TNT India Private Limited, Bangalore V. CIT, Bangalore

ITA 37/BANG/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1644 (ITAT-BANGALORE)
• Duration Of Justice: 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 22-12-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 18-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: IS ALLOWED
• Keywords: Reason to believe; Revenue expenditure; Capital expenditure
• Section: 143(3); 263

Judgement Text

PAGE 12 OF 12 ITA NO.37/BANG/2010 12 E) CIT V ABDUL RAHMAN SAIT 306 ITR 142 (MAD.) WHEN A REGULAR ORDER OF ASSESSMENT WAS PASSED U/S 143(3) OF THE INCOME-TAX ACT, 1961, A PRESUMPTION CAN BE MADE THAT SUCH AN ORDER HAS BEEN PASSED ON APPLICATION OF MIND. 8.4 IN THE LIGHT OF THE AFORESAID REASONING, WE ARE OF THE VIEW, THE ASSESSING OFFICERS ORDER DATED 5.12.2008 IS NOT ERRONEOUS, SINCE HE HAS TAKEN A PERMISSIBLE VIEW AND CIT, ACTING U/S 263, DOES NOT HAVE POWER TO REVISE THE SAME. HENCE, THE ORDER OF THE CIT IS STRUCK OUT. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 7.4 IN THE LIGHT OF THE ABOVE REASONS, WE SET ASID E THE CITS ORDER PASSED U/S 263 OF THE ACT. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ORDER PRONOUNCED ON FRIDAY, THE 7 TH DAY OF JANUARY, 2011 AT BANGALORE. SD/- SD/- (A MOHAN ALANKAMONY) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMB ER COPY TO :- 1. THE ASSESSEE 2. THE REVENUE 3. THE CIT(A) CONCERNED. 4. THE CIT, CONCERNED. 5. THE DR 6. GF BY ORDER MSP/5/1. ASSISTANT REGISTRAR, ITAT, BANGALORE. PAGE 11 OF 12 ITA NO.37/BANG/2010 11 C) COMMISSIONER OF INCOME-TAX V ASHISH RAJPAL 320 ITR 674 (DEL.) AT PAGE 687 AND 688 (PARA 18) THE FACT THAT A QUERY WAS RAISED DURING THE COURSE OF SCRUTINY WHICH WAS SATISFACTORILY ANSWERED BY THE ASSESSEE BUT DID NOT GET REFLECTED IN THE ASSESSMENT ORDER, WOULD NOT BY ITSELF LEAD TO A CONCLUSION THAT THERE WAS AN ENQUIRY WITH RESPECT TO TRANSACTIONS CARRIED OUT BY THE ASSESSEE. THE FACT THAT THERE WAS AN ENQUIRY CAN ALSO BE DEMONSTRATED WITH THE HELP OF THE MATERIAL AVAILABLE ON RECORD WITH THE ASSESSING OFFICER. THE MATERIAL, TO WHICH A REFERENCE HAS BEEN MADE IN THE IMPUGNED JUDGEMENT, WOULD SHOW THAT THERE WAS NO UNDUE HASTE IN EXAMINING THE MATERIAL PRIOR TO THE PASSING OF THE ASSESSMENT ORDER DATED MARCH 24, 2005. AT LEAST FOUR LETTERS DATED APRIL 27, 2004, FEBRUARY 22, 2005, FEBRUARY 28, 2005 AND MARCH 18, 2005 WERE ADDRESSED BY THE ASSESSEE TO THE ASSESSING OFFICER GIVING DETAILS, DOCUMENTS AND INFORMATION PERTAINING