MANOIR PETRO INDIA LTD, MUMBAI V. PR CIT 1, MUMBAI

ITA 2626/MUM/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6806 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 04-07-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 07-05-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Gift; Business expenditure; Opportunity of being heard; Period of limitation; Capital receipt; Revenue expenditure
• Section: 37(1); 263

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I, MUMBAI , . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO.2626/MUM/2015 ASSESSMENT YEAR: 2010-11 MANOIR PETRO INDIA LIMITED, 602, B-WING, UNIVERSAL BUSINESS PARK, CHANDIVALI FARM ROAD, OFF SAKI VIHAR ROAD, ANDHERI (EAST), MUMBAI-400072 / VS. PR. CIT - 1 ROOM NO.387, 3 RD FLOOR, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI-400020 ( ! /ASSESSEE) ( ' / REVENUE) P.A. NO. AAFCM5210J MANOIR PETRO INDIA LIMITED ITA NO.2626/MUM/2015 & C.O. NO.95/MUM/2015 2 C.O. NO.95/MUM/2015 (ARISING OUT OF ITA NO.2626/MUM/2015) ASSESSMENT YEAR: 2010-11 PR. CIT - 1 ROOM NO.387, 3 RD FLOOR, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI-400020 / VS. MANOIR PETRO INDIA LIMITED, 602, B-WING, UNIVERSAL BUSINESS PARK, CHANDIVALI FARM ROAD, OFF SAKI VIHAR ROAD, ANDHERI (EAST), MUMBAI-400072 ( ' / REVENUE) ( ! /ASSESSEE) P.A. NO. AAFCM5210J ! / ASSESSEE BY SHRI SANJAY PARIKH ' / REVENUE BY SMT. SUNITA BILLA CIT-DR # '$ % ! & / DATE OF HEARING : 07/06/2018 % ! & / DATE OF ORDER: 12/07/2018 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 27/03/2015 OF THE LD. PR. COMMISSIONER OF INCOME TA X, MUMBAI AND THE REVENUE HAS PREFERRED CROSS OBJECTIO N. THE ASSESSEE HAS CHALLENGED INVOCATION OF REVISIONAL JU RISDICTION UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 (HERE INAFTER THE ACT) AND SETTING ASIDE THE ASSESSMENT ORDER TO BE F RAMED AFRESH. MANOIR PETRO INDIA LIMITED ITA NO.2626/MUM/2015 & C.O. NO.95/MUM/2015 3 2. DURING HEARING, THE LD. COUNSEL FOR THE ASSESSE E, SHRI SANJAY PARIKH, CONTENDED THAT THE NATURE OF IN COME WAS EXAMINED BY THE LD. ASSESSING OFFICER AND ACCORDING LY TAXED THE ENTIRE AMOUNT. IT WAS CONTENDED THAT THE PRINCI PLE COMMISSIONER OF INCOME TAX DID NOT PROVIDE PROPER OPPORTUNITY TO THE ASSESSEE AND HAS NOT TOUCHED UPO N THE BROUGHT FORWARD LOSSES, WHEREAS, THE LD. ASSESSING OFFICER PROPERLY EXAMINED THE FACTUAL MATRIX, THEREFORE, TH E REVISIONAL ORDER CANNOT BE SAID TO BE JUSTIFIED. OUR ATTENTION WAS INVITED TO VARIOUS PAGES OF THE PAPER BOOK AND ALSO PARA-4 OF THE IMPUGNED ORDER. RELIANCE WAS PLACED UPON THE DECISI ON IN THE CASE OF CIT VS MAHINDRA & MAHINDRA LTD. 404 ITR 1(S C), CIT VS FINE JEWELLERY INDIA LTD. (2015) 372 ITR 303(BOM .), MOIL LTD. VS CIT (2017) 396 ITR 244 (BOM.), SMALL WONDER INDUSTRIES VS CIT (ITA NO.2464/MUM/2013), ORDER DAT ED 24/02/2017. 2.1. ON THE OTHER HAND, THE LD. CIT-DR, MS. SUNITA BILLA, DEFENDED THE REVISION ORDER BY CONTENDING TH AT THE LD. ASSESSING OFFICER MERELY EXAMINED THE PROFIT & LOSS ACCOUNT FOR WHICH OUR ATTENTION WAS INVITED TO PARA-4 OF TH E MANOIR PETRO INDIA LIMITED ITA NO.2626/MUM/2015 & C.O. NO.95/MUM/2015 4 ASSESSMENT ORDER AND THERE IS NO APPLICATION OF MIN D BY THE LD. ASSESSING OFFICER. IT WAS PLEADED THAT NO DISCU SSION WAS MADE WITH RESPECT TO NON-COMPETE FEE IN THE ASSESSM ENT ORDER AND AT PAGE-10 OF THE PAPER BOOK THAT THERE IS NO M ENTION OF CAPITAL CREDIT RETURN BACK. OUR ATTENTION WAS INVIT ED TO PAGE- 11 TO THE EFFECT THAT WHAT WAS FILED BY THE ASSESSE E BEFORE THE LD. ASSESSING OFFICER AND NOTHING WAS EXAMINED IN A REQUIRED MANNER, MEANING THEREBY, NO INVESTIGATION WAS MADE OF THE AGREEMENT AND WHETHER IT WAS TAXED OR NOT. THE CRUX OF THE ARGUMENT IS THAT THE ASSESSMENT ORDER WAS PASSED WI THOUT EXAMINATION OF FACTS, THEREFORE, IT IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. RELIANC E WAS PLACED UPON THE DECISION FROM KOLKATA HIGH COURT IN RAJMAN DIR ESTATES PVT. LTD. VS PR. CIT (G.A. NO.509 OF 2016), HON'BLE MADRAS HIGH COURT IN INDIAN TEXTILES VS CIT (1986) 26 TAXMANN.COM 677 (MAD.), CIT VS VARANASI KHANTA RAO (2015) 59 TAXMANN.COM 175 (AP), THE DECISION OF THE TRIBUN AL IN M/S CROMPTON GREAVES VS CIT (ITA NO.1994/MUM/2013 AND 2836/MUM/2014), ORDER DATED 01/02/2016, CIT VS AMIT ABH BACHAN (2016) 69 TAXMANN.COM 170 (SUPREME COURT). MANOIR PETRO INDIA LIMITED ITA NO.2626/MUM/2015 & C.O. NO.95/MUM/2015 5 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. BEFORE AD VERTING FURTHER, IT IS OUR BOUNDED DUTY TO EXAMINE SECTION 263 OF THE ACT, WHICH IS REPRODUCED HEREUNDER FOR READY REFERE NCE AND ANALYSIS:- 263. (1) THE PRINCIPAL COMMISSIONER OR COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDING UNDER THIS ACT, AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY TH E ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, HE MAY, AFTER GIVING THE ASSESSEE AN O PPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THEREON AS T HE CIRCUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORD ER ENHANCING OR MODIFYING THE ASSESSMENT, OR CANCELLING THE ASSESSM ENT AND DIRECTING A FRESH ASSESSMENT. 