NOBLE MEDICALS BCJC HOSPITALS, MUMBAI V. CIT CITY-16, MUMBAI

ITA 3207/MUM/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0352 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 03-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Depreciation; Business expenditure; Opportunity of being heard
• Section: 143(3); 263; 63; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUM BAI BEFORE SHRI B.R.BASKARAN, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH JUDICIAL MEMBER ITA NO.3207/MUM/2017 (AY 2012-13) M/S NOBLE MEDICALS BCJC HOSPITALS, S.V. ROAD, SANTACRUZ , MUMBAI-400054. VERSUS CIT, CITY-16, MUMBAI. PAN NO.AAGFN4356A APPLICANT RESPONDENT APPLICANT BY SHRI VIPUL JOSHI - ADVOCATE RESPONDENT BY SHRI BHUPENDRA KUMAR SINGH (CIT- DR) DATE OF HEARING: 05/02/2018 DATE OF ORDER: 05/02/2018 ORDER PER PAWAN SINGH, JUDICIAL MEMBER : 1. THIS APPEAL BY ASSESSEE UNDER SECTION 253 OF THE IN COME TAX ACT (THE ACT) IS DIRECTED AGAINST THE ORDER OF LD. CIT-16(3), MUMBAI PASSED UNDER SECTION 263 OF THE ACT DATED 29.03.2017 FOR ASSESSMENT YEAR (AY) 2 012-13. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE CIRCUMSTANCES AND FACTS OF THE CASE THE LEAR NED CIT ERRED IN PASSING ORDER U/S. 263 AND DIRECTING THE ASSESSING OFFICER TO PASS FRESH ASSESSMENT ORDER. THE ORDER U/S. 263 DATED 29.03.2017 IS BAD I N LAW AND BE CANCELLED. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS EN GAGED IN THE BUSINESS OF DRUGS AND PHARMACEUTICALS, FILED ITS RETURN OF INCOME FOR RELEVANT AY ON 27.09.2012 DECLARING TAXABLE INCOME OF RS. 88,84,350/-. THE A SSESSMENT WAS COMPLETED ON 03.03.2015 UNDER SECTION 143(3) OF THE ACT. THE ASS ESSING OFFICER (AO) WHILE PASSING THE ASSESSMENT ORDER DISALLOWED THE BUSINES S PROCUREMENT EXPENSES OF 2 ITA NO. 3207/M/17- M/S NOBLE MEDICALS BCJC HOSPITAL S RS. 3,76,000/- AND 20% OF EXPENSES CONSISTING OF M OTORCAR EXPENSES, DEPRECIATION OF CAR,SALE PROMOTION AND BUSINESS DEV ELOPMENT EXPENSES. THE AO ASSESSED THE TOTAL INCOME OF RS. 95,69,400/-. AGGRI EVED BY THE ORDER OF AO, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). SUBSEQ UENTLY, THE ASSESSMENT ORDER WAS SET-ASIDE BY THE LD. CIT AND DIRECTED THE AO TO PASS FRESH ASSESSMENT ORDER IN ACCORDANCE WITH HIS DIRECTION. THE LD. CIT WHILE SETTING ASIDE THE ASSESSMENT ORDER PASSED THE FOLLOWING ORDER: IN THIS CASE, THE ASSESSMENT PROCEEDING U/S. 143(3 ) WAS COMPLETED ON 03.03.2015. 