M/s. Info Edge India Ltd., New Delhi V. CIT, New Delhi

ITA 5279/DEL/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0387 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 03-02-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 26-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJNI KANT GUPTA
• Keywords: Bad and doubtful debts; Revenue expenditure; TDS; Set aside; Capital Gains
• Section: 40(a)(ia); 263

Judgement Text

ITA NO. 5279/DEL/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 5279/DEL/2010 A.Y. : 2007-08 M/S INFO EDGE INDIA LTD., G.F. 12A, MEGHDOOT BUILDING, 94, NEHRU PLACE, NEW DELHI 110 019 (PAN/GIR NO. : AAACI1838D) VS. C.I.T. - IV/ADDL. C.I.T., RANGE - 11, CR BUILDING, NEW DELHI (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. AJAY VOHRA, ADV. & SH. SACHIT JOLLY, ADVOCATE DEPARTMENT BY : SH. RAJNI KANT GUPTA, C.I.T.(D.R.) ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX, DELHI-IV, NEW DELHI PASS ED U/S. 263 OF THE IT ACT DATED 28.9.2010 PERTAINING TO ASSESSMENT YEAR 2007-08. 2. THE ASSESSEE IN THIS CASE IS A COMPANY ENGAGED I N THE BUSINESS OF PROVIDING ONLINE RECRUITMENT, MATRIMONIAL AND REAL ESTATE CLASSIFIED. C.I.T. IN THIS CASE OBSERVED THAT THE RECORD SHOW S THAT THE FOLLOWING ASPECTS WERE NEVER CONSIDERED / VERIFIED BY THE ASS ESSING OFFICER WHILE FRAMING THE ASSESSMENT ORDER: (I) IT IS SEEN FROM THE RECORDS THAT ASSESSING OFFI CER HAS NOT CALLED FOR BOOKS OF ACCOUNTS AND VOUCHERS FOR EXAMIN ATION. PARTICULARLY, IN THE CONTEXT THAT ASSESSEE CO. HAS I TSELF ADDED AN AMOUNT OF ` 96,44,277/- U/S. 40(A)(IA), TH EREFORE, IT ITA NO. 5279/DEL/2010 2 APPEARS THAT THE ASSESSEE IS HABITUAL DEFAULTER IN RESPECT OF MEETING ITS STATUTORY LIABILITIES RELATING TO TDS. THE MATTER SHOULD HAVE BEEN EXAMINED TO MAKE EXACT QUANTIFICATIO N OF THE TDS TO BE MADE. AT LEAST EXTRACT OF LEDGER A/C. SHOULD HAVE BEEN EXAMINED FOR THE PURPOSE OF GENUINE CLASSIFICATION OF EXPENSES TO QUANTIFY THE TDS IMPLIC ATION. (II) PROFIT ON REDEMPTION OF MUTUAL FUNDS SHOULD HAVE BEEN EXAMINED FROM THE ANGLE OF SHORT TERM CAPITAL GAINS AN D IN VIEW OF PROVISIONS OF SEC. 94(7). (III) IN SCHEDULE 14, UNDER THE HEAD ADMINISTRATION AND OTHER EXPENSES, THE ASSESSEE HAS CLAIMED AN AMOUNT OF ` 4 0.0 LAC ON ACCOUNT OF PROVISION FOR DOUBTFUL DEBTS. TH E SAME HAS NOT BEEN DISALLOWED, BEING CONTINGENT IN NATURE . THIS IS A SERIOUS LAPSE ON THE PART OF THE ASSESSING OFFIC ER . (IV) ADVERTISEMENT EXPENSES FOR APPROXIMATELY ` 30 C RORES AND RENT FOR ` 4 CRORE HAVE BEEN DEBITED IN P&L ACCOUNT . THESE EXPENSES ARE SUBJECT TO TDS AND SHOULD HAVE BEEN EXAMINED ACCORDINGLY WITH RESPECT TO TDS RETURN FILED BY THE ASSESSEE. (V) CREDITORS ARE APPEARING IN THE BALANCE SHEET FO R A SUM OF ` 14,19,57,142/-. THIRD PARTY VERIFICATION COULD HA VE BEEN MADE FOR VERIFYING THE CLOSING BALANCES BY SENDING N OTICES U/S 133(6). 