46 [ EXPLANATION 1 .]FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT, FOR THE PURPOSES OF THIS SUB-SECTION , ( A ) AN ORDER PASSED ON OR BEFORE OR AFTER THE 1ST DAY OF JUNE, 1988 BY THE ASSESSING OFFICER SHALL INCLUDE ( I ) AN ORDER OF ASSESSMENT MADE BY THE ASSISTANT COMM ISSIONER OR DEPUTY COMMISSIONER OR THE INCOME-TAX OFFICER ON TH E BASIS OF THE DIRECTIONS ISSUED BY THE JOINT COMMISSIONER UND ERSECTION 144A ; ( II ) AN ORDER MADE BY THE JOINT COMMISSIONER IN EXERCI SE OF THE POWERS OR IN THE PERFORMANCE OF THE FUNCTIONS OF AN ASSESSING OFFICER CONFERRED ON, OR ASSIGNED TO, HIM UNDER THE ORDERS OR DIRECTIONS ISSUED BY THE BOARD OR BY THE PRINCIPAL CHIEF COMMISSIONER OR CHIEF COMMISSIONER OR PRINCIPAL DIR ECTOR GENERAL OR DIRECTOR GENERAL OR PRINCIPAL COMMISSION ER OR COMMISSIONER AUTHORISED BY THE BOARD IN THIS BEHALF UNDER SECTION 120 ; ( B ) 'RECORD' SHALL INCLUDE AND SHALL BE DEEMED ALWAYS TO HAVE INCLUDED ALL RECORDS RELATING TO ANY PROCEEDING UND ER THIS ACT MANOIR PETRO INDIA LIMITED ITA NO.2626/MUM/2015 & C.O. NO.95/MUM/2015 6 AVAILABLE AT THE TIME OF EXAMINATION BY THE PRINCIP AL COMMISSIONER OR COMMISSIONER; ( C ) WHERE ANY ORDER REFERRED TO IN THIS SUB-SECTION A ND PASSED BY THE ASSESSING OFFICER HAD BEEN THE SUBJECT MATTER OF AN Y APPEAL FILED ON OR BEFORE OR AFTER THE 1ST DAY OF JUNE, 1988, TH E POWERS OF THE PRINCIPAL COMMISSIONER OR COMMISSIONER UNDER THIS S UB-SECTION SHALL EXTEND AND SHALL BE DEEMED ALWAYS TO HAVE EXT ENDED TO SUCH MATTERS AS HAD NOT BEEN CONSIDERED AND DECIDED IN SUCH APPEAL. 47 [ EXPLANATION 2. FOR THE PURPOSES OF THIS SECTION, IT IS HEREBY DECLARED THAT AN ORDER PASSED BY THE ASSESSING OFFI CER SHALL BE DEEMED TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICI AL TO THE INTERESTS OF THE REVENUE, IF, IN THE OPINION OF THE PRINCIPAL COMMISSIONER OR COMMISSIONER, ( A ) THE ORDER IS PASSED WITHOUT MAKING INQUIRIES OR V ERIFICATION WHICH SHOULD HAVE BEEN MADE; ( B ) THE ORDER IS PASSED ALLOWING ANY RELIEF WITHOUT I NQUIRING INTO THE CLAIM; ( C ) THE ORDER HAS NOT BEEN MADE IN ACCORDANCE WITH AN Y 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 T HE JURISDICTIONAL HIGH COURT OR SUPREME COURT IN THE CASE OF THE ASSE SSEE OR ANY OTHER PERSON.] (2) NO ORDER SHALL BE MADE UNDER SUB-SECTION (1) AF TER THE EXPIRY OF TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER SOUGHT TO BE REVISED WAS PASSED. (3) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SECTI ON (2), AN ORDER IN REVISION UNDER THIS SECTION MAY BE PASSED AT ANY TIME IN THE CASE OF AN ORDER WHICH HAS BEEN PASSED IN CONSE QUENCE OF, OR TO GIVE EFFECT TO, ANY FINDING OR DIRECTION CONTAIN ED IN AN ORDER OF THE APPELLATE TRIBUNAL, NATIONAL TAX TRIBUNAL, THE HIGH COURT OR THE SUPREME COURT. EXPLANATION .IN COMPUTING THE PERIOD OF LIMITATION FOR THE PURPOSES OF SUB-SECTION (2), THE TIME TAKEN IN GIVI NG AN OPPORTUNITY TO THE ASSESSEE TO BE REHEARD UNDER THE PROVISO TO SECTION 129 AND ANY PERIOD DURING WHICH ANY PROCEEDING UNDER MANOIR PETRO INDIA LIMITED ITA NO.2626/MUM/2015 & C.O. NO.95/MUM/2015 7 THIS SECTION IS STAYED BY AN ORDER OR INJUNCTION OF ANY COURT SHALL BE EXCLUDED. 23. IF THE AFORESAID SECTION IS ANALYZED, IT SPEAK S ABOUT THE POWERS OF THE LD. PR. COMMISSIONER OR THE COMMI SSIONER TO CONSIDER WHETHER THE ASSESSMENT ORDER IS ERRONEO US IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE AND A FTER GIVING OPPORTUNITY OF BEING HEARD AND HE MAKE SUCH ENQUIRY AS HE DEEMS NECESSARY AND PASS SUCH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE SO JUSTIFY INCLUDING, ENH ANCE AND MODIFYING THE ASSESSMENT OR CANCELING THE ASSESSMEN T AND DIRECTING A FRESH ASSESSMENT. IT HAS BEEN FURTHER E XPLAINED WITH THE INSERTION OF EXPLANATION-2 INSERTED BY THE FINANCE ACT, 2015 W.E.F. 01/06/2015. UNDISPUTEDLY, THE LD. PR. COMMISSIONER SERVED UPON THE ASSESSEE A SHOW CAUSE NOTICE ISSUED U/S 263 OF THE ACT, TO WHICH THE ASSESSEE FI LED WRITTEN SUBMISSIONS, THEREFORE, THE CONTENTION OF THE LD. C OUNSEL FOR THE ASSESSEE THAT PROPER OPPORTUNITY WAS NOT PROVID ED IS NOT SUBSTANTIATED. BEFORE THE LD. PR. COMMISSIONER, THE ASSESSEE SUBMITTED THAT THE LD. ASSESSING OFFICER DULY EXAMI NED THE ISSUE INVOLVED, RAISED APPROPRIATE QUERIES, CALLED FOR RELEVANT MANOIR PETRO INDIA LIMITED ITA NO.2626/MUM/2015 & C.O. NO.95/MUM/2015 8 DETAILS AND ON EXAMINATION OF SUCH DETAILS ALLOWED RELIEF TO THE ASSESSEE. IDENTICAL PLEA WAS RAISED BEFORE THIS TR IBUNAL. 