2. SUBSEQUENT EXAMINATION OF RECORDS REVEALED THAT ASSESSEE HAS CLAIMED EXPENDITURE ON ACCOUNT OF BUSINESS DEVELOPMENT EXP TO THE EXTENT OF RS. 4,24,000/-. AS PER THE SUBMISSION LETTER DATED 06.1 1.2014 ASSESSEE SAID THAT 'THE BUSINESS DEVELOPMENT EXPENSES OF RS. 4,24,000/- ARE PAID TO DR. RAMESH DESAI AND THE BUSINESS PROCUREMENT EXPENSES OF RS. 3,76,0 00/- ARE PAID TO R V DESAI HUF. THESE EXPENSES ARE INCURRED FOR SUPPLIES TO IN DOOR PATIENTS OF SARLA HOSPITAL AND ICU, DATTATRAY ROAD, SANTRACRUZ WEST, MUMBAI-400 054'. AS PER THE ABOVE SUBMISSION THESE EXPENSES INCLUDED EXPENS ES RELATED TO GIFT ARTICLES, TRAVEL FACILITY, HOSPITALITY, CASH OR MONETARY GRAN T PAID TO CUSTOMERS OR DOCTORS AMOUNTING RS. 8,00,000/-. ASSESSING OFFICER HAS DIS ALLOWED RS. 3,76,000/- AND ADDED IN TAXABLE INCOME BUT NOT DISALLOWED EXPENSES OF RS. 4,24,000/- IN THE ASSESSMENT ORDER. 3. THE ASSESSING OFFICER NEITHER RAISED ANY SPECIFI C QUERY ON THE ABOVE ISSUES NOR DISCUSSED THIS MATTER IN THE ASSESSMENT ORDER. THUS, THE ASSESSMENT ORDER WAS PASSED WITHOUT MAKING PROPER ENQUIRIES/VERIFICA TIONS. 4. ACCORDINGLY A SHOW CAUSE NOTICE DATED 01.03.2007 WAS ISSUED TO THE ASSESSEE ASKING HIM TO SHOW CAUSE AS TO WHY THE ASSESSMENT O RDER DATED 03.03.2015 SHOULD NOT BE REVISED U/S. 263 OF THE I.T. ACT, 196 1. IN RESPONSE ASSESSEE HAS SUBMITTED REPLY ON 15.03.2015. 3 ITA NO. 3207/M/17- M/S NOBLE MEDICALS BCJC HOSPITAL S 5. I HAVE CONSIDERED THE SUBMISSIONS OF THE ASSESSE E AND FACTS ON RECORD AND I AM OF THE OPINION THAT THE ASSESSING OFFICER SHOULD HAVE MADE THE ENQUIRIES/VERIFICATIONS BEFORE PASSING THE ASSESSME NT ORDER. EXPLANATION 2 TO SECTION 263 IS DEFINED AS UNDER. EXPLANATION -2. FOR THE PURPOSE OF THIS SECTION, IT IS HEREBY DECLARED THAT AN ORDER PASSED BY THE ASSESSING OFFICER SHALL BE DEEM ED TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENU E, IF, IN THE OPINION OF THE 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 WIT H ANY DECISION WHICH IS PREJUDICIAL TO THE ASSESSEE, RENDERED BY THE JURISD ICTIONAL HIGH COURT OR SUPREME COURT IN THE CASE OF THE ASSESSEE OR ANY OT HER PERSON.]. 6. I HAVE CAREFULLY PERUSED THE FACTS ON RECORDS TH E ASSESSMENT ORDER AND VARIOUS SUBMISSION MADE BY THE ASSESSEE. IT IS NOTE D FROM RECORDS THE ASSESSEE HAD CLAIMED BUSINESS DEVELOPMENT EXPENDITURE OF RS. 4,24,000/- WHICH WAS PAID TO DR. RAMESH DESAI AND BUSINESS PROCUREMENT EXPENS ES OF RS.3,76,000/- WHICH WAS PAID TO R. V. DESAI (HUF). IT IS FURTHER NOTED THAT THE EXPENSES WERE INCURRED FOR SUPPLIES TO INDOOR PATIENTS OF SARLA H OSPITAL. IT IS NOTED THAT THESE PAYMENTS WERE AGAINST THE GUIDELINES ISSUED BY INDI AN MEDICAL COUNCIL WHICH HAD PROHIBITED SUCH EXPENSES. THE CLAIM SHOULD NOT HAVE BEEN ALLOWED BY THE AO U/S.37(1) OF THE ACT. IT IS FURTHER NOTED THAT T HE AO MADE NO ATTEMPT TO INQUIRE THE GENUINENESS OF THESE PAYMENTS AND WHETH ER THESE WERE ACTUALLY INCUR 4 ITA NO. 3207/M/17- M/S NOBLE MEDICALS BCJC HOSPITAL S FOR THE PURPOSE OF BUSINESS OR NOT. THE CLAIM OF TH