2.1 ASSESSEE EXPLAINED IN THIS REGARD THAT AS PER I NDIAN ACCOUNTING STANDARD REQUIREMENT OF COMPANIES ACT, ACCOUNTS ARE TO BE DRAWN ON ACCRUAL BASIS AND FOR THAT IT BECOME NECESSARY TO MAKE THE PROVISIONS ITA NO. 5279/DEL/2010 3 OF VARIOUS EXPENDITURE, IN ORDER TO REFLECT THE TRU E AND FAIR VIEW. MOST OF THE TIMES THOUGH THE PROVISIONS ARE MADE ON MOST A PPROXIMATELY BASIS. BILL WOULD NOT HAVE BEEN RECEIVED MAKING IT DIFFICULT TO EXACTLY IDENTIFY THE PARTY AT THE TIME OF MAKING THE PROVISI ONS. THE TDS ARE DEDUCTED AS AND WHEN, BILLS OF THE PARTIES ARE RE CEIVED AND PAID AS PER THE PROVISIONS OF THE IT ACT. IT WAS FURTHE R EXPLAINED THAT THIS METHODOLOGY HAS BEEN EXPLAINED TO THE ASSESSING OFFI CER. IT WAS FURTHER EXPLAINED THAT PROVISIONS OF EXPENSES AS FA R AS TDS ARE BOTH ON ESTIMATE BASIS FOR ACCOUNTING PURPOSE. IT IS NO T THE CASE THAT ASSESSEE HAS DEDUCTED THE TAX FROM PARTIES AND NOT D EPOSITED THE SAME WITH THE GOVERNMENT. UNDER THE ABOVE CONDIT ION, IT WAS EXPLAINED THAT FOR ASSESSMENT YEAR 2007-08 THE PROVI SION UNDER THE DIFFERENT HEAD WAS MADE TO THE TUNE OF ` 96442277/-, ON WHICH TDS WAS DEDUCTED AND PAID AFTER 31 ST MAY, 2007 AS AND WHEN SUCH BILLS WERE APPROVED AND PAID AND HENCE THE DISALLOWANCE WAS MADE BY THE ASSESSEE ITSELF AS PER THE TAX AUDIT REPORT, IN CO MPLIANCE WITH THE PRE AMENDED PROVISIONS OF SEC. 40(A)(IA). IT WAS FURTH ER SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE H AD DEDUCTED AND PAID TDS FROM CONTRACTORS, PROFESSIONALS, RENT ETC. TO THE TUNE OF ` 1,83,18,826/- FROM ABOUT 1847 PARTIES APART FROM ` 47 ,19,913/- DEDUCTED AND PAID U/S 195. C.I.T. WAS NOT SATISFIE D WITH THE EXPLANATION. ON FURTHER POINTS THE C.I.T. NOTED AS SESSEES SUBMISSION AS UNDER:- COMING TO THE SECOND ISSUE ON THE APPLICABILITY OF THE PROVISIONS OF SECTION 94(7) OF THE ACT, IT WAS EXPLAINED THAT THE ASSESSEE COMPANY, USED TO INVEST THE SURPLUS FUND IN CERTAIN MUTUAL FUNDS AS MATTER OF PRUDENTIAL FINANCIAL PLANNING AND NOT W ITH THE INTENTION OF DIVIDEND STRIPPING. IT IS CLEAR FROM TH E DETAILS, THAT THE ITA NO. 5279/DEL/2010 4 COMPANY HAS A GAIN OF ` 8667/- AND LOSS OF ` 2803/- OUT