2.4. NOW, WE SHALL DEAL WITH THE CASES CITED FROM BOTH SIDES ALONG WITH THE RATIO LAID DOWN THEREIN AND AL SO SOME OTHER CASES WHICH ARE AVAILABLE ON THE ISSUE IN HAN D, SO THAT WE CAN REACH TO A JUSTIFIABLE CONCLUSION. IN THE CA SE OF MOIL LTD. VS CIT ((SUPRA)), RELIED UPON BY THE LD. COUNS EL FOR THE ASSESSEE, THE PARTICULAR DECISION WAS ARRIVED AT WH ERE THE ASSESSING OFFICER WAS SATISFIED WITH THE ADMISSIBIL ITY OF THE CLAIM ON THE BASIS OF MATERIAL AND DETAILS SUPPLIED BY THE ASSESSEE, THEREFORE, THE LD. ASSESSING OFFICER WAS NOT EXPECTED TO RAISE MORE QUERIES. IN THE CASE OF CIT VS FINE J EWELLERY INDIA LTD. ((SUPRA)), THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS, SOUGHT DETAILS IN RESPECT OF EXPENDITU RE INCURRED FOR BUILDING BRAND AND AFTER EXAMINING DETAILS HOLD ING PART ALONE WAS OF CAPITAL NATURE. IN THAT SITUATION, THE ASSESSMENT ORDER WAS HELD TO BE NEITHER ERRONEOUS OR PREJUDICI AL TO THE INTEREST OF THE REVENUE. ANOTHER DECISION RELIED UP ON WAS CIT VS MAHINDRA & MAHINDRA LTD. (2018) 404 ITR 1(SUPREM E COURT), WHEREIN, THE ISSUE WAS WITH RESPECT TO BENE FIT OR MANOIR PETRO INDIA LIMITED ITA NO.2626/MUM/2015 & C.O. NO.95/MUM/2015 9 AMENITY OR ARISING FROM BUSINESS AND NO DEDUCTION W AS CLAIMED IN RESPECT OF INTEREST PAID ON LOAN WITHIN THE AMBIT OF SECTION 36(1)(III) AND 41(1) OF THE ACT. IN THE CAS E OF SMALL WONDER INDUSTRIES VS CIT (2017) 49 CCH 177 (MUM. TR IB.) ORDER DATED 24/02/2017, WHEREIN, THE CASE OF THE AS SESSEE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 142 ALONG WITH QUESTIONNAIRE WAS ISSUED TO THE ASSESSEE. THE ASSESSEE FILED THE NECESSARY DETAILS AND AFTER CONSIDERING T HE FACTUAL MATRIX, THE ASSESSMENT WAS FRAMED. IN THAT SITUATIO N, A PARTICULAR DECISION WAS TAKEN IN FAVOUR OF THE ASSE SSEE. 2.5. SO FAR AS, THE CASES RELIED UPON BY THE LD. C IT-DR IS CONCERNED, ONE SUCH CASE IS OF M/S CROMPTON GREA VES VS CIT (ITA NO.1994/MUM/2013 AND 2836/MUM/2014), ORDER DATED 01/02/2016. IN THAT CASE, THE LD. ASSESSING O FFICER DID NOT MAKE NECESSARY/PROPER ENQUIRY WITH RESPECT TO T HE PROVISION OF RS.17.72 CRORES ON ACCOUNT OF CLAIM OF DEDUCTION FOR LIQUIDITY DAMAGES, WARRANTY, SALES TAX AND EXCI SE DUTY. IN THE ABSENCE OF PROPER ENQUIRY, THE REVISIONS ORDER WAS UPHELD. THE HON'BLE ANDHRA PRADESH HIGH COURT IN CIT VS VAR ANASI KHANTA RAO ((SUPRA)), THE ASSESSEE WAS PROPRIETOR O F RICE MILLS MANOIR PETRO INDIA LIMITED ITA NO.2626/MUM/2015 & C.O. NO.95/MUM/2015 10 DECLARED CERTAIN INCOME. THE LD. ASSESSING OFFICER COMPLETED ASSESSMENT ADMITTING THE INCOME DECLARED BY THE ASS ESSEE. THE LD. COMMISSIONER PASSED REVISIONAL ORDER DIRECT ING THE ASSESSING OFFICER TO CALL FOR RECORDS RELATING TO M INIMUM SUPPORT PRICE, FIXED BY STATE GOVERNMENT, TOWARDS P URCHASE COST OF DIFFERENT VARIETY OF PADDY, SALE PRICE OF R ICE FIXED IN RESPECT OF RICE SOLD TO FCI, IN THAT SITUATION, THE REVISIONAL ORDER WAS HELD TO BE JUSTIFIED. IDENTICALLY, THE HO N'BLE MADRAS HIGH COURT IN INDIAN TEXTILE VS CIT, WHEREIN, THE R ELIEF WAS GIVEN BY THE ASSESSING OFFICER WITHOUT PROPER VERIF ICATION, THEREFORE, THE REVISIONS ORDER WAS HELD TO BE JUSTI FIED. 2.6. NOW, WE SHALL ANALYZE SOME OTHER CASES WHICH THROWS LIGHT ON THE ISSUE LIKE ACIT VS M.P. WAREHOU SING AND LOGISTIC CORPORATION LTD. (2012) 21 TAXMAN.COM 322 (INDORE), WHEREIN WITH RESPECT TO REPAIRS AND INSURANCE OF MA CHINERY, PLANT AND FURNITURE, IT WAS HELD THAT THE EXPENDITU RE MUST BE INCURRED BY THE ASSESSEE TO PRESERVE AND MAINTAIN E XISTING ASSET AND SUCH EXPENDITURE MUST NOT BRING INTO EXIS TENCE A NEW ASSET. THIS CASE MAY NOT HELP THE ASSESSEE BECA USE THE EXPENSE WERE INCURRED WITH RESPECT TO REPAIR AND MA INTENANCE MANOIR PETRO INDIA LIMITED ITA NO.2626/MUM/2015 & C.O. NO.95/MUM/2015 11 OF MACHINERY, WHICH IS REQUIRED FOR ITS SMOOTH FUNC TIONING, WHEREAS, IN THE PRESENT APPEAL, THE ASSESSEE INCURR ING EXPENDITURE ON RENOVATION AND EVEN CHANGED TILES EV ERY YEAR, WHICH SEEMS TO BE QUITE UNREASONABLE. POSSIBLY, AFT ER FEW YEAR, THE TILES MAY BE CHANGED BUT NOT EVERY YEAR. IT IS ALSO NOTED THAT THE BUSINESS OF THE ASSESSEE IS BROADLY DONE ON COMPUTER TO KNOW ABOUT THE LOCATIONS OF THE SHIP AN D IT CANNOT BE CLAIMED THAT TILES ARE DAMAGED EVERY YEAR . THE BUSINESS OF THE ASSESSEE ARE NOT OF SUCH NATURE, WH ERE HEAVY ITEMS ARE THROWN ON THE TILES CAUSING BREAKAGE AND COMPULSORILY THE TILES ARE TO BE CHANGED. THE LD. A SSESSING OFFICER HAS NEVER EXAMINED THE GENUINENESS OF SUCH AND ITS NECESSITY. THEREFORE, THE ORDER IS ERRONEOUS AS WEL L AS PREJUDICIAL TO THE INTEREST OF REVENUE. 