TO VARIOUS QUERIES RAISED BY THE ASSESSING OFFICER. THESE HAVE BEEN EXAMINED BY THE TRIBUNAL. WE HAVE NO REASON TO BELIEVE THAT EXAMINATION WAS LESS THAN EXACTING. THEREFORE, THE CONCLUSION OF THE COMMISSIONER THAT THERE WAS LACK OF PROPER VERIFICATION IS UNSUSTAINABLE. D) DHRUV N SHAH V DEPUTY COMMISSIONER OF INCOME-TAX 273 ITR (AT) 59, ITAT, BOM. WHERE THE ASSESSEE HAD GIVEN DETAILED EXPLANATION REGARDING HIS CLAIM AND THE ASSESSING OFFICER PASSED AN ORDER IN WHICH HE DID NOT MAKE AN ELABORATE DISCUSSION, DOES NOT GIVE THE COMMISSIONER THE POWER TO EXERCISE REVISIONARY JURISDICTION UNDER SECTION 263. PAGE 10 OF 12 ITA NO.37/BANG/2010 10 APPLICATION OF MIND BY THE ASSESSING OFFICER CONCERNED. AS STATED EARLIER, THE ASSESSING OFFICE R HAD CALLED FOR THE DETAILS ON THE CLUB MEMBERSHIP FEES PAID BY THE ASSESSEE COMPANY AND THE SAME WAS FURNISHED IN THE COURSE OF SCRUTINY ASSESSMENT AND I T IS THEREAFTER, THE ASSESSMENT WAS COMPLETED BY HOLDING THAT THE DETAILS FURNISHED BY THE ASSESSEE H AS BEEN EXAMINED AND THE SAME IS ACCEPTED. IN THIS CONTEXT, IT IS APPOSITE TO CITE THE FOLLOWING DECISIONS OF THE HONBLE HIGH COURTS:- A) CIT V GABRIEL INDIA LTD. 203 ITR 108 AT PAGE 117 THE INCOME TAX OFFICER IN THIS CASE HAD MADE ENQUIRIES IN REGARD TO THE NATURE OF THE EXPENDITUR E INCURRED BY THE ASSESSEE. THE ASSESSEE HAD GIVEN A DETAILED EXPLANATION IN THAT REGARD BY A LETTER IN WRITING. ALL THESE WERE PART OF THE RECORD OF THE CASE. EVIDENTLY, THE CLAIM WAS ALLOWED BY THE INCOME TAX OFFICER ON BEING SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. THIS DECISION OF THE INCOME TAX OFFICER COULD NOT BE HELD TO BE ERRONEOUS SIMPLY BECAUSE IN HIS ORDER HE DID NOT MAKE AN ELABORATE DISCUSSION IN THAT REGARD. B) B AND A PLANTATION AND INDUSTRIES LTD. AND ANR. V CIT AND ORS. 290 ITR 395 (GAUHATI) AT PAGE 406 (PARA 17) AN ORDER CANNOT BE TERMED ERRONEOUS UNLESS IT CAN BE SHOWN TO BE AN ORDER, WHICH IS NOT IN ACCORDANCE WITH LAW. IF THE INCOME TAX OFFICER, ACTING IN ACCORDANCE WITH LAW, MAKES CERTAIN ASSESSMENT, THE SAME CANNOT BE TERMED AS ERRONEOUS BY THE COMMISSIONER MERELY BECAUSE THE ORDER, ACCORDING TO THE COMMISSIONER, SHOULD HAVE BEEN MORE ELABORATE IN WRITING. PAGE 9 OF 12 ITA NO.37/BANG/2010 9 8.2 SUBSEQUENT TO THIS CLARIFICATION FURNISHED BY THE ASSESSEE, THE ASSESSMENT ORDER DATED 5.12.2008 WAS COMPLETED U/S 143(3). IN THE SAID ASSESSMENT ORDER, IT WAS CATEGORICALLY MENTIONED BY THE ASSESSING OFFICER THAT THE CASE WAS DISCUSSED BY THE REPRESENTATIVE