OF THE REDEMPTION OF THE MUTUAL FUNDS. IT IS SUBMITTED THAT T HE COMPANY HAVING TAXABLE INCOME OF ` 37,58,60,337/- AND HAVIN G PAID THE TAX OF ` 12,75,05,927/- WOULD NOT INDULGE IN DIVIDE ND STRIPPING FOR SUCH A SMALL AMOUNT. FURTHER IT IS SUBMITTED THAT THE SECTION 94(7) WAS INTRODUCED BY THE FINANCE ACT, 2001 W.E.F. 1.4.2002, AS MEASURE TO CURB CREATION OF SHORT TERM LOSSES BY CERTAIN TRANSACTION IN SECURITIES AND UNITS. FURTHER THE SAID SECTION WAS AMENDED TO INTRODUCE CL (B) BY FINANCE ACT, 2004, AS A MEASURE TO CURB TAX AVOIDANCE VIA DIVIDEND OR BONUS STRIPPING. THE ABOVE LEGISLATURE INTENTIONS WERE EXPLAINED IN BOARD CIRCULAR NO., 14/2001 DT. 1 2.12.01 AND 5 OF 2005 DT. 15.7.2005. FROM THE CAREFUL READING OF THE ABOVE CIRCULARS AND THE DETAILS OF SALE AND PURCHASE OF I NVESTMENTS, IT WAS SUBMITTED THAT IT WAS NOT A FIT CASE FOR INITIAT ING PROCEEDINGS US/ 263 MAINLY BECAUSE THE AMOUNT INVOLVED IS VERY S MALL, AS ALSO FACTUALLY NO DIVIDEND OR BONUS STRIPPING HAS BEEN DONE BY THE COMPANY. AS REGARDS THE ITEM NO. 3 OF THE NOTICE, REGARDING PROVISION OF DOUBTFUL DEBTS AMOUNTING TO ` 40 LACS SHOULD HAVE BEEN DISALLOWED BEING CONTINGENT IN NATURE, IT WAS SUBMIT TED THAT THE SAID AMOUNT WAS DULY DISALLOWED BY THE ASSESSEE ITS ELF WHILE FILING THE RETURN. IN THIS REGARD ATTENTION WAS I NVITED TO SCH 14 OF THE FINANCIAL STATEMENT, IN WHICH IT WAS SHOWN AS B AD DEBTS AT ` 4879(000) AND PROVISION FOR DOUBTFUL DEBTS AT ` 40 00(000). BOTH PUT TOGETHER AMOUNTING TO ` 8879(000), WHICH WAS DU LY DISALLOWED IN THE COMPUTATION AS ` 8879222/-. ON THA T BASIS IT ITA NO. 5279/DEL/2010 5 WAS SUBMITTED THAT THERE WAS NO LAPSE ON THE PART O F THE ASSESSING OFFICER WHILE FRAMING THE ASSESSMENT AND I T DOES NOT AMOUNT TO ANY LEAKAGE OF TAX AND IT WAS NOT PREJUDIC IAL TO THE INTEREST OF REVENUE. THEREFORE, IT WAS SUBMITTED THA T ON THIS GROUND, THE ACTION U/S 263 MAY BE NOT TAKEN. AS REGARDS THE ITEM NO. 4 OF THE NOTICE, REGARDING THE TDS COMPLIANCE OF ADVERTISEMENT EXPENSES (30 CRORES) AND RENT (4 CRORES), IT WAS SUBMITTED THAT COMPLETE DETAILS OF TDS ALONG WITH THE CHALLAN, FORM 27A, DEDUCTEE DETAILS AND LEDGER A CCOUNTS WERE ALL SUBMITTED DURING THE ASSESSMENT PROCEEDING S VIDE LETTER DATED 16.12.2009. THE SAID DETAILS WERE FUR NISHED IN THE CD MEDIA. IT WAS ALSO SUBMITTED THAT THE DETAILS OF EXPENSES, WITH THE PARTIES NAME, ADDRESS, PAN AND TDS AMOUNT WE RE SUBMITTED VIDE LETTER DATED 18.11.2009. IT WAS CONTENDED THAT OUT OF THE TOTAL DISALLOWANCE U/S 40(A)(IA) OF ` 96,44,277/- A SUM OF ` 5247326/- WAS ON ACCOUN T OF ADVERTISEMENT BALANCE BEING TOWARDS PROFESSIONAL FES S OF ` 4291693/- AND CONTRACTORS ` 10525/-. IN VIEW OF THE ABOVE IT WAS SUBMITTED THAT THE ASSESSING OFFICER HAS DULY CONS IDERED ALL THE DETAILS FURNISHED FROM TIME TO TIME, AND THE TAX AUD IT REPORT WHILE FRAMING THE ORDER AND IT WAS REQUESTED THAT TH E NO ACTION MAY BE TAKEN U/S. 263 ON THIS ACCOUNT. AS REGARDS THE ITEM NO. 5 OF THE NOTICE, REGARDING THE SUNDRY CREDITORS, IT WAS SUBMITTED THAT THE COMPLETE LIST O F CREDITORS, WITH NAME, ADDRESS, PAN ETC. WERE SUBMITTED VIDE LETT ER DATED 18.11.2009 AND ALSO THE LEDGER ACCOUNTS WERE SUBMITT ED IN CD MEDIA. ALL THE TRANSACTIONS WITH THE PARTIES ARE EF FECTED THROUGH ITA NO. 5279/DEL/2010 6 BANKING CHANNELS ONLY. THE ASSESSEE HAS DULY SUBMITT ED THE DETAILS ALONG WITH THE PAN. SIMPLY BECAUSE THE ASSES SING OFFICER DID NOT GO FOR THIRD PARTY VERIFICATION, IT CANNOT BE CONSTRUED AND PRESUMED AS AN ERRONEOUS ORDER AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN VIEW OF THE ABOVE IT WAS SUBMITT ED THAT NO ACTION MAY BE TAKEN U/S 263 ON THIS ISSUE. IT WAS ALSO SUBMITTED THAT THE ASSESSEE COMPANY HAS S UBMITTED ALL THE DETAILS CALLED FOR VIDE NOTICES DATED 1.5.2 009, 22.6.2009/5.11.2009 AND ALSO VARIOUS OTHER QUERIES CALLED FOR DURING THE ASSESSMENT PROCEEDINGS WERE SUBMITTED BY THE ASSESSEE VIDE LETTERS DATED 27.5.2009, 18.11.2009, 26.11.2009, 16.12.2009 AND THE ASSESSING OFFICER AFTER DULY CO NSIDERING ALL THE ASPECTS AND HAS FRAMED THE ORDER ACCORDINGLY. IN VIEW OF THE ABOVE, IT WAS REQUESTED THAT THE PRO CEEDING INITIATED U/S 263 MAY BE DROPPED. 2.2 C.I.T. CONSIDERED THE ABOVE AND WAS NOT SATISFI ED. HE REFERRED TO THE SEVERAL CASE LAWS AND WAS OF THE OPINION THAT T HERE IS LACK OF ENQUIRY AND IN AS MUCH AS THE ASSESSING OFFICERS OR DER ON THIS POINT IS PREJUDICIAL TO THE INTEREST OF REVENUE FOR IMPROPER RELIANCE WITHOUT VERIFICATION. HE HELD THAT ORDER OF THE ASSESSI NG OFFICER WAS BOTH ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST O F THE REVENUE AND PROCEEDINGS U/S 263 HAS BEEN CORRECTLY INITIATED. 3. AGAINST THIS ABOVE ORDER, THE ASSESSEE IS IN APP EAL BEFORE US. 4. LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT ASSESS EE HAS GIVEN EXPLANATION ON EACH OF THE POINTS RAISED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND THIS MATTER WAS DULY RAISED BY THE ASSESSING ITA NO. 5279/DEL/2010 7 OFFICER AND AS REGARD THE POINT RAISED IN ITEM NO. 1 PERTAINING TO TDS, ASSESSEE