2.7. IN THE CASE OF NARAYN TATU RANE VS INCOME TAX OFFICER (2016) 70 TAXMAN.COM 227 (MUM. TRIB.). IN T HIS CASE, SINCE, THE COMMISSIONER HAD NOT BROUGHT ANY MATERIA L ON RECORD TO SUBSTANTIATE THE INFERENCE AND MERELY PAS SED THE REVISIONAL ORDER ONLY TO CARRY OUT FISHING AND ROVI NG ENQUIRIES WITH OBJECTIVE OF SUBSTITUTING HIS VIEW WITH THAT O F THE MANOIR PETRO INDIA LIMITED ITA NO.2626/MUM/2015 & C.O. NO.95/MUM/2015 12 ASSESSING OFFICER, IN THAT SITUATION THE REVISIONAL ORDER WAS HELD TO BE NOT JUSTIFIED, WHEREAS, IT IS NOT SO IN THE PRESENT APPEAL. 2.8. IN THE CASE OF M/S AMIRA ENTERPRISES LTD. VS PR. CIT (ITA NO.3206/DEL./2017), THE BUSINESS OF THE ASSESS EE WAS TRADING OF RICE. IT WAS FOUND BY THE TRIBUNAL THAT THE PRINCIPLE CIT HIMSELF DID NOT TAKE ANY ENQUIRY TO REACH TO A CONCLUSION THAT THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDIC IAL TO THE INTEREST OF REVENUE. IN THAT SITUATION, A PARTICULA R VIEW WAS TAKEN, THEREFORE, THIS DECISION MAY NOT HELP THE AS SESSEE. 2.9. LIKEWISE, IN THE CASE OF M/S INDUS BEST HOSPI TALITY VS PR. CIT (ITA NO.3125/MUM/2017), THE BENCH RELIED UPON THE DECISION FROM HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS NIRAV MODI 390 ITR 292. THE ISSUE WAS WHE THER THE LD. ASSESSING OFFICER EXAMINED THE GIFT RECEIVED BY THE ASSESSEE AND ACCEPTED THE SAME AS GENUINE. NO ENQUI RY WAS CAUSED BY THE LD. CIT TO FIND OUT WHETHER THE ASSES SING OFFICER WAS SATISFIED WITH RESPECT TO CORRECTNESS OF THE CL AIM OF THE MANOIR PETRO INDIA LIMITED ITA NO.2626/MUM/2015 & C.O. NO.95/MUM/2015 13 ASSESSEE WHETHER ERRONEOUS. IN THAT SITUATION, THE BANK TOOK A DECISION. 2.10. SO FAR AS, THE CASE OF METACAPS ENGINEERING AND MAHENDRA CONSTRUCTION COMPANY (J.V.) (2017) 86 TAXMAN.COM 128 (MUM. ITAT) IS CONCERNED, THEREIN TH E ASSESSEE WAS AWARDED AS CIVIL CONSTRUCTION CONTRACT OF A PROJECT. AS THE ASSESSEE HAD INSUFFICIENT CAPITAL AND INFRASTRUCTURE, IT SUB-CONTRACTED THE PROJECT TO S UB-CONTRACTOR URJA ON BACK TO BACK BASIS. THE ENTIRE RESPONSIBI LITY AND COMPLETION OF CONTRACT WAS TAKEN OVER BY THE SUB-CO NTRACTOR. REVISIONAL JURISDICTION WAS INVOKED MAINLY ON THE G ROUND OF EXCESSIVE EXPENSES ON LABOUR PAYMENT, ETC. IN THAT SITUATION, A PARTICULAR VIEW WAS TAKEN. 2.11. IN THE CASE OF ARVEE INTERNATIONAL VS ADDL. CIT (2006) 8 SOT 452 (MUM. TRIB.) , WHEREIN, THE ASSESS MENT WAS FRAMED WITHOUT APPLICATION OF MIND. IT WAS HELD TH AT MERE ALLEGATION THAT ASSESSING OFFICER HAS TAKEN A VIEW IN THE MATTER WILL NOT PUT THE MATTER BEYOND THE PURVIEW O F SECTION MANOIR PETRO INDIA LIMITED ITA NO.2626/MUM/2015 & C.O. NO.95/MUM/2015 14 263 UNLESS THE VIEW SO TAKEN BY THE ASSESSING OFFIC ER IS A JUDICIAL VIEW BASED ON PROPER ENQUIRY AND LEGAL ASP ECT. 2.12. IN HORIZON INVESTMENT COMPANY LTD. VS CIT (I TA NO.1593/MUM/2013), WHEREIN, IT WAS CLEAR THAT THERE WAS A LACK/ABSENCE OF ENQUIRY BY THE ASSESSING OFFICER, T HEREFORE, THE JURISDICTION IN RELATION TO DEDUCTION OF THE SA ID EXPENDITURE WAS HELD TO BE VALIDLY ASSUMED. 2.13. IN THE CASE OF CIT V. OXFORD UNIVERSITY PRESS 108 ITR 166 (BOM.), WHEREIN, THE HON'BLE HIGH COURT HEL D AS UNDER:- THIS COURT HELD IN THE CASE OF GULAMHUSSEIN EBRAHIM MATCHESWALLA V. CIT [1974] 97 ITR 24 (BOM.), THAT THE EXPRESSION REPAIR MUST BE UNDERSTOOD IN CONTRADISTINCTION TO RENEWAL OR RESTORATION AND THE TEST TO BE APPLIED IS TO SEE WH ETHER AS A RESULT OF THE EXPENDITURE WHAT IS BEING DONE IS TO PRESERVE A ND MAINTAIN AN ALREADY EXISTING ASSET. IF THE AMOUNT IS SPENT FOR THE PURPOSE OF BRINGING INTO EXISTENCE A NEW ASSET OR OBTAINING A NEW ADVANTAGE THEN SUCH AN EXPENDITURE WOULD NOT BE REVENUE EXPEN DITURE. THE MERE QUANTUM OF EXPENDITURE IS NOT BY ITSELF DECISI VE OF THE QUESTION WHETHER IT IS OF THE NATURE OF REVENUE OR CAPITAL. A SUM CAN BE ALLOWED AS COST OF REPAIRS EVEN THOUGH THE EXPENDIT URE IN A PARTICULAR YEAR IS HEAVY ON ACCOUNT OF THE FACT THA T IT IS UNDERTAKEN TO REMEDY THE EFFECT OF SEVERAL YEARS OF WEAR AND T EAR OR NEGLECT AND ALSO IN SPITE OF THE FACT THAT SUCH EXPENDITURE MAY NOT BE NECESSARY FOR SEVERAL YEARS TO COME AFTER REPAIRS HAVE BEEN E FFECTED. IT IS THUS CLEAR THAT WHAT THE COURT IS REQUIRED TO FIND OUT I S WHETHER AS A RESULT OF THE EXPENDITURE A NEW ASSET OR A NEW ADVA NTAGE IS BEING BROUGHT INTO EXISTENCE. THE COURT WILL ALSO HAVE RE GARD TO THE ASPECT MANOIR PETRO INDIA LIMITED ITA NO.2626/MUM/2015 & C.O. NO.95/MUM/2015 15 AS TO WHETHER AS A RESULT OF THE EXPENDITURE WHAT I S BEING DONE IS TO PRESERVE AND MAINTAIN AN ALREADY EXISTING ASSET. IN THE INSTANT CASE, IT WAS CLEAR AS TO WHY AND IN WHAT CIRCUMSTANCES THE GUNITING WORK WAS UNDERTAKEN BY THE ASSESSEE IN RELATION TO THE