IN THE INCOME TAX APPELLATE TRIBUNAL
PANAJI BENCH : PANAJI
[THROUGH VIRTUAL HEARING]
BEFORE SHRI RAMA KANTA PANDA, VICE PRESIDENT
AND
SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER
I.T.A.No.297/PAN./2019
Assessment Year 2014-2015
Aqua Resorts and Spa
Pvt. Ltd., 4
th
Floor, Joffre
Residency, Near
Pharmacy College, Panaji,
Goa – 403 001. PAN AAFCA0277P
Maharashtra.
vs.
The Principal Commissioner
of Income Tax, Aaykar
Bhavan, Plot No.5, EDC
Complex, Patto Plaza,
Panaji.
(Appellant) (Respondent)
For Assessee : Shri Rajiv Khandelwal
For Revenue : Shri P.S. Shivshankar, CIT-DR
Date of Hearing : 03.06.2024
Date of Pronouncement : 07.06.2024
ORDER
PER SATBEER SINGH GODARA, J.M. :
This assessee’s appeal, for assessment year 2014-
2015, arises against the order of the Pr. CIT, Panaji, Panaji’s
Order F.No.04/263/Pr.CIT-PNJ/2018-19,
dated 29.03.2019,
involving proceedings u/s.263 of the Income Tax Act, 1961 (in
short “the Act”).
Heard both the parties. Case file perused.
2. The assessee raises the following substantive
grounds in the instant appeal :
1. “Whether on the facts and circumstances of the case, the learned
Principal Commissioner of Income - tax, (“the ld. Pr. CIT”) erred in
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invoking the provisions of Section 263 of the Income - tax Act, 1961
(“the Act”).
2. Whether in the facts and circumstance of the case, revision under
Section 263 can be made when the Assessing Officer has taken one
view with which the Pr. Commissioner does not agree and in such
case, the order made by the Assessing Officer can be treated as
erroneous order insofar as prejudicial to the interest of revenue,
unless the view taken by the Assessing Officer is unsustainable in
law.
3. In the given facts and circumstance, the order of the assessing
officer (“the A.O.”) passed u/s. 143(3) of the Act was neither
erroneous nor prejudicial to the interest of the revenue, so far as the
expenditure made on construction of the school building was
allowable under Section 37(1) of the Act was concerned, and, as
such, the action of the Id. Pr. CIT in invoking the provisions of section
263 of the Act was without jurisdiction.
4. Whether under the facts and circumstances of the case, Ld. Pr. CIT
has erred in setting aside the assessment order with a direction to
re-examine the issue in the light of her observations.
5. Whether in the facts and circumstance of the case, the expenditure
on construction of school building amounting to Rs.166 Lakhs is not
revenue expenditure to be allowed under Section 37(1) of the Income
Tax Act, 1961.
6. Whether in the facts and circumstance of the case, the Ld. Pr. CIT
erred in holding that the expenditure incurred by the Appellant was
capital in nature.
7. The Appellant craves leave to add, alter, delete or modify all or any
of the above ground at the time of hearing.”
3. Both the learned representatives next invited our
attention to the PCIT’s impugned sec.263 discussion terming
the Assessing Officer’s corresponding regular assessment
dated 25.10.2016 as an erroneous one causing prejudice to
interest of the Revenue as under :
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4. We have given our thoughtful consideration to the
respective vehement rival submissions. Learned counsel inter
alia submitted that the impugned expenditure of
Rs.1,66,14,318/- for raising school building on that leased
land was incurred wholly and exclusively for the purpose of
business. And that the lessor herein had imposed a pre-
condition to this effect so as to execute the lease of parcel of
land, which in turn, has been claimed by the assessee in it’s
regular course of business i.e., in running hotel business at
Goa. Mr. Khandelwal further took pains to invite our attention
to the Assessing Officer’s detailed discussion running in 16
pages thereby concluding that the impugned school
expenditure is indeed allowable under the revenue head.
4.1. The assessee further stated that once the Assessing
Officer had carried-out his detailed enquiry(ies) during
scrutiny before allowing the impugned expenditure; the PCIT’s
impugned action invoking sec.263 revision jurisdiction; is an
instance of having two possible views; which is not sustainable
in law as per Malabar Industrial Company Ltd., vs. CIT [2000]
243 ITR 83 (SC) and CIT vs. Gabriel India Limited (1993) 203
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ITR 108 (Bom.). Learned counsel lastly contended that the
PCIT herein has accordingly erred in law and on facts in
invoking his sec.263 revision jurisdiction in his above
extracted detailed discussion.
5. The Revenue has drawn strong support from the
PCIT’s above extracted revision directions terming the
Assessing Officer’s impugned assessment dated 25.10.2016 as
an erroneous one causing prejudice to the interest of Revenue.
6. We have given our thoughtful consideration to the
foregoing rival stands and find no merit in assessee’s
arguments. Suffice to say, the sole issue herein is regarding
the assessee’s claim of “advertising and sales promotion”
expenses of Rs.1,66,00,000/- allegedly spent on construction
of a school building at Odxel near its resort at Dona Paula.
Learned counsel has vehemently reiterated the assessee’s
stand that the same has to be treated as revenue expenditure
u/sec.37 of the Act once incurred wholly and exclusively for
the purpose of ‘business’ as the lessor herein had imposed a
pre-condition to this effect. We find that this clinching aspect
had been nowhere examined by the learned Assessing Officer
in his assessment nor the assessee has filed any lessor-lessee
agreement in support either during scrutiny or in course of
revision proceedings or before us. Meaning thereby, this
crucial fact has escaped the attention of the learned Assessing
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Officer which in turn leading to an instance of lack of enquiry
at his behest in assessment thereby rendering his sec.143(3)
assessment as an erroneous one causing prejudice to the
interest of Revenue going by Malabar Industrial Company Ltd.,
vs. CIT (supra). We thus see no reason to disturb the learned
PCIT’s revision directions to the assessing authority herein to
carry-out de novo assessment as per law. Rejected accordingly.
7. This assessee’s appeal is dismissed in above terms.
Order pronounced in the open Court on 07.06.2024
Sd/- Sd/-
[R.K. PANDA] [SATBEER SINGH GODARA]
ACCOUNTANT MEMBER JUDICIAL MEMBER
Pune, Dated 07
th
June, 2024
VBP/-
Copy to
1. The applicant
2. The respondent
3. The CIT(A), Panaji concerned.
4. D.R. ITAT, Panaji Bench, Panaji.
5. Guard File.
//By Order//
//True Copy //
Sr. Private Secretary, ITAT, Pune Benches,
Pune.