AND HE HAD FILED THE DETAILS CALLED FOR. AFTER VERIFYING THE DETAILS FILED BY THE ASSESSEE AND DISCUSSION WITH THE REPRESENTATIVE, TH E ASSESSMENT IS COMPLETED ACCEPTING THE INCOME RETURNED. WHEN ASSESSMENT U/S 143(3) WAS COMPLETED ON 5.12.2008, SEVERAL DECISIONS OF THE HONBLE HIGH COURTS AND THE TRIBUNAL WERE IN FAVOUR OF THE ASSESSEE HOLDING THAT CLUB MEMBERSHIP FEES PAID IS TO BE ALLOWED AS REVENUE EXPENDITURE. THE JUDGEMENTS OF HIGH COURT WHICH ARE IN FAVOUR OF ASSESSEE ARE AS FOLLOWS:- OTIS ELEVATORS CO. P. LTD. 195 ITR 682 (BOM.) CIT V SUNDARAM INDUSTRIES LTD. 240 ITR 335 (MAD.) GUJARAT STATE EXPORT CORPN. LTD. V CIT 209 ITR 649 (GUJ.) NO CONTRARY DECISION OF THE HONBLE SUPREME COURT OR OF THE JURISDICTIONAL HIGH COURT WAS BROUGHT TO OUR NOTICE, WHICH WAS AVAILABLE AT THAT TIME OF PASSING THE ASSESSMENT ORDER. HENCE, WE ARE OF THE VIEW, THE ASSESSING OFFICER HAD TAKEN A VIEW PERMISSIBLE UNDE R LAW AND THE SAME CANNOT BE HELD TO BE ERRONEOUS. I N THAT SENSE OF THE MATTER, THE CONDITION PRECEDENT F OR EXERCISING REVISION OF JURISDICTION U/S 263 IS ABSE NT ON THE FACTS OF THE PRESENT CASE IN THE LIGHT OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F CIT V MALABAR INDUSTRIAL CO. LTD. 243 ITR 83. 8.3 MERELY BECAUSE THERE HAS BEEN NO ELABORATE DISCUSSION ON THE ISSUE BY THE ASSESSING OFFICER, CANNOT BY ITSELF LEAD TO CONCLUSION THAT THERE IS NO PAGE 8 OF 12 ITA NO.37/BANG/2010 8 NAME OF THE CLUB CORPORATE MEMBERSHIP NATURE AMOUNT (RS.) NAME OF THE BENEFICIARY DURING AY 2006-07 OOTERS CLUB ENTRANCE FEES 30,00,000 ALURI SRINIVASA RAO & BALA DESHPANDE BOMBAY PRESIDENCY GOLF CLUB ENTRANCE FEES 10,00,000 SUMIT CHANDWANI BANGALORE CLUB ANNUAL CHARGES 27,000 RENUKA RAMNATH & BEENA CHOTAI INDIAN HOTELS TAJ CHAMBERS ANNUAL CHARGES 75,000 RENUKA RAMNATH KHANNA HOTELS ANNUAL CHARGES 22,000 KISHORE GOTETY THE OBEROI, BELVEDERE CLUB ANNUAL CHARGES 30,000 RENUKA RAMNATH NATIONAL SPORTS CLUB OF INDIA ANNUAL CHARGES 220 RENUMA RAMNATH TOTAL 41,54,220 8.1 FURTHER, IN ASSESSEES LETTER DATED 3 RD DECEMBER, 2008, THE ASSESSEE HAS FURTHER CLARIFIED THE QUERY RAISED BY THE ASSESSING OFFICER IN THE FOLLOWING MANNER:- PLEASE SPECIFY WHETHER ENTRANCE FEE/SUBSCRIPTION FOR CLUBS WERE CONSIDERED FOR THE COMPUTATION OF FBT. YOUR ATTENTION IS INVITED TO QUESTION NO.96 OF CIRCULAR NO.08/2005 ISSUED BY CBDT. ENTRANCE FEE PAID TO CLUBS HAS NOT BEEN CONSIDERED IN THE COMPUTATION OF FBT. SIR, THE ASSESSEE HUMBLY SUBMITS THAT ENTRANCE FEES DOES NOT RESULT IN AVAILMENT OF ANY