BUILDING. IN THEIR LETTER, THE ARCHITECTS OF THE AS SESSEE STATED THAT DURING THE INSPECTION OF THE BUILDING, WHICH WAS UN DERTAKEN IN JANUARY, 1961, IT WAS OBSERVED THAT THE REINFORCEME NT OF THE SLABS HAD DECAYED AND CRACKS WERE VISIBLE UNDERSIDE OF TH E SLAB AND ON THE FLOORS AND SOME OF THE STEEL REINFORCEMENT IN T HE SLAB HAD LITTLE OR NO COVER. FURTHER, THAT THE ASSESSEE HAD BEEN SP ENDING GOOD AMOUNTS ON THE REPAIRS OF SUCH CRACKS AND PLASTERIN GS OF THE SLABS ON WHICH THE REINFORCEMENTS HAD DISAPPEARED BUT THE AMOUNT SPENT FOR PLASTER PATCH WORK THAT WAS UNDERTAKEN WAS A WA STE AND THAT, THEREFORE, SINCE THE PLASTERING BY MEANS OF AN ORDI NARY METHOD WAS OF NO USE, PLASTERING BY THE PROCESS OF GUNITING WA S ADVISED. THE NATURE OF THE GUINTING PROCESS WAS EXPLAINED BY THE ASSESSEE. HAVING REGARD TO THE NATURE OF THE GUNITING PROCESS THAT W AS UNDERTAKEN FOR CARRYING OUT THE PLASTERING AND REPAIR WORK TO THE BUILDING AND THE REASONS AND CIRCUMSTANCES AS TO WHY THE GUNITIN G PROCESS HAD BEEN EMPLOYED, IT BECAME VERY CLEAR THAT BY EMPLOYI NG THIS METHOD, WHICH WAS NOTHING BUT AN IMPROVED METHOD OF PLASTER ING AND REPAIRING WORK, ALL THAT THE ASSESSEE HAD DONE WAS TO PRESERVE AND MAINTAIN THE ALREADY EXISTING ASSET. NO NEW ASSET O R NEW ADVANTAGE AS SUCH COULD BE SAID TO HAVE BEEN BROUGHT INTO EXI STENCE BY REASON OF EXPENDITURE INCURRED FOR DOING THE GUINTING WORK . AS A RESULT OF GUNITING WORK DONE THE ASSESSEE HAD NOT CHANGED THE NATURE OF THE ASSET, VIZ., THE BUILDING AS A WHOLE, AND THE SAME IN NO WAY IN CREASED THE ACCOMMODATION OR EARNING CAPACITY OF THE BUILDI NG; IN THAT SENSE NO NEW ADVANTAGE OF ENDURING BENEFIT HAD BEEN BROUGHT INTO EXISTENCE. THE REPAIRS ALSO COULD NOT BE REGARDED A S HEAVY STRUCTURAL REPAIRS, FOR, ACCORDING TO THE ASSESSEE' S ARCHITECTS, WHAT COULD NOT BE ACHIEVED BY THE ORDINARY METHOD OF PLA STERING WAS ACHIEVED BY A SOPHISTICATED METHOD OF PROCESS OF GU NITING. IN THIS VIEW OF THE MATTER, IT SEEMED VERY CLEAR THAT THE E XPENDITURE INCURRED FOR GUNITING WORK DONE AS ALSO THE EXPENDI TURE BEING THE ARCHITECTS' FEES PAID IN CONNECTION THEREWITH WOULD HAVE TO BE REGARDED AS EXPENDITURE OF A REVENUE NATURE. ALL THAT THE ASSESSEE DID IN THE INSTANT CASE WAS T O UNDERTAKE THE PLASTER REPAIRING WORK OUT BY ADOPTING A NEW METHOD CALLED GUNITING PROCESS, AND BY INCURRING THE EXPENDITURE BY ADOPTING SUCH A PROCESS THE ASSESSEE WAS MERELY MAINTAINING AND P RESERVING AN ASSET WHICH IT ALREADY POSSESSED AND THUS THOUGH TO SOME EXTENT THE MANOIR PETRO INDIA LIMITED ITA NO.2626/MUM/2015 & C.O. NO.95/MUM/2015 16 LIFE OF THE ASSET HAD BEEN PROLONGED AND THE ASSET WAS MADE TO GIVE BETTER SERVICE THEN IT WAS DOING IN THE PAST, THE E XPENDITURE WOULD HAVE TO BE REGARDED AS REVENUE EXPENDITURE. II. SECTION 37(1) OF THE INCOME-TAX ACT, 1961 - BUS INESS EXPENDITURE - ALLOWABILITY OF - ASSESSMENT YEAR 196 3-64 - DURING RELEVANT ASSESSMENT YEAR, ASSESSEE-COMPANY P AID CERTAIN AMOUNT TO ITS DECEASED EMPLOYEE AS GRATUITY , CALCULATING QUANTUM OF 2 YEARS' SALARY PAYABLE TO D ECEASED AT TIME OF HIS DEALTH - ITO DISALLOWED ASSESSEE'S CLAI M IN RESPECT OF AFORESAID EXPENDITURE - AAC FINDING THAT GRATUIT Y FIXED FOR NON-COVENANTED STAFF WAS ONLY 12 MONTHS' SALARY, HE LD THAT GRATUITY PAYMENT IN EXCESS OF 12 MONTHS' SALARY WAS EX-GRATIA PAYMENT - HE THUS, ALLOWED DEDUCTION OF AMOUNT REPRESENTING 12 MONTHS' SALARY AS LEGITIMATE BUSINE SS EXPENDITURE AND DISALLOWED REST AS BEING IN NATURE OF EX- GRATIA PAYMENT - TRIBUNAL CONFIRMED AAC'S ORDER - W HETHER, ON FACTS, TRIBUNAL RIGHTLY AFFIRMED AAC'S ORDER, AN D THEREFORE, ORDER PASSED BY TRIBUNAL COULD NOT BE INTERFERED WI TH - HELD, YES FACTS-II DURING THE RELEVANT ASSESSMENT YEAR, THE ASSESSEE-C OMPANY PAID CERTAIN AMOUNT TO ITS DECEASED EMPLOYEE AS AND BY W AY OF GRATUITY, ROUGHLY CALCULATING THE QUANTUM OF 2 YEAR S' SALARY PAYABLE TO THE DECEASED AT THE TIME OF HIS DEATH. T HE ASSESSEE CLAIMED THE SAID PAYMENT AS AN ALLOWABLE EXPENDITUR E IN COMPUTING ITS ASSESSABLE INCOME. THE ITO DISALLOWED THE CLAIM ON THE GROUND THAT THERE WAS NO CONTRACTUAL OBLIGATION TO PAY ANY GRATUITY AND, THEREFORE, THE PAYMENT WAS AN EX-GRATIA PAYMENT AND NOT A LEGITIMATE BUSINESS EXPENDITURE. ON APPEA L, THE AAC HELD THAT THE GRATUITY PAID TO THE DECEASED'S HEIRS WAS EQUIVALENT TO APPROXIMATELY 2 YEARS' SALARY WHILE THE GRATUITY FIXED FOR THE NON-COVENANTED STAFF WAS ONLY 12 MONTHS' SALARY AND IN VIEW OF THIS HE HELD THAT THE GRATUITY PAYMENT IN EXCESS OF 12 MONTHS' SALARY WAS AN EX-GRATIA PAYMENT. IN OTHER WORDS, HE ALLOWED A DEDUCTION OF AMOUNT REPRESENTING 12 MONTHS' SALARY AS LEGITIMATE BUSINESS EXPENDITURE BUT DISALLOWED THE REST AS BEI NG IN THE NATURE OF