VIDE LETTER DATED 20.11.2009 HAS DULY GIVE N ITS SUBMISSION BEFORE THE ASSESSING OFFICER. HENCE, IT CANNO T BE SAID THAT ASSESSING OFFICER HAS NOT ENQUIRED OR THE MATTER H AS ESCAPED ASSESSING OFFICERS ATTENTION. IN THE SAID LET TER PLACED IN PAPER BOOK PAGE NO. 27 ALL THE ASPECTS IN THIS REGARD HAS BE EN DULY EXPLAINED WHICH PERTAIN TO RECONCILIATION OF TDS CERTIFICATES, DETAILS OF DISALLOWANCE U/S. 40(A)(IA), DETAIL OF COMMISSION RE CEIVED AND PAID, COMPLETE DETAILS OF EMPLOYEES SALARY ETC. 4.1 AS REGARDS ITEM NO. 2 LD. COUNSEL OF THE ASSESSE E REFERRED TO THE PAPER BOOK 29 IN WHICH ASSESSEE HAS INTIMATED THE AS SESSING OFFICER VIDE LETTER DATED 18.11.2009 IN THIS REGARD. I N THIS LETTER IT WAS DULY SAID THAT DETAIL OF INVESTMENT AND THAT MADE BY THE C OMPANY HAVE BEEN ATTACHED. THUS, IT CANNOT BE SAID THAT ASSES SING OFFICER HAS NOT ENQUIRED THE ISSUE AND GO INTO THE DETAILS. MOREOV ER, LD. COUNSEL OF THE ASSESSEE POINTED OUT THAT SECTION 94(7) IS NOT APPLICABLE IN ASSESSEES CASE AS NO REDEMPTION WAS DONE WITHIN THE THREE MONTHS OF THE PURCHASE. 4.2 AS REGARDS THE ITEM NO. 3 ABOVE, LD. COUNSEL OF THE ASSESSEE POINTED OUT IN THE PAPER BOOK PAGE NO. 138 WHERE IN IT HAS BEEN STATED THAT ASSESSEE HAS ITSELF ADDED BACK THE PROV ISION OF DOUBTFUL DEBT AMOUNTING TO ` 40 LACS AND THEN SURRENDERED THE AMOUNT AND SO THERE IS NO QUESTION OF C.I.T. HOLDING THAT ASSESSI NG OFFICER HAS NOT MADE NECESSARY ENQUIRY IN THIS REGARD. 4.3 AS REGARDS THE MATTER OF ADVERTISEMENT EXPENSES RENT AND TDS, LD COUNSEL OF THE ASSESSEE SUBMITTED THAT THESE DETA ILS HAVE BEEN DULY ENQUIRED BY THE ASSESSING OFFICER AND ASSESSEE HA S PROVIDED THE ITA NO. 5279/DEL/2010 8 NECESSARY REPLY. IN THIS REGARD, HE REFERRED TO Q UESTIONNAIRE ISSUED BY THE ASSESSING OFFICER IN PAPER BOOK PAGE NO. 5 WHE REIN ALL THE NECESSARY DETAILS WERE ASKED BY THE ASSESSING OFFIC ER WHICH INCLUDED RECONCILIATION OF TDS ALONGWITH RECEIPT SHOWN IN PRO FIT AND LOSS ACCOUNT. 4.4 AS REGARDS THE LAST MATTER PERTAINING TO CREDIT ORS, LD. COUNSEL SUBMITTED THAT ASSESSING OFFICER HAS DULY ENQUIRED THE SAME VIDE HIS LETTER DATED 18.11.2009 IN PAPER BOOK PAGE NO. 6 WH EREIN THE COMPLETE DETAILS OF CREDITORS AND DEBTORS WERE CALL ED FOR. IN THESE CIRCUMSTANCES, LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THERE WAS NO OCCASION FOR C.I.T. TO ASSUME THE JURISDICTION U/S 263 IN AS MUCH AS OF THE MATTERS ABOVE WERE DULY ENQUIRED BY THE ASSESSI NG OFFICER AND ASSESSEE HAS FURNISHED THE NECESSARY REPLIES. 