BENEFIT OR SERVICE, SINCE FOR UTILIZATION OF ANY SERVICE, MEMBER HAS TO PAY SEPARATELY. HENCE, ENTRANCE FEES CANNOT BE TREATED AS PAYMENT TOWARDS USE OF CLUB FACILITIES. PAGE 7 OF 12 ITA NO.37/BANG/2010 7 IN FAVOUR OF THE ASSESSEE HOLDING THAT THE CLUB MEM BERSHIP FEES PAID IS TO BE ALLOWED AS REVENUE EXPENDITURE. IN THE LI GHT OF THE ABOVE STATED DECISIONS, IT CANNOT BE SAID THAT THE ORDER OF THE ASSESSMENT IS ERRONEOUS. ON THE CONTRARY, HE HAS TAKEN A PERMISS IBLE VIEW AND THEREFORE THE ORDER CANNOT BE SAID TO BE REVISABLE U/S 263 OF THE ACT. 7.3 IN IDENTICAL CIRCUMSTANCES, IN THE CASE OF M/S ICICI VENTURE FUNDS MANAGEMENT COMPANY LIMITED, THE TRIBUN AL DECIDED THE MATTER IN FAVOUR OF THE ASSESSEE AND THE RELEVA NT FINDING OF THE TRIBUNAL IS REPRODUCED BELOW:- 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ASSESSING OFFICER IN THE COURSE OF SCRUTINY ASSESSMENT HAD CALLED FOR DETAILS WITH REGARD TO CLUB MEMBERSHIP FEES PAID AND THE SAME WAS FURNISHED BY THE ASSESSEE. THE ASSESSEE IN ITS LETTER DATED 24.11.2008 ADDRESSED TO THE ASSESSING OFFICER HAD STATED THAT AS FOLLOWS:- FURTHER TO THE HEARING HELD ON 21 ST AUGUST, 2008, THE INFORMATION RELATING TO VARIOUS ISSUES RAISED DURING THE ASSESSMENT PROCEEDINGS IS ATTACHED. IN THE SAID LETTER, THE DETAILS WITH REGARD TO THE CLUB MEMBERSHIP FEES ARE FURNISHED AS ITEM NO.3 AND THE SAME READS AS FOLLOWS:- DETAILS OF CLUB EXPENSES (IN THE NATURE OF ENTRANCE FEES AND SUBSCRIPTIONS) RS.41,54,220 PAGE 6 OF 12 ITA NO.37/BANG/2010 6 7.1 IN THIS CASE, THE ASSESSING OFFICER IN THE COU RSE OF SCRUTINY ASSESSMENT, HAD CALLED FOR THE DETAILS OF P AYMENTS MADE AS CLUB MEMBERSHIP FEES AND THE SAME WAS FURNISHED BY T HE ASSESSEE VIDE ITS LETTER DATED 11 TH DECEMBER, 2008 AND THE DETAILS FURNISHED READS AS FOLLOWS:- DETAILS OF MEMBERSHIP FEE FOR CRICKET ASSOCIATION AMOUNTING TO RS.15 LAKHS PAID DURING FY 2004-05 TNT INDIA HAS TAKEN A CORPORATE MEMBERSHIP WITH KARNATAKA STATE CRICKET ASSOCIATION CLUB HOUSE (KSCA CLUB HOUSE). UNDER THE SAID MEMBERSHIP, THE EXECUTIVES OF THE COMPANY PARTICIPATE IN THE SPORTS ACTIVITIES SUCH AS BADMINTON, TENNIS, TABLE TENNIS, SWIMMING ETC. AND THESE ACTIVITIES NOT ONLY IMPROVES THE HEALTH OF THE EMPLOYEES BUT ALSO MOTIVATES THEM IN THEIR DAY TO DAY COMPANY ACTIVITIES. FURTHER, THE MEMBERSHIP ALSO ENABLES THE COMPANY TO HOLD CUSTOMER AND OFFICIAL MEETINGS AT VARIOUS HALLS IN THE KSCA CLUB HOUSE. THE MEMBERSHIP ALSO ENTITLES THE COMPANY TO USE THE ROOMS FOR ITS EMPLOYEES DURING THEIR