E ASSESSEE WAS NOT VERIFIED AT ALL BY THE AO. 7. DURING THE COURSE OF PROCEEDINGS BEFORE ME IT HA S BEEN SUBMITTED BY THE ASSESSEE THAT IT HAD FILED AN APPEAL BEFORE THE CIT -7 AND THEREFORE THE ORDER PASSED BY THE AO CANNOT BE EXAMINED U/S.263. I HAVE CAREFULLY EXAMINED THE ISSUE AND IT IS NOTED THAT SINCE THE AO HAS NOT MAD E ANY ADDITION ON THE ISSUE THE SAME CANNOT BE SUBJECT MATTER OF APPEAL AND ACCORDI NGLY THE ISSUE IS NOT SUBJUDICE BEFORE CIT(A) AND THEREFORE THE CONTENTIO N OF THE ASSESSEE CANNOT BE ACCEPTED. THE COMMISSIONER CAN EXAMINE THE ISSUES W HICH ARE NOT SUBJECT MATTER OF APPEAL U/S.263. IT IS FURTHER TO BE POINT ED OUT THAT THE CIT(A) HAS NOT YET DECIDED THE MATTER AND THEREFORE, PRINCIPLE AND MERGER IS NOT APPLICABLE. 8. THE ASSESSEE HAS ALSO SUBMITTED THE ISSUE WAS EX AMINED BY THE AO AND 20% OF RS. 4,24,000/- WAS DISALLOWED. HOWEVER, IT IS NO TED THAT DISALLOWANCE WAS MADE ON ADHOC BASIS AND WITHOUT MAKING DUE INQUIRIE S REGARDING THE GENUINENESS OF EXPENSES AND WHETHER SUCH EXPENSES W ERE REQUIRED FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE OR NOT. FUR THER, ON THIS ISSUE THE APPEAL HAS NOT YET BEEN DECIDED. 9. IN VIEW OF THE ABOVE DISCUSSION THE ORDER U/S.14 3(3) DATED 03.03.2015 IS ERRONEOUS IN SO FAR AS IT IS PRE-JUDICIAL TO THE IN TEREST OF REVENUE. HENCE, THE ORDER PASSED IS APPARENTLY ERRONEOUS AND PREJUDICIA L IN SO FAR AS TO THE INTERESTS OF THE REVENUE. ACCORDINGLY I HEREBY CANCEL THE ASS ESSMENT ORDER PASSED BY THE AO DATED 03.03.2015 WITH THE DIRECTION TO PASS FRES H ASSESSMENT CONCERNING STRICTLY THE ABOVE REFERRED ISSUES AFTER GIVING ASS ESSEE DUE OPPORTUNITY OF BEING HEARD AS PER ACT AND LAW. 3. AGGRIEVED BY THE ORDER OF LD. CIT, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 4. WE HAVE HEARD THE LD. AUTHORISED REPRESENTATIVE (AR ) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE AN D PERUSED THE MATERIAL 5 ITA NO. 3207/M/17- M/S NOBLE MEDICALS BCJC HOSPITAL S AVAILABLE ON RECORD. THE LD. AR OF THE ASSESSEE SUB MITS THAT DURING THE ASSESSMENT PROCEEDING, THE AO MADE EACH AND EVERY P OSSIBLE QUERY DURING THE ASSESSMENT. THE ASSESSEE VIDE ITS REPLY DATED 06.11 .2014 FURNISHED ITS SUBMITS REGARDING THE DISALLOWANCE ON ACCOUNT OF BUSINESS D EVELOPMENT EXPENSES AND PROCUREMENT EXPENSES, COPY OF WHICH IS FILED AT PAG E NO.2 6 OF PAPER BOOK. THE AO DISALLOWED RS. 3,76,000/- ON ACCOUNT OF BUSINESS PROCUREMENT EXPENSES AND OUT OF RS. 4,24,000/- BUSINESS DEVELOPMENT EXPENSES 20% WAS DISALLOWED. THE AO HAS TAKEN A POSSIBLE VIEW ON THE ADDITIONS/DISAL LOWANCES. IT WAS FURTHER SUBMITTED THAT THE AO FURTHER ISSUED NOTICE UNDER S ECTION 154 DATED 11.06.2014 FOR RECTIFICATION OF THE ORDER ON THE BASIS OF