TMI Blog2023 (10) TMI 1011X X X X Extracts X X X X X X X X Extracts X X X X ..... enses incurred by the assessee was before the A.O. during the assessment proceeding u/s. 143(3) of the Act. We are conscious of the propositions laid down by the various courts wherein it was held that the A.O. cannot go beyond the scope for which the assessment proceeding was initiated and thereby restricted to make a roving enquiry, into issues not confronted to the assessee. See SHREE ANIRUDDHA UPASANA FOUNDATION VERSUS CIT (EXEMPTION) , MUMBAI [ 2022 (9) TMI 973 - ITAT MUMBAI] Revenue has failed to substantiate that the issue related to the expenditure claimed by the assessee was before the A.O. during the assessment limited scrutiny proceeding nor it brought on record any fact to show that the A.O. had authority to go beyond the is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee company being an Indian company is a captive service provider of its associated enterprises (AE) on a cost plus model. The assessee had filed its return of income on 27.11.2018, declaring total income at Rs. 37,24,68,330/-. The assessee s case was selected for scrutiny and the assessment order dated 11.01.2021 was passed u/s. 143(3) of the Act where the Assessing Officer ('A.O.' for short) accepted the returned income filed by the assessee. The assessee company had entered into a lease agreement with Indiabulls Properties Private Limited (lessor) in respect of its premises at One Indiabulls (OIB) with a lock in period of 3 years and was in the process of shifting its office to OIB premises during Financial Year 2014-15. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of the ld. PCIT. 5. The learned Authorised Representative ('ld. AR' for short) for the assessee contended that the assessee has incurred the said expenditure for the purpose of litigating before the arbitration and the same amounted to the business expenditure of the assessee company. The ld. AR further contended that the assessee s case was selected for limited scrutiny assessment on the issue of deduction from total income under Chapter VIA and not for complete scrutiny. The ld. AR further contended that the issue of allowability of expenditure was not before the A.O. during the assessment proceeding and that the ld. PCIT lacked jurisdiction to invoke the provision of section 263 of the Act on the ground that the A.O. has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r expenses) incurred for the purpose of litigating with OIB Properties Pvt. Ltd. for the dispute pertaining to the contract entered into by the assessee with OIB for the commercial space leased out to the assessee. The assessee s case was selected for limited scrutiny assessment where the issue of the impugned expenditure was not the subject matter of scrutiny assessment and the A.O. passed the assessment order accepting the return filed by the assessee. 8. The ld. PCIT invoked the provision of section 263 for the reason that the impugned expenditure is neither a capital expenditure not a revenue expenditure and the same ought not to have allowed by the A.O. thereby making the assessment order erroneous and prejudicial to the interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of limited scrutiny and the relevant extract of the said instruction is cited hereunder for ease of ready reference: 3. As far as the returns selected for scrutiny through CASS 3. CASS-2015 are concerned, two type of cases have been selected for scrutiny in Year-- one is 'Limited Scrutiny' and other is the current Financial Year 'Complete Scrutiny'. The assessees concerned have duly been intimated about their cases falling either in 'Limited Scrutiny' or 'Complete Scrutiny' through notices issued under section 143(2) of Section Tax Act, 1961 ('Act'). The procedure for handling the Income-tax 'Limited Scrutiny' cases shall be as under: a. In 'Limited Scrutiny' cases, the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to conduct a comprehensive scrutiny, necessary approval from the concerned authority is mandatory. In the present case in hand, the Revenue has failed to substantiate that the issue related to the expenditure claimed by the assessee was before the A.O. during the assessment limited scrutiny proceeding nor it brought on record any fact to show that the A.O. had authority to go beyond the issue for which scrutiny assessment was initiated. The decision of the co-ordinate bench relied upon by the ld. AR in Shree Aniruddha Upasana Foundation (supra) has dealt with this issue extensively by citing the various instructions of CBDT on several occasions on this issue. 10. From the above observation, we are of the considered view that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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