OFFICIAL TRAVEL. IT MAY BE NOTED THAT ROOM RENTS OF KSCA CLUB HOUSE IS SUBSTANTIALLY CHEAPER THAN THE COMMERCIAL HOTELS 7.2 FROM THE ABOVE, IT IS EVIDENT THAT THE ASSESSI NG OFFICER HAD CALLED FOR THE DETAILS AND THE SAME WAS FURNISH ED AND IT IS THEREAFTER A CONSCIOUS DECISION HAS BEEN TAKEN BY TH E ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE AS REVEN UE EXPENDITURE. AT THE STAGE OF ASSESSMENT, AS STATED EARLIER, THERE W ERE SEVERAL JUDGEMENTS OF THE HONBLE HIGH COURTS AND DECISIONS OF THE TRIBUNAL PAGE 5 OF 12 ITA NO.37/BANG/2010 5 7. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL ON RECORD. THE ASSESSMENT ORDER WAS COMPL ETED ON 18.12.2008. ON 18.12.2008, THERE WERE SEVERAL JUD GEMENTS OF THE HONBLE HIGH COURTS AND ORDERS OF THE TRIBUNAL IN F AVOUR OF THE ASSESSEE HOLDING THAT THE CLUB MEMBERSHIP FEES PAID IS TO BE ALLOWED AS REVENUE EXPENDITURE. THE JUDGEMENTS OF THE HON BLE HIGH COURTS AND THE ORDER OF THE TRIBUNAL IN FAVOUR OF THE ASSE SSEE ARE AS FOLLOWS:- CIT V THE SANDUR MANGANESE & IRON ORES LTD. (KAR.) ITR NOS.13 TO 24/2002; OTIS ELEVATORS CO. P. LTD. 195 ITR 682 (BOM.); CIT V SUNDARAM INDUSTRIES LTD. 240 ITR 335 (MAD.); GUJARAT STATE EXPORT CORPN. LTD. V CIT 209 ITR 649 (GUJ.) AND M/S INFOSYS TECHNOLOGIES LTD. V JCIT (ASST.) (ITA NOS.50, 793 TO 795, 742 & 732 TO 734) (BANG.). NO CONTRARY DECISION OF THE HONBLE SUPREME COURT OR OF THE JURISDICTIONAL HIGH COURT WAS BROUGHT TO OUR NOTICE , WHICH WAS AVAILABLE AT THAT TIME OF PASSING THE ASSESSMENT OR DER. HENCE, WE ARE OF THE VIEW, THE ASSESSING OFFICER HAD TAKEN A VIEW PERMISSIBLE UNDER LAW AND THE SAME CANNOT BE HELD TO BE ERRONEOUS. I N THAT SENSE OF THE MATTER, THE CONDITION PRECEDENT FOR EXERCISING REVISION OF JURISDICTION U/S 263 IS ABSENT ON THE FACTS OF THE PRESENT CASE IN THE LIGHT OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT V MALABAR INDUSTRIAL CO. LTD. 243 ITR 83. PAGE 4 OF 12 ITA NO.37/BANG/2010 4 THE HONBLE JURISDICTIONAL HIGH COURT HAD HELD, THE EXPENDITURE INCURRED AS MEMBERSHIP FEES IS TO BE ALLOWED AS REV ENUE EXPENDITURE. IT WAS STATED THAT THIS JUDGEMENT OF THE HONBLE HI GH COURT WAS DELIVERED ON 21 ST MARCH, 2005 AND ON THE DATE OF PASSING THE ASSESSMENT ORDER, THE JUDGEMENT OF JURISDICTIONAL H IGH COURT WAS IN FAVOUR OF THE ASSESSEE AND HENCE, THE CIT IS NOT CO RRECT IN INVOKING HIS JURISDICTION U/S 263. FURTHER IT WAS CONTENDED THAT THE ISSUE IN QUESTION IS SQUARELY COVERED BY THE ORDER OF THE TRIB UNAL IN THE CASE OF M/S ICICI VENTURE