CBDT CIRCULAR NO. 5/12 DATED 01.08.2012 INTERALIA STATING THEREIN THAT AS PER IN DIAN MEDICAL COUNCIL, (PROFESSIONAL CONDUCT, ETIQUETTE AND ETHICS) REGULA TION 2012, REGULATION DATED 10.12.2009 IMPOSED A PROHIBITION MEDICAL PRACTITION ER AND PROFESSION FROM TAKING ANY GIFT, TRAVELLERS FACILITIES, HOSPITALIT IES, CASH OR MONEY FROM PHARMACEUTICAL COMPANY. THE ASSESSEE FIELD ITS REPL Y VIDE ITS REPLY DATED 18.04.2016 AND CONTENDED THAT THE AO HAS DISALLOWED 20% OF BUSINESS DEVELOPMENT EXPENSES OUT OF RS. 4,24,000/- AND THE ASSESSEE HAS FILED APPEAL AGAINST THE ADDITION AND AS SUCH THE AO HAS NO JUR ISDICTION ON THE SUBJECT MATTER. THE ASSESSEE HAS NOT RECEIVED ANY COMMUNICATION THE REAFTER. HOWEVER, THE LD. CIT ISSUED NOTICE UNDER SECTION 263 DATED 01.03.201 7 FOR REVISING THE ASSESSMENT ORDER. THE NOTICE ISSUED BY LD. CIT IS I TSELF ISSUED ON WRONG FACTS. THE ASSESSEE HAS FILED REPLY OF SHOW-CAUSE NOTICE I SSUED BY LD. CIT VIDE ITS REPLY DATED 14.03.2017. IN THE REPLY, THE ASSESSEE CONTEN DED THAT AFTER PASSING THE ASSESSMENT ORDER BY THE AO, THE AO HAD PROCEEDED TO RECTIFY THE SAME UNDER 6 ITA NO. 3207/M/17- M/S NOBLE MEDICALS BCJC HOSPITAL S SECTION 154 VIDE ITS NOTICE DATED 11.04.2016 AND TH E PROCEEDINGS ARE PENDING BEFORE THE AO, ON THE SAID POINT, THE ORDER IS SOUG HT TO BE REVISED UNDER SECTION 263 WHICH IS BAD-IN-LAW. THE ASSESSEE FURTHER CONTE NDED THAT THE APPEAL AGAINST THE ASSESSMENT ORDER WHEREIN DISALLOWANCE ON ACCOUN T OF BUSINESS DEVELOPMENT EXPENSES AND BUSINESS PROCUREMENT EXPENSES IS ALREA DY PENDING ADJUDICATION BEFORE THE LD. CIT. IT WAS FURTHER SUBMITTED THAT C IRCULAR NO. 5/15 OF CBDT DATED 01.08.2012 IS NOT APPLICABLE IN THE AY UNDER REFERE NCE. THE SAME IS APPLICABLE PROSPECTIVELY. IN SUPPORT OF HIS SUBMISSION, THE LD . AR OF THE ASSESSEE RELIED UPON THE DECISION OF SOLVAY PHARMA INDIA LTD. VS. P CIT [2018] 89 TAXMANN.COM 249 (MUM TRIB.), DCIT VS. PHL PHARMA (P.) LTD. [201 7] 78 TAXMANN.COM 36 (MUM TRIB.), DR. REDDYS LABORATORIES LTD. VS. ACIT [2017] TAXMANN.COM 398 (HYD. TRIB.), CADILA PHARMACEUTICALS LTD. VS. DCIT [2017] TAXMANN.COM 354 (AHMEDABAD TRIB.), MACLEODS PHARMACEUTICALS LTD. VS . ACIT [2016 74 TAXMANN.COM 250 (MUM TRIB.). ON VALIDITY OF ORDER P ASSED UNDER SECTION 263, THE LD. AR OF THE ASSESSEE SUBMITS THAT THE ORDER P ASSED BY AO IS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. EVEN IF THE ORDER IS PREJUDICIAL TO THE INTEREST OF REVENUE, NO REVISION AS POSSIBLE, IF TH E ORDER IS NOT ERRONEOUS, PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVE RY TYPE OF MISTAKE IN SUPPORT OF HIS SUBMISSION THE RELIANCE IS MADE ON THE DECIS ION OF HONBLE APEX COURT IN MALABAR INDUSTRIAL CO. LTD. VS. CIT [(2000) 243 