EX-GRATIA PAYMENT. ON CROSS APPEALS, THE TRIBUNAL UPHELD THE ORDER OF THE AAC. ON REFERENCE : HELD-II MANOIR PETRO INDIA LIMITED ITA NO.2626/MUM/2015 & C.O. NO.95/MUM/2015 17 IN THE INSTANT CASE THE AAC HELD THAT SINCE THE GRA TUITY FIXED FOR NON- COVENANTED STAFF WAS SUBJECT TO A MAXIMUM OF 12 MON THS' SALARY, IN RESPECT OF COVENANTED STAFF THE MEMBERS THEREOF COU LD AT LEAST EXPECT THAT MUCH GRATUITY IF NOT MORE AND, HAVING R EGARD TO THIS ASPECT OF THE MATTER, THE AAC HELD THAT PART OF THE GRATUITY PAID TO THE HEIRS OF DECEASED TO THE EXTENT OF RS. 24,000 B EING 12 MONTHS' SALARY COULD BE REGARDED AS PROPER AND LEGITIMATE B USINESS EXPENDITURE WHILE THAT PART WHICH WAS IN EXCESS OF 12 MONTHS' SALARY WAS TO BE REGARDED AS EX GRATIA PAYMENT AND HE, THEREFORE, DISALLOWED THE EXCESS AMOUNT. THE MATTER WAS CARRIE D IN FURTHER APPEAL TO THE TRIBUNAL, THE TRIBUNAL HAD CONFIRMED THIS FINDING OF THE AAC. IN THIS VIEW OF THE MATTER, IT WAS HELD TH AT THE TRIBUNAL WAS RIGHT IN ALLOWING A DEDUCTION OF THE EXPENDITURE ON LY TO THE EXTENT OF RS. 24,000 BEING THE PART OF THE GRATUITY AMOUNT PA ID BY THE ASSESSEE TO THE HEIRS OF DECEASED. 2.14. THE HON'BLE CALCUTTA HIGH COURT IN CIT VS J. K. INDUSTRIES PVT. LTD. 125 ITR 218 (CAL.), RELIED UPO N BY THE ASSESSEE, HELD AS UNDER: IT HAD BEEN FOUND BY THE TRIBUNAL THAT WITH THE CAPITAL BORROWED THE ASSESSEE HAD ACQUIRED A BUSINESS ASSET FOR THE PURPOSES OF IT S OWN BUSINESS. FURTHER FINDING WAS THAT IT WAS THE OBJECT OF THE ASSESSEE TO HOUSE ITS OWN OFFICE AS ALSO THE OFFICES OF THE COMPANIES MANAGED BY IT. THE FINDIN GS OF THE TRIBUNAL HAD NOT BEEN CHALLENGED NOR WAS IT CONTENDED AT ANY STAG E THAT THE HOUSING OF THE OFFICES OF THE MANAGED COMPANIES WAS NOT A PART OF T HE BUSINESS OF THE ASSESSEE. HAD THIS POINT BEEN MOOTED AT THE PROPER ST AGE THE AGREEMENTS BETWEEN THE ASSESSEE AND THE MANAGED COMPANIES COULD HAVE BEEN CONSIDERED TO ASCERTAIN WHETHER THE ASSESSEE WAS IN ANY WAY LIA BLE TO ARRANGE FOR OFFICE OF THE MANAGED COMPANIES. FOLLOWING THE DECISION OF THE SUPREME COURT IN CIT V. KIRKEND COAL CO. [1969] 74 ITR 67 THE QUESTION WHICH WAS NEITHER RAISED NOR ARGUED BEFORE THE TRIBUNAL COULD NOT BE R AISED AT THIS STAGE. EVEN OTHERWISE, IT COULD NOT BE SAID THAT IT WOULD N OT BE CONDUCIVE TO THE BUSINESS OF THE ASSESSEE IF ALL THE COMPANIES MANAGED BY IT WERE HOUSED IN THE SAME BUILDING. IT WOULD LEAD TO SOME ECONOMY AND GR EATER EFFICIENCY IN MANAGEMENT. IN VIEW OF AFORESAID, IT COULD BE CONCLUDED THAT AMO UNTS PAID AS INTEREST AND THE MUNICIPAL TAXES WERE ALLOWABLE AS DEDUCTION. AS REGARDS RENOVATION EXPENSES FOR THE ASSESSMENT YE AR 1961-62, THE EXPENSES IN PUTTING UP THE WOODEN PANELLING DID NOT RESULT IN ANY ENDURING BENEFIT TO MANOIR PETRO INDIA LIMITED ITA NO.2626/MUM/2015 & C.O. NO.95/MUM/2015 18 THE ASSESSEE AND, THEREFORE, WAS DEDUCTIBLE AS A REVE NUE EXPENDITURE. THE REVENUE DID NOT CHALLENGE THE OTHER EXPENSES. HENCE THE ENTIRE EXPENDITURE ON RENOVATION WAS DEDUCTIBLE. 2.15. THE HON'BLE CALCUTTA HIGH COURT IN RAJMANDIR ESTATE PVT. LTD. VS PR. CIT (2016) 70 TAXMAN.COM 12 4 (CALC.) ORDER DATED 13/05/2016 AND THE RATIO LAID DOWN THER EIN SUPPORTS THE CASE OF THE REVENUE. IT IS NOTEWORTHY THAT WHILE COMING TO A PARTICULAR CONCLUSION, HON'BLE CALCUTTA HIGH COURT CONSIDERED FOLLOWING JUDICIAL PRONOUNCEMENTS: - I. CIT V. CALCUTTA DISCOUNT CO. LTD. [1973] 91 ITR 8 (SC) (PARA 3), II. SUMATI DAYAL V. CIT [1995] 214 ITR 801/80 TAXMAN 89 (SC) (PARA 4), III. CIT V. NOVA PROMOTERS & FINLEASE (P.) LTD. [2012] 342 ITR 169/206 TAXMAN 207/18 TAXMANN.COM 217 (DELHI) (PARA 4), IV. CIT V. DURGA PRASAD MORE [19711] 82 ITR 540 (SC) (PARA 6), V. CIT V. PRECISION FINANCE (P.) LTD. [1994] 208 ITR 465/[1995] 82 TAXMAN 31 (CAL.) (PARA 6), VI. ITO V. DG HOUSING PROJECTS LTD. [2012] 343 ITR 329/212 TAXMAN 132 (MAG.)/[2012] 20 TAXMANN.COM 587 (DELHI) (PARA 7), VII. DIT V. JYOTI FOUNDATION [2013] 35 ITR 388/219 TAXMAN 105/38 TAXMANN.COM 180 (DELHI) (PARA 7), VIII. CIT V. STELLER INVESTMENT LTD. [1991] 192 ITR 287/59 TAXMAN 568 (DELHI) (PARA 8), IX. CIT V. SOPHIA FINANCE LTD. [1994] 205 ITR 98/70 TAXMAN 69 (DELHI) (FB) (PARA 8), MANOIR PETRO INDIA LIMITED ITA NO.2626/MUM/2015 & C.O. NO.95/MUM/2015 19 X. CIT V. DIVINE LEASING & FINANCE LTD. [2008] 299 ITR 268/[2007] 158 TAXMAN 440 (DELHI)(PARA 8), XI. LOTUS CAPITAL FINANCIAL SERVICES LTD. V. ITO [IT APPEAL NO. 479 (KOL.) OF 2011] (PARA 8), XII. CIT V. LOTUS CAPITAL FINANCIAL SERVICES (P.) LTD. [ITAT NO. 125 OF 2012] (PARA 8), XIII. CIT V. DATAWARE (P.) LTD. [ITAT NO. 263 OF 2011] (PARA 8), XIV. CIT V. ROSEBERRY MERCANTILE (P.) LTD. [G.A. NO. 3296 OF 2010, DATED 10-1-2011] (PARA 8), XV. CIT V. SANCHATI PROJECTS (P.) LTD. [ITAT