Aqua Resorts and Spa Pvt. Ltd, Panaji V. Pr. CIT, Panaji

ITA 297/PAN/2019

• RSA Number: 29724114 RSA 2019
• Duration Of Justice: 2 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: WT(D)
• Next Hearing Date: 02-06-2024
• Assessment Year: 2014-2015
• Appeal Filed On: 15-07-2021

Judgement Text

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 2 I.T.A.No. 297/PAN./2019 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 : 3 I.T.A.No. 297/PAN./2019 4 I.T.A.No. 297/PAN./2019 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 5 I.T.A.No. 297/PAN./2019 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 6 I.T.A.No. 297/PAN./2019 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.