FUNDS MANAGEMENT COMPANY LTD. ( ITA NO.66/BANG/2010 DATED 17 TH SEPTEMBER, 2010). IT WAS SUBMITTED THAT THE CLUB MEMBERSHIP FEE PAID IN THAT CASE WAS ALLOWED AS REVENUE EXPENDITURE BY THE ASSESSING OFFICER AND THE CIT INV OKED HIS REVISIONAL JURISDICTION U/S 263 OF THE ACT AND DISA LLOWED THE SAME. ON FURTHER APPEAL, THE TRIBUNAL SET ASIDE THE 263 ORDE R BY HOLDING THAT THE ASSESSING OFFICER, BY ALLOWING THE DEDUCTION OF MEMBERSHIP FEES PAID, HAD TAKEN A PERMISSIBLE VIEW AND THERE IS NO ERROR IN THE ASSESSMENT SO PASSED AND THEREFORE, THE CIT IS NOT RIGHT IN INVOKING HIS REVISIONAL JURISDICTION. 6. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED TH E FINDING OF THE CIT. IT WAS SUBMITTED THAT ON THE ISSUE OF DEDUCTION OF CLUB MEMBERSHIP FEE, THERE WAS NO DISCUSSION BY THE ASSES SING OFFICER CONCERNED WHILE COMPLETING THE SCRUTINY ASSESSMENT A ND HENCE, THE ORDER OF ASSESSMENT IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. PAGE 3 OF 12 ITA NO.37/BANG/2010 3 3.1 IN RESPONSE TO THE NOTICE ISSUED U/S 263, THE ASSESSEE FILED WRITTEN SUBMISSIONS VIDE ITS LETTER DATED 8/9 /2009. THE GIST OF WRITTEN SUBMISSION IS REPRODUCED IN THE IMPUGNED OR DER OF THE CIT AT PAGE 2 AND 3 AND HENCE, THE SAME IS NOT REITERATED HERE. THE OBJECTIONS/CONTENTIONS RAISED AGAINST THE INVOCATIO N OF THE REVISION WERE REJECTED BY THE CIT AND HE DIRECTED THE ASSESSI NG OFFICER TO DISALLOW THE EXPENDITURE OF RS.15 LAKHS PAID AS MEM BERSHIP FEES TO KARNATAKA STATE CRICKET ASSOCIATION CLUB HOUSE. TH E DIRECTION OF THE CIT READS AS FOLLOWS:- IN VIEW OF THE ABOVE DISCUSSION, IN MY CONSIDERED OPINION, THE ORDER U/S 143(3) ON DATED 18.12.2008 OF THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE WITHIN THE MEANING OF SECTION 263, IN SO FAR AS THE ISSUE OF PAYMENT OF RS.15,00,000/- TO KARNATAKA STATE CRICKET ASSOCIATION CLUB HOUSE IS CONCERNED. THEREFORE, THE AO IS DIRECTED TO REDO THE ASSESSMENT IN THE LIGHT OF THE DISCUSSION MADE IN THIS ORDER. 4. THE ASSESSEE, BEING AGGRIEVED BY THE ORDER PASSE D U/S 263, HAS FILED THIS APPEAL BEFORE US. 5. THE LEARNED AR REITERATED THE SUBMISSIONS MADE BEFORE THE CIT. HE RELIED ON THE DECISION OF THE JURISDIC TIONAL HIGH COURT IN THE CASE OF THE SANDUR MANGANESE & IRON ORES LTD. I N ITR CASE NOS.13 TO 24/2002 DATED 21 ST MARCH, 2005, WHICH IN TURN FOLLOWED THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF THE GUJARAT STATE EXPORT CORPORATE LIMITED 209 ITR 649. IT WAS SUBMITTED THAT PAGE 2 OF 12 ITA NO.37/BANG/2010 2 CLUB