NO. 140 OF 2011] (PARA 8), XVI. CIT V. SAMIR BIO-TECH. (P.) LTD. [2010] 325 ITR 294 (DELHI) (PARA 8), XVII. CIT V. KAMDHENU STEEL & ALLOYS LTD. [2014] 361 ITR 220/[2012] 206 TAXMAN 254/19 TAXMANN.COM 26 (DELHI) (PARA 8), XVIII. CIT V. DWARKADHISH CAPITAL (P.) LTD. [2011] 330 ITR 298/[2010] 194 TAXMAN 43 (DELHI) (PARAS 9, 10), XIX. CIT V. KINETIC CAPITAL FINANCE LTD. [2013] 354 ITR 296/[2011] 202 TAXMAN 548/14 TAXMANN.COM 150 (DELHI) (PARAS 9, 10), XX. ZAFA AHMAD & CO. V. CIT [2013] 214 TAXMAN 440/30 TAXMANN.COM 267 (ALL.) (PARAS 9, 10), XXI. ANIL RICE MILLS V. CIT [2006] 282 ITR 236/[2005] 149 TAXMAN 313 (ALL.) (PARAS 9, 10), XXII. CIT V. FIVE VISION PROMOTERS (P.) LTD. [2016] 380 ITR 289/236 TAXMAN 502/65 TAXMANN.COM 71 (DELHI) (PARA 11), XXIII. CIT V. GABRIEL INDIA LTD. [1993] 203 ITR 108/71 TAXMAN 585 (BOM.) (PARA 12), XXIV. HARI IRON TRADING CO. V. CIT [2003] 263 ITR 437/131 TAXMAN 535 (PUNJ. & HAR.) (PARA 12), MANOIR PETRO INDIA LIMITED ITA NO.2626/MUM/2015 & C.O. NO.95/MUM/2015 20 XXV. CIT V. LEISURE WEAR EXPORTS (P.) LTD. [2012] 341 ITR 166/[2011] 202 TAXMAN 130/11 TAXMANN.COM 54 (DELHI) (PARA 13), XXVI. OMAR SALAY MOHAMED SAIT V. CIT [1959] 37 ITR 151 (SC) (PARA 14), XXVII. LALCHAND BHAGAT AMBICA RAM V. CIT [1959] 37 ITR 288 (SC) (PARA 14), XXVIII. RELIANCE JUTE & INDUSTRIES LTD. V. CIT [1979] 120 ITR 921/2 TAXMAN 417 (SC) (PARA 15), XXIX. KARIMTHARUVI TEA ESTATE LTD. V. STATE OF KERALA [1966] 60 ITR 262 (SC) (PARA 15), XXX. CIT V. SUNBEAM AUTO LTD. [2011] 332 ITR 167/[2010] 189 TAXMAN 436 (DELHI) (PARA 16), XXXI. GRINDLAYS BANK LTD. V. ITO [1978] 115 ITR 799 (CAL.) (PARA 17), XXXII. VIJAY MALLYA V. ASSTT. CIT [2003] 131 TAXMAN 477 (CAL.) (PARA 17), XXXIII. CIT V. J.L. MORRISON (INDIA) LTD. [2014] 366 ITR 593/225 TAXMAN 17 (MAG.)/46 TAXMANN.COM 215 (CAL.) (PARA 17), XXXIV. MALABAR INDUSTRIAL CO. LTD. V. CIT [2000] 243 ITR 83/109 TAXMAN 66 (SC) (PARA 18), XXXV. CIT V. MAX INDIA LTD. [2007] 295 ITR 282/166 TAXMAN 188 (SC) (PARA 18), XXXVI. CIT V. MAITHAN INTERNATIONAL [2015] 375 ITR 123/231 TAXMAN 381/56 TAXMANN.COM 283 (CAL.) (PARA 20), XXXVII. CIT V. NAVODAYA CASTLES (P.) LTD. [2014] 367 ITR 306/226 TAXMAN 190/50 TAXMANN.COM 110 (DELHI) (PARA 20), XXXVIII. CIT V. N.R. PORTFOLIO (P.) LTD. [2013] 214 TAXMAN 408/29 TAXMANN.COM 291 (DELHI) (PARA 20), XXXIX. CIT V. ACTIVE TRADERS (P.) LTD. [1995] 214 ITR 583/[1993] 69 TAXMAN 281 (CAL.) (PARA 20), MANOIR PETRO INDIA LIMITED ITA NO.2626/MUM/2015 & C.O. NO.95/MUM/2015 21 XL. CIT V. JAWAHAR BHATTACHARJEE [2012] 341 ITR 434/209 TAXMAN 174/24 TAXMANN.COM 215 (GAU.) (FB) (PARA 20) AND XLI. SMT. TARA DEVI AGGARWAL V. CIT [1973] 88 ITR 323 (SC) (PARA 27). 2.16. SO FAR AS, THE CASES RELIED UPON BY THE ASSE SSEE LIKE CIT VS FINE JEWELLERY (INDIA) LTD. AND CIT VS NIRAV MODI ((SUPRA)) ARE CONCERNED, NO DOUBT THESE CASES THROW LIGHT ON THE ISSUE BUT WERE DECIDED BY HON'BLE JURISDICTIONA L HIGH COURT TO THE PECULIAR FACTS OF THE CASE AND ON THE BASIS OF FACTUAL FINDING RECORDED BY THE TRIBUNAL. 2.17. ADMITTEDLY, AN INCORRECT ASSUMPTION OF FACT OR AN INCORRECT APPLICATION OF LAW WOULD SATISFY THE REQU IREMENT OF ORDER BEING ERRONEOUS U/S. 263 OF THE ACT. THE PHRA SE PREJUDICIAL TO THE INTEREST OF THE REVENUE U/S. 2 63, HAS TO BE READ IN CONJUNCTION WITH THE EXPRESSION ERRONEOUS ORDER BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A C ONSEQUENCE OF ASSESSMENT ORDER CANNOT BE TERMED AS PREJUDICIAL TO THE INTEREST OF REVENUE, MEANING THEREBY, PREJUDICE M UST BE PREJUDICE TO THE REVENUE ADMINISTRATION. AT THE SAM E TIME, IF ANOTHER VIEW IS POSSIBLE, REVISION IS NOT PERMISSIB LE. OUR VIEW MANOIR PETRO INDIA LIMITED ITA NO.2626/MUM/2015 & C.O. NO.95/MUM/2015 22 IS FORTIFIED BY THE DECISION FROM HIMACHAL PRADESH FINANCIAL CORP. (186 TAXMANN 105)(HP), BISMILLAH TRADING CO. (248 ITR 292)(KER.) AND CIT VS. GREEN WORLD CORPN. (314 ITR 81)(SC) . FOR INVOKING REVISIONAL JURISDICTION U/S. 263 OF THE AC T, THE ASSESSMENT ORDER MUST CONTAIN GRIEVOUS ERROR WHICH IS SUBVERSIVE OF THE ADMINISTRATION OF REVENUE. FURTHE R, EXACT ERROR MUST BE DISCLOSED BY THE COMMISSIONER AS WAS HELD IN CIT VS. G.K. KABRA (211 ITR 336)(AP). SECTION 263 OF THE ACT ENABLES THE COMMISSIONER TO HAVE A RE-LOOK AT THE O RDERS OR PROCEEDINGS OF THE LOWER AUTHORITY TO EFFECT CORREC TION, IF SO NEEDED, PARTICULARLY, IF THE ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE OBJECT OF THE P ROVISION IS TO RAISE REVENUE FOR THE STATE AND SECTION 263 IS ENAB LING PROVISION CONFERRING JURISDICTION UPON THE COMMISSI ONER TO REVISE THE ORDER. THE PROVISION IS INTENDED TO PLUG THE LEAKAGE OF THE REVENUE BY THE ERRONEOUS AND PREJUDICIAL ORD ER. OUR VIEW FIND SUPPORT FROM THE RATIO LAID DOWN