4.5 LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAN D, RELIED ON THE ORDERS OF THE C.I.T. 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS. WE FIND THAT AS REGARDS THE MATER PERTAINING TO SECTION 40(A)(IA), WE FIND THAT ASSESSEE COMPANY HAS ITSELF ADDED THE AMOUNT 9644277/-. IT IS UNDISPUTED THAT COMPANY DO MAKE THE PROVISION ON ESTIMATE BASIS A T THE CLOSE OF THE FINANCIAL YEAR AND IN THE ABSENCE OF EXACT BILL S FOR EXACT PROVISION FOR TDS CANNOT BE MADE. HENCE, WE DO NOT FIND INFI RMITY IN THE ACTION BY THE ASSESSEE TO MAKE THE PROVISION WHICH WAS DUL Y ADDED BACK U/S 40(A)(IA). HENCE, IN THIS REGARD, THERE IS NO MATTE R ON WHICH ASSESSING OFFICER HAS NOT MADE ANY ENQUIRY. 6. AS REGARDS THE SECOND ITEM REGARDING PROFIT ON R EDEMPTION ON MUTUAL FUNDS, ASSESSEE HAD DULY SUBMITTED THAT ENQUI RIES WERE MADE BY THE ASSESSING OFFICER REGARDING INVESTMENTS AND THE SAME WERE ITA NO. 5279/DEL/2010 9 REPLIED BY THE ASSESSEE. MOREOVER, IT HAS BEEN PO INTED OUT THAT SECTION 94(7) IS NOT APPLICABLE IN THIS CASE AS NO REDEMPTION HAS BEEN DONE WITHIN THE THREE MONTHS OF THE PURCHASE. 7. AS REGARDS THE ASSESSEES CLAIM OF ` 40 LACS ON ACCOUNT OF PROVISION OF DOUBTFUL DEBTS, C.I.T. HAS GROSSLY ER RED THAT THERE IS LACK OF ENQUIRY ON THE PART OF THE ASSESSING OFFICER AS ASSESSEE POINTED OUT THAT THIS AMOUNT WAS DULY ADDED BACK BY THE ASSESSEE IN THE RETURN. 8. AS REGARDS THE TDS MATTER ON ADVERTISEMENT AND RE NT EXPENSES, WE FIND THAT ALL THE NECESSARY ENQUIRIES WERE MADE B Y THE ASSESSING OFFICER AND ASSESSEE HAS FURNISHED REPLIES IN THIS REGARD. SO, IT CANNOT BE SAID THAT NO ENQUIRY HAS BEEN MADE BY THE ASSESSING OFFICER IN THIS REGARD. 9. AS REGARDS THE MATTER PERTAINING TO SUNDRY CREDI TORS LD. COUNSEL OF THE ASSESSEE HAS DULY DEMONSTRATED BEFORE US THAT DETAIL IN THIS REGARD WAS CALLED FOR BY THE ASSESSING OFFICER AND ASSESSING OFFICER HAS MADE THE VERIFICATION WHICH HE DEEMED FIT. 10. IN LIGHT OF THE ABOVE DISCUSSION, WE FIND TH AT C.I.T. HAS ERRED IN ASSUMING JURISDICTION BY HOLDING THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. WE FIND THAT ASSESSING OFFICER HAS MADE THE NECESSA RY ENQUIRIES AND PROPER RELIES WERE GIVEN BY THE ASSESSEE. IF TH ERE IS NOTHING ADVERSE IN THIS REGARD, IT IS NOT NECESSARY FOR THE ASSESSI NG OFFICER TO POINT OUT HIS ORDER THAT HE HAS EXAMINED THIS MATTER AND FOUND EVERYTHING IN ORDER. THE ORDER OF THE C.I.T. U/S 263 IS AMOUNTIN G HERE TO ASK THE ASSESSING OFFICER TO MAKE FURTHER ENQUIRIES WITHOU T POINTING OUT