MEMBERSHIP FEE AMOUNTING TO RS.15,00,000 IS IN THE NATURE OF CAPITAL EXPENDITURE AND NOT REVENUE EXPENDITURE. III) THE LEARNED CIT HAS ERRED IN LAW AND IN FACTS BY RELYING ON THE DECISION OF THE HONBLE HIGH COURT OF KERALA IN THE CASE OF FRAMATONE CONNECTOR OEN LTD. V DCIT 294 ITR 559 AND THE DECISION OF THE CHANDIGARH INCOME TAX APPELLATE TRIBUNAL IN THE CASE OF MASTER CAPITAL SERVICES LTD. (88 ITD 496) WHILE PASSING THE ORDER U/S 263 OF THE ACT, WHEN THE FACT PATTERN IN THE APPELLANTS CASE IS DISTINGUISHABLE FROM THE FACT PATTERN APPLICABLE IN THE AFOREMENTIONED DECISIONS. 3. THE BRIEF FACTS OF THE CASE ARE AS FOLLOWS:- THE ASSESSEE IS A COMPANY. IN THE CONCERNED ASST. YEAR, RETURN OF INCOME WAS FILED ON 31.10.2005 DECLARING A LOSS OF RS.16,69,58,884/-. THE ASSESSMENT WAS COMPLETED U/ S 143(3) VIDE ASSESSMENT ORDER DATED 18.12.2008 DETERMINING THE T OTAL LOSS AT RS.16,53,78,234/-. LATER, THE CIT ISSUED NOTICE U/ S 263 TO DISALLOW THE PAYMENT MADE BY THE ASSESSEE AS CLUB MEMBERSHIP F EES TO KARNATAKA STATE CRICKET ASSOCIATION, CLUB HOUSE AMO UNTING TO RS.15 LAKHS. ACCORDING TO THE COMMISSIONER, THE SAID EXP ENDITURE IS NOT A REVENUE EXPENDITURE BUT CAPITAL IN NATURE. HE RELI ED ON THE JUDGEMENT OF THE HONBLE HIGH COURT OF KERALA IN THE CASE OF FRAMATONE CONNECTOR OEN LTD. V DCIT 294 ITR 559 AND THE ORDER OF THE TRIBUNAL IN THE CASE OF CIT V MASTER CAPITAL SE RVICES LTD. 88 ITD 496. PAGE 1 OF 12 ITA NO.37/BANG/2010 1 THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH B BEFORE SHRI GEORGE GEORGE K, J.M. AND SHRI A MOHAN ALANKAMONY, A.M. ITA NO.37/BANG/2010 (ASST. YEAR 2005-06) TNT INDIA PRIVATE LIMITED, 82/1, RICHMOND ROAD, BANGALORE-25. - APPELLANT VS THE COMMISSIONER OF INCOME-TAX (LTU), BANGALORE. - RESPONDENT APPELLANT BY : SHRI CHAVALI NARAYAN, C.A. RESPONDENT BY : SMT. SWATHI S PATIL, CIT-II O R D E R PER GEORGE GEORGE K : THIS APPEAL INSTITUTED BY THE ASSESSEE IS DIRECTE D AGAINST THE ORDER OF THE CIT, BANGALORE DATED 16.11.2009 PA SSED U/S 263 OF THE ACT. THE ASST. YEAR CONCERNED IS 2005-06. 2. THE GROUNDS RAISED IN THE APPEAL READS AS FOLLO WS:- I) THE LEARNED CIT HAS ERRED IN LAW AND IN FACTS BY INITIATING REVISION PROCEEDINGS U/S 263 OF THE I T ACT, 1961 FOR ASST. YEAR 2005-06, ALTHOUGH THE ORDER OF THE DCIT, LARGE TAX PAYERS UNIT (THE LEARNED ASSESSING OFFICER) IS NOT AN ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF REVENUE. II) THE LEARNED CIT HAS ERRED IN LAW AND IN FACTS BY HOLDING IN THE ORDER U/S 263 OF THE ACT THAT THE