IN FOLLO WING DECISIONS:- I. CIT VS INFOSYS TECHNOLOGIES LTD. (2012) 341 ITR 293 (KARN.), MANOIR PETRO INDIA LIMITED ITA NO.2626/MUM/2015 & C.O. NO.95/MUM/2015 23 II. CIT VS JAWAHAR BHATTACHARYAJI (2012) 341 ITR 434 (GUWAHATI) (FB), III. CIT VS LEISURE WEAR EXPORTS LTD. (2012) 341 ITR 166 (DEL.), IV. CIT VS TRIVENI ENGINEERING WORKS LTD. (2011) 336 ITR 366 (DEL.), V. R.A. HIMMATSINGHKA & COMPANY VS CIT (2012) 340 ITR 253 (PAT.) VI. CIT VS RAJEEV AGNIHOTRI (2011) 332 ITR 608 (P & H), VII. CIT VS DLF LTD. (2013) 350 ITR 555 (DEL.), VIII. CIT VS GABREAL INDIA LTD. (1993) 203 ITR 108, 114 (B OM.), IX. MALABAR INDUSTRIAL COMPANY LTD. VS CIT (2000) 243 ITR 83 (SC), X. NABHA INVESTMENTS PVT. LTD. VS UOI (2000) 246 ITR 41 (DEL.), XI. BISMILLAH TRADING COMPANY LTD. VS IO (2001) 248 ITR 292, 308 (KERALA), XII. PAUL MATHEWS & SONS VS CIT (2003) 263 ITR 101, 113 (KERALA), XIII. CIT VS SESHASAYEE PAPER & BOARDS LTD. (2000) 242 ITR 490, 500 (MAD.), XIV. RAYON SILK MILLS VS CIT 221 ITR 155 (GUJ.) 2.18. IF THE AFORESAID JUDICIAL PRONOUNCEMENTS ARE KEPT IN JUXTAPOSITION WITH THE FACTS OF THE PRESENT APPEAL AND ANALYZED, WE FIND THAT THE ASSESSEE COMPANY CREDITE D RS.83,94,764/- TO THE PROFIT & LOSS ACCOUNT AS OTHE R INCOME, WHEREAS, THE LD. ASSESSING OFFICER HAS TAKEN TAXABL E INCOME OF RS.17,22,360/- ONLY. THE LD. ASSESSING OFFICER A LSO DISALLOWED OTHER EXPENSES BY OPINING THAT THE ASSES SEE HAS MANOIR PETRO INDIA LIMITED ITA NO.2626/MUM/2015 & C.O. NO.95/MUM/2015 24 NOT TAKEN ANY BUSINESS ACTIVITY DURING THE YEAR BUT THE RECORD SAYS THAT DURING ASSESSMENT YEAR 2009-10, TH E ASSESSEE CLAIMED BUSINESS LOSS OF RS.1,05,37,985/- BUT THERE WAS NO BUSINESS ACTIVITY. THEREFORE, THE ASSESSMENT ORDER WAS FOUND TO BE ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. DURING ASSESSMENT YEAR 2009-10 , THE ASSESSEE ENTERED IN TO A NON-COMPETE AGREEMENT WITH A CORPORATE ENTITY BELONGING TO NETRAWALA GROUP. UNDE R THIS AGREEMENT, THE ASSESSEE WAS TO PAY AN AMOUNT OF RS.2,83,81,500/- TO NETRAWALA GROUP IN CONSIDERATIO N OF THEM AGREEING TO NON-COMPETE WITH THE ASSESSEE. OUT OF THE SAID AMOUNT, THE AMOUNT OF RS.2,00,34,000/- WAS PAI D DURING THE RELEVANT YEAR FOR ASSESSMENT YEAR 2009-1 0 AND THE BALANCE REMAINS OUTSTANDING. DURING ASSESSMENT YEAR 2010-11, WHICH IS UNDER CONSIDERATION, THE NON-COMP ETE AGREEMENT WAS DISPENSED WITH. THE ENTIRE AMOUNT OF NON- COMPETE FEE WHICH BECAME LOSS TO THE ASSESSEE AND C LAIMED AS DEBIT ENTRY IN THE PROFIT & LOSS ACCOUNT. THE L D. ASSESSING OFFICER HAS MADE NO DISCUSSION ABOUT THE FACTUAL MA TRIX AND SIMPLY FRAMED THE ASSESSMENT WITHOUT EXAMINING THE TRUE MANOIR PETRO INDIA LIMITED ITA NO.2626/MUM/2015 & C.O. NO.95/MUM/2015 25 FACTS. THE LD. ASSESSING OFFICER HAS NOT EXAMINED W HETHER THE AMOUNT FORFEITED BY NETRAWALA GROUP AND ALSO TH ERE IS NO DISCUSSION WHETHER IT WAS CAPITAL RECEIPT OR REVENU E RECEIPT IN THE HANDS OF NETRAWALA GROUPS, THUS, WE FOUND TH AT THE ASSESSMENT ORDER WAS PASSED WITHOUT EXAMINING THE T RUE FACTS AND THUS THERE IS LACK OF APPLICATION OF MIND BY THE LD. ASSESSING OFFICER, CONSEQUENTLY, WE FIND NO INFIRMI TY IN THE IMPUGNED ORDER. EVEN OTHERWISE, NO GRIEVANCE IS CAU SED IN SETTING ASIDE THE MATTER TO THE FILE OF THE LD. ASS ESSING OFFICER FOR FRESH ADJUDICATION. THE APPEAL OF THE ASSESSEE , IS THEREFORE, DISMISSED. 3. NOW, WE SHALL TAKE UP THE CROSS OBJECTION 95/MUM/2015 RAISED BY THE REVENUE, WHEREIN, THE GRO UND RAISED IS THAT THE ASSESSEE COMPANY VIDE GROUND NO. 5 WRONGLY PRAYED BEFORE THE TRIBUNAL TO DECIDE THE CA SE ON MERIT AS THE ADJUSTMENT DONE BY THE ASSESSEE WHILE FILING THE RETURN OF INCOME AND THUS, THE ABOVE PLEA DOES NOT EMANATE FROM THE ORDER PASSED UNDER SECTION 263 OF THE ACT, THUS, NO ADJUDICATION IS REQUIRED. CONSIDERING THE GROUND RA ISED BY THE REVENUE, WE FIND NO MERIT, THEREFORE, THE CROSS OBJECTION MANOIR PETRO INDIA LIMITED ITA NO.2626/MUM/2015 & C.O. NO.95/MUM/2015 26 OF THE REVENUE DOES NOT SURVIVE AND EVEN SINCE WE H AVE UPHELD THE REVISIONAL JURISDICTION UNDER SECTION 26 3 OF THE ACT, THE CROSS OBJECTION OF THE REVENUE HAS BECOME IN- FRUCTUOUS. FINALLY, THE APPEAL OF THE ASSESSEE AS WELL AS THE CROSS OBJECTION OF THE REVENUE ARE DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 07/06/2018. SD/- SD/- ( G. MANJUNATHA ) (JOGINDER SINGH) ' # / ACCOUNTANT MEMBER $ # / JUDICIAL MEMBER MUMBAI; ( DATED : 12/07/2018 F{X~{T? P.S / )' !%$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. *+,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. 0 0 1! ( *+ ) / THE CIT, MUMBAI. 4. 0 0 1! / CIT(A)- , MUMBAI 5. 3'4.! , 0 *+&* 5 , / DR, ITAT, MUMBAI 6. 67 / GUARD FILE. ! / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI,