9911796707
TMI Blog2023 (8) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... llows: 1. General Grounds 1.1 The Principal Commissioner of Income Tax, Bengaluru-1, Bengaluru (Pr. CIT') erred in passing the order under section 263 of the Income Tax Act (the Act') by holding that the order passed by the Deputy Commissioner of Income Tax, Circle - NFAC (`AO') as erroneous and prejudicial to the interest of the revenue. The order passed under section 263 is bad in law and liable to be quashed. 1.2 The learned Pr. CIT erred in disregarding the submissions made by the Appellant and remanding all the issues to the learned AO to verify and pass a suitable order demonstrating the fact that the learned Pr. CIT is seeking to make fishing and roving enquiry, which is not permissible under the provisions of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial to the interests of revenue as the same was offered to tax by the respective dealers in their return of income filed for AY 2018-19. 2.6 On facts and circumstances of the case and in law, the assumption of jurisdictional by the learned Pr. CIT under section 263 is bad in law and the consequent order is to be quashed in its entirety. 3. Grounds relating to applicability of section 194H 3.1 The learned Pr. CIT erred in holding that sales incentives paid to dealers to the tune of Rs. 9,38,92,257 is liable to tax deduction at source under section 194H of the Act. 3.2 The learned Pr. CIT failed to appreciate that the provisions of section 194H are inapplicable in the absence of a principal-agent relationship. 3.3 The learned Pr. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d towards club expenses is allowable as an expenditure since it satisfies all the pre-requisites of section 37 of the Act. 5.3 On the facts and circumstances of the above, the proposed disallowance of service charges relating to club expenses is bad in law and deserves to be deleted. 3. Brief facts of the case are as follows: Assessee is a company. It filed the return of income on 30.11.2018 declaring total income at Rs. 6,09,29,350/-. The return of income was processed under section 143(1)(a) of the Act assessing total income of Rs. 6,10,29,750/-. Thereafter, the assessment was selected for scrutiny and notice under section 143(2) of the Act was issued on 23.09.2019. The assessment was completed under section 143(3) of the Act vide orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. 5. Aggrieved, assessee has filed the present appeal before the Tribunal. The assessee has filed a Paper Book enclosing therein the audited financial statement for the relevant Assessment Year, various notices and replies submitted during the course of assessment proceedings, details of the sales promotion expenses, etc. The assessee has also filed another Paper Book enclosing therein the case laws relied on. The learned AR submitted that during the course of assessment proceedings, the AO had called for the details of the payments of sales incentives and assessee had satisfactorily explained the same to the AO. It was submitted that the AO, having been convinced that the payments of sales incentives is on principal-to-princip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal 1[Chief Commissioner or Chief Commissioner or Principal] Commissioner or Commissioner,- (a) the order is passed without making inquiries or verification which should have been made; _ (b) the order is passed allowing any relief without inquiring into the claim; (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or (d) the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between the assessee (the payer) and its dealers (the payees). Therefore, on the facts of the instant case, the Assessment Order has been passed without verification, which should have been made, and the PCIT was well within the jurisdiction to have invoked the revisionary powers under section 263 of the Act. 9. Moreover, we find that on identical issue, the matter is pending before the CIT(A) for Assessment Years 2016-17 and 2017-18. The PCIT has only directed the AO to carryout necessary enquiry / verification after affording sufficient opportunity of being heard to the assessee. Therefore, in the strict sense, there is no prejudice caused to the assessee. For the aforesaid reasoning, we uphold the order of the PCIT as correct and in acc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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