ITR 83 (SC)] AND CIT VS. KWALITY STEEL SUPPLIERS COMPLEX [(2017) 395 ITR 1 ( SC)] AND DECISION OF JURISDICTIONAL HIGH COURT IN CIT VS. GABRIEL INDIA LTD. [(1993) 203 ITR 108 (BOM)]. IN OTHER ALTERNATIVE SUBMISSION, THE LD. AR OF THE ASSESSEE SUBMITS THAT THE ORDER IS INVALID AS THE AO ADOPTED AND FOLLOWED ONE OF THE POSSIBLE VIEWS 7 ITA NO. 3207/M/17- M/S NOBLE MEDICALS BCJC HOSPITAL S WHILE PASSING THE ASSESSMENT ORDER. MERELY FACTS TH AT SOME OTHER ALTERNATIVE METHOD COULD FETCH MORE REVENUE OR THE COMMISSION I S NOT IN AGREEMENT WITH THE VIEW TAKEN BY AO WOULD NOT RENDER THE ASSESSMENT OR DER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THE RELIANC E IS MADE IN CASE OF CIT VS. MAX INDIA LTD. [(2007) 295 ITR 282 (SC)], GRASIM INDUST RY LTD. VS. CIT [(2010) 321 ITR 92 (BOM)], CIT VS. LIC HOUSING FINANCE LTD. [(2 014) 367 ITR 458 (BOM)], CIT VS. GERA DEVELOPMENTS (P) LTD. [(2016) 387 ITR 691(BOM)] AND CIT VS. KIRAN HIRJI SHAH [(2015) 56 TAXMANN.COM 360(BOM)]. IN OTHER ALTERNATIVE SUBMISSION, THE LD. AR OF THE ASSESSEE SUBMITS THAT NO REVISIONAL POWER SHOULD BE EXERCISED FOR DIRECTING FULL ENQUIRY, WHERE THE AO HAS ALREADY CONDUCTED SUFFICIENT ENQUIRY AND HAS TAKEN A POSSIBLE VIEW AF TER THE ENQUIRY. THE POWER OF REVISION CAN ONLY EXERCISE, WHERE NO ENQUIRY AS REQ UIRED UNDER LAW IS DONE. RELIANCE IS MADE IN CASE OF CIT VS. NIRAV MODI [(20 17) 390 ITR 292 (BOM)], CIT VS. NIRAV MODI [(2017) 77 TAXMANN.COM 15(SC)], CIT VS. NIRAV MODI [(2017) TAXMANN.COM 78 (SC)], CIT VS. SUNBEAM AUTO LTD. [(2011) 332 ITR 167 (DEL)], CIT VS. ANIL KUMAR SHARMA [(2011) 335 ITR 8 3 (DEL)], CIT VS. NEW DELHI TELEVISION LTD. [(2014) 360 ITR 44 (DEL)]. IN FURTHER ALTERNATIVE SUBMISSION IT WAS ARGUED THAT THE ORDER OF ASSESSME NT CANNOT BE HELD ERRONEOUS ONLY BECAUSE NO ELABORATE DISCUSSION WAS MADE BY AO WHILE PASSING ASSESSMENT ORDER. RELIANCE IS MADE ON CASE LAW OF CIT VS. RELI ANCE COMMUNICATION LTD. [2016) 76 TAXMANN.COM 226(SC)]. THE LD. AR OF THE A SSESSEE FINALLY SUBMITS THAT THE ORDER OF REVISION CANNOT BE DIFFERENT FROM THE REASONS STATED IN THE SHOW- CAUSE NOTICE. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPORTED THE ORDER OF CIT. THE LD. DR SUBMITS THAT AS PER EXPLANATION- 1 OF SECTION 37, THE PAYMENT 8 ITA NO. 3207/M/17- M/S NOBLE MEDICALS BCJC HOSPITAL S OF COMMISSION PAID TO THE DOCTORS IS ILLEGAL AND SH OULD NOT BE ALLOWED. THE ORDER OF AO WAS THUS ERRONEOUS AND PREJUDICIAL TO THE INT EREST OF REVENUE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE NOTED THAT WHILE PASSING THE ASSESSMENT ORDER UNDER SECTION 143(3) ON 30.03.2015. THE AO MA DE THE DISALLOWANCE ON ACCOUNT OF BUSINESS PROCUREMENT EXPENSES OF RS. 3,7 6,000/-. THUS, CERTAINLY THE