ANY LAPSE IN THE ENQUIRY ON THE PART OF THE ASSESSING O FFICER. IN THIS REGARD, WE REFER THE DECISION OF THE HONBLE APEX C OURT IN THE CASE OF ITA NO. 5279/DEL/2010 10 MALABAR INDUSTRIES CO. LTD. V C.I.T 243 ITR 83 WHERE IN IT HAS BEEN HELD THAT FOR EXERCISING POWER U/S 263 IT IS ESSENTIAL T HAT THE ASSESSMENT ORDER WHICH IS PASSED BY THE ASSESSING OFFICER AND WHICH IS SUBJECT TO SECTION 263 SHOULD BE ERRONEOUS AS WELL AS PREJUDIC IAL TO THE INTEREST OF REVENUE. IN THIS REGARD, HE ALSO REFERRED THE DECIS ION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF C.I.T. V. SUNBEAM AUTO LTD. 227 CTR 133. IN THIS CASE IT WAS HELD THAT ASSESSING OF FICER HAVE MADE THE ENQUIRIES, ELICITED REPLY AND THEREAFTER ALLOWED THE EXPENDITURE OF TOOLS AND DYES AS REVENUE EXPENDITURE. IT CANNOT BE SAID THAT IT IS A CASE OF LACK OF ENQUIRY AND ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER ALLOWING DEDUCTION OF SUCH EXPENDITURE COU LD NOT BE REVISED U/S 263, MORE SO, AS THE VIEWS TAKEN BY THE ASSESS ING OFFICER WAS ONE OF THE POSSIBLE VIEWS AND THE COMMISSIONER OF INCOME TAX HIMSELF WAS NOT CLEAR AS TO WHETHER THE SAID EXPENDITURE IS TO BE TREATED AS CAPITAL OR REVENUE EXPENDITURE. 11. EXAMINING THE PRESENT ISSUE ON THE ANVIL OF THE AFORESAID DECISIONS, WE FIND THAT THERE IS NO CASE OF LACK OF ENQUIRY. LD COUNSEL OF THE ASSESSEE DULY BROUGHT OUT BY REFERENCE TO THE P APER BOOK THAT ENQUIRIES WERE MADE BY THE ASSESSING OFFICER ON A LL THE ITEMS MENTIONED BY THE C.I.T. FURTHER ASSESSEE HAD SUBMIT TED ALL THE NECESSARY REPLIES IN THIS REGARD WHICH WERE ALSO BR OUGHT OUT IN THE PAPER BOOK. AFTER MAKING THE ENQUIRY AND CONSIDERING THE REPLY ASSESSING OFFICER HAS PROCEEDED TO PASS AN ORDER. HENCE, IT CANNOT BE SAID THAT THAT ASSESSING OFFICERS ORDER IS ERRONE OUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. C.I.T. HAS ONLY POINTED OUT A FEW ITEMS AND ITA NO. 5279/DEL/2010 11 MADE THEORETICAL STATEMENTS WITHOUT POINTING OUT ANY SPECIFIC MISTAKES WHICH HE HAS CAME ACROSS FROM EXAMINING ALL THE RECORDS. UNDER THESE CIRCUMSTANCES, IN OUR CONSIDERED OPINION , THE ORDER OF THE C.I.T. IS NOT SUSTAINABLE. HENCE, WE SET ASIDE THE ORDER PASSED U/S 263 BY THE C.I.T. AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESS EE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11/02/2011. SD/- SD/- [RAJPAL YADAV] [RAJPAL YADAV] [RAJPAL YADAV] [RAJPAL YADAV] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 11/02/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES