SC) In view of ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 263 of the Income-tax Act, 1961, I hold that the order u/s 143(3) of the I T Act, 1961 dated 28.12.2018 for A Y 2016-17 passed by the Assessing Officer is erroneous in so far it is prejudicial to the interest of Revenue as the said order has been passed by the Assessing Officer in a routine and perfunctory manner without verifying the claim of exemption of Rs. 2,58,48,598/- credited in the Profit and Loss account and not verifying the expenses of Rs. 20,26,50,000/- debited by the assessee company in the Profit & Loss account. The order of the Assessing Officer is therefore, liable to revision under the Explanation-2 clause (b) and clause (a) of Section 263 of the Income-tax Act, 1961. Hence, the assessment order is set aside and as per law to be redone de-novo in the light of the observation made in this order and with direction to the Assessing Officer to verify and examine and finalize the assessment in accordance with the prevailing law; quantify the correct income of the assessee liable to tax for A Y 2016-17 after according reasonable opportunity to the assessee." 11. We have heard the rival contentions and perused the material available on record. Broadly, two iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2017 wherein section 115BBG has been introduced with effect from 01.04.2018 wherein income from sale of CERs is taxable at special rate of 10%. It was submitted that the said amendment has been brought on the statute with prospective effect and in the instant year, the receipt from sale of CERs is not taxable being capital receipt. The Assessing Officer after considering and examining the submissions of the assessee has not recorded any adverse finding while passing the assessment order. We therefore, find that in the instant case, the Assessing Officer has raised specific queries not once but twice, firstly as part of initial notice u/s 142(1) and thereafter, by way of a specific show-cause before passing the assessment order. The assessee has also submitted its response explaining the factual as well as the legal position and the fact that the matter has been examined earlier by the Tribunal in assessee's own case for A.Y 2007-08 and which has also been affirmed by the Hon'ble Rajasthan High Court. Therefore, where the Assessing Officer has taken into consideration the decision of the Tribunal as well as of jurisdictional High Court in assessee's own case and find that identica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion sectorial discussions, deliberations, investors meet, investors discussions etc. It brought together leading investors from all over the world. Assessee being a leading mining company of the State Government in order to promote and undertake activities of industrial and mineral development in the state of Rajasthan and for the furtherance of its objective has participated in the organization of the event. The primary objective of the company for participation in the event was to find out joint ventures partners in PPP mode or otherwise towards mineral development in Rajasthan. Accordingly assessee has sponsored the event by paying sponsorship fees of Rs. 20,26,50,000/- so that more and more investors around the world must have the knowledge about the company, its working and objective in order to invest in the company. Since the object of the expenditure was to earn more and more business for the company, the expenditure is allowable u/s 37(1) of Income Tax Act, being incurred wholly and exclusively for the business purpose of the company. 15. It was further submitted that the Assessing Officer again issued a show cause dated 18.09.2018 wherein it was stated that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncurring the expenditure, third party is also benefited, the same is a allowable expenditure u/s 37(1) of the Act. Further, reliance was placed on various Hon'ble Supreme Court and High Court decisions. It was accordingly submitted that where the Assessing Officer has made necessary inquiry/verification which he should have made and has applied his mind and has allowed the claim of the assessee, the order cannot be said to be erroneous in so far as prejudicial to the interest of the Revenue. 16. We find that in this second matter as well, the Assessing Officer has raised specific queries not once but twice, firstly as part of initial notice u/s 142(1) and thereafter, by way of a specific show-cause before passing the assessment order. The assessee has also submitted its response explaining the factual position as to how the sponsorship payment to Bureau of Investment Promotion, the nodal agency for organizing Resurgent Rajasthan 2015 Summit has been incurred for the purposes of its business duly approved by its Board of Directors and its claim duly supported by various Court decisions, the opinion formed by the Assessing Officer cannot be held as erroneous in nature. It is therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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