DISALLOWANCE WAS MADE AFTER RAISING QUERIES. WE HAV E FURTHER NOTED THAT OUT OF TOTAL BUSINESS EXPENSES OF RS. 4,24,000/-, THE AO D ISALLOWED 20% OF THE EXPENSES. THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE APPEAL OF THE ASSESSEE WAS PENDING ADJUDICATION BEFORE THE LD. CI T(A). THE LD. CIT ISSUED NOTICE UNDER SECTION 263 DATED 14.03.2017 DURING TH E PENDENCY OF APPEAL OF THE ASSESSEE BEFORE THE LD. CIT(A) ON THE SAME DISALLOW ANCE. THE LD. DR FOR THE REVENUE NOT DISPUTED THE PENDENCY OF APPEAL OF ASSE SSEE BEFORE THE LD CIT(A) ON THE DAY, WHEN THE SHOW-CAUSE NOTICE UNDER SECTION 2 63 DATED 14.03.2017 WAS ISSUED/SERVED ON THE ASSESSEE. CLAUSE-(C) OF EXPLAN ATION 1 ATTACHED WITH SECTION 263 PRESCRIBE THAT WHERE ANY ORDER PASSED BY AO IS SUBJECT MATTER OF APPEAL, THE LD. PCIT OR CIT SHALL NOT CONSIDER THE SUBJECT MATT ER WHICH IS TO BE DECIDED IN APPEAL, THOUGH HE MAY CONSIDER WHICH MAY NOT BEEN C ONSIDERED OR APPEALED IN SUCH APPEAL. 6. FURTHER, WE HAVE NOTED THAT THE NOTICE UNDER SECTI ON 263 IS WRONG, SO FAR AS IT RELATES TO BUSINESS PROCUREMENT EXPENSES OF RS. 3,7 6,000/- PAID TO R.V. DESAI (HUF). AS THE ENTIRE EXPENSES WAS DISALLOWED BY AO WHILE PASSING THE ASSESSMENT ORDER. FURTHER OUT OF TOTAL BUSINESS DEV ELOPMENT EXPENSES CLAIMED BY THE ASSESSEE. THE AO ALREADY DISALLOWED 20% OF T HE EXPENSES. THUS, THE 9 ITA NO. 3207/M/17- M/S NOBLE MEDICALS BCJC HOSPITAL S OBSERVATION OF CIT IS THAT 20% DISALLOWANCE MADE BY AO WAS WITHOUT MAKING DUE ENQUIRY REGARDING THE GENUINENESS OF THE EXPENS ES IS ERRONEOUS, THE HONBLE APEX COURT IN MALABAR INDUSTRIAL CO. LTD. VS. CIT ( SUPRA) HELD THAT WHERE TWO VIEW ARE POSSIBLE AND THE AO HAS TAKEN ONE VIEW, TH E ORDER OF CIT REVISING THE ORDER IN SUCH CIRCUMSTANCES CANNOT BE TREATED AS OR DER ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF REVENUE. IN OUR VIEW, WHEN THE SUBJ ECT MATTER OF DISALLOWANCE WAS PENDING ADJUDICATION BEFORE THE LD. CIT. THE LD . CIT OUGHT NOT TO HAVE REVISED THE ORDER FOR PASSING ASSESSMENT ORDER AFRE SH. THUS, WE HOLD THAT THE ORDER PASSED BY CIT IS BAD-IN-LAW AND COLOURABLE EX ERCISE OF HIS POWER UNDER SECTION 263 OF THE ACT. THUS, WE ACCEPT THE APPEAL FILED BY ASSESSEE AND SET-ASIDE THE IMPUGNED ORDER PASSED BY LD. CIT. AS WE HAVE AL LOWED THE APPEAL OF THE ASSESSEE ON LEGAL SUBMISSION, THE DISCUSSIONS ON OT HER SUBMISSIONS HAVE BECOME ACADEMIC. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THI S 05 TH FEBRUARY 2018 SD- SD- ( B.R.BASKARAN ) (PAWAN SINGH ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 05/02/2018 S.K.PS / COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT.REGISTRAR) ITAT (MUMBAI) 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE.