CIT v. Vodafone Essar South Ltd.

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The Tax Publishers2013 TaxPub(DT) 0367 (Del-HC) : (2013) 050 (I) ITCL 0146 : (2013) 212 TAXMAN 0184 Income Tax Act, 1961 --Revision under section 263--Erroneous and prejudicial order One of the possible view taken by assessing officer--While completing the original assessment under section 143(3), assessing officer allowed the claim of assessee that regulatory fee, bank charges and stamp duty were revenue expenditure. Subsequently, Commissioner invoked the provisions of section 263 on the ground that the order of assessing officer was erroneous and prejudicial to the interest of revenue in as much as regulatory/licence, fee, bank charges and stamp duty were capital expenditure. Assessee contended that the Tribunal in case of, Comsat Max Ltd. v. DCIT 2009 TaxPub(DT) 1396 (Del-Trib) ruled that payment of one time regulatory fee was allowable as revenue expenditure. The said decision of the Tribunal was brought to the notice of Commissioner after issuance of notice and, therefore, assessee submitted that once this decision of Tribunal was existing and available, Commissioner ought to have dropped the proceedings. It further, contended that where two views were possible, powers of section 263 could not be exercised. *Held:* A detailed explanation in the form of statements and other documents required a by assessing officer were produced at the stage of original assessment. Clearly this was not a case of No Enquiry. The lack of any discussion on this cannot lead to the assumption that the assessing officer did not apply his mind. The proceeding in fact shows that assessing officer directed his mind specifically on this aspect and then concluded that the expenditure was in the revenue field. Moreover the decision in Comsat Max Ltd. (supra) has ruled that the expenditure was revenue; it constituted one plausible or reasonable view. Under these circumstances, the Commissioner could not have validly exercised his supervisory or revisionary power under section 263. As far as the other issues, i.e., bank guarantee charges and stamp duty are concerned, these expenses has to be regarded as falling properly in revenue field. In view of above, the revision order passed by Commissioner did not sustain. Income Tax Act, 1961 Section 263 In The DELHI High Court S. Ravindra Bhat & R.V. Easwar CIT v. Vodafone Essar South Ltd. ITA No. 119/2012 20 November, 2012 JUDGEMENT *S. Ravindra Bhat* The Revenue is aggrieved by an order of the Income Tax Appellate Tribunal (ITAT) dated 24-6-2011 in ITA 3238/Del/2009. The question of law sought to be urged by it is whether the impugned order is in error in setting aside the assessment made by the Commissioner, after invoking jurisdiction under section 263 of the Income Tax Act. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2013 TaxPub(DT) 0367 (Del-HC) : (2013) 050 (I) ITCL 0146 : (2013) 212 TAXMAN 0184

Income Tax Act, 1961

--Revision under section 263--Erroneous and prejudicial order One of the possible view taken by assessing officer--While completing the original assessment under section 143(3), assessing officer allowed the claim of assessee that regulatory fee, bank charges and stamp duty were revenue expenditure. Subsequently, Commissioner invoked the provisions of section 263 on the ground that the order of assessing officer was erroneous and prejudicial to the interest of revenue in as much as regulatory/licence, fee, bank charges and stamp duty were capital expenditure. Assessee contended that the Tribunal in case of, Comsat Max Ltd. v. DCIT 2009 TaxPub(DT) 1396 (Del-Trib) ruled that payment of one time regulatory fee was allowable as revenue expenditure. The said decision of the Tribunal was brought to the notice of Commissioner after issuance of notice and, therefore, assessee submitted that once this decision of Tribunal was existing and available, Commissioner ought to have dropped the proceedings. It further, contended that where two views were possible, powers of section 263 could not be exercised. Held: A detailed explanation in the form of statements and other documents required a by assessing officer were produced at the stage of original assessment. Clearly this was not a case of No Enquiry. The lack of any discussion on this cannot lead to the assumption that the assessing officer did not apply his mind. The proceeding in fact shows that assessing officer directed his mind specifically on this aspect and then concluded that the expenditure was in the revenue field. Moreover the decision in Comsat Max Ltd. (supra) has ruled that the expenditure was revenue; it constituted one plausible or reasonable view. Under these circumstances, the Commissioner could not have validly exercised his supervisory or revisionary power under section 263. As far as the other issues, i.e., bank guarantee charges and stamp duty are concerned, these expenses has to be regarded as falling properly in revenue field. In view of above, the revision order passed by Commissioner did not sustain.

Income Tax Act, 1961 Section 263

In The DELHI High Court

S. Ravindra Bhat & R.V. Easwar

CIT v. Vodafone Essar South Ltd.

ITA No. 119/2012

20 November, 2012

JUDGEMENT

S. Ravindra Bhat

The Revenue is aggrieved by an order of the Income Tax Appellate Tribunal (ITAT) dated 24-6-2011 in ITA 3238/Del/2009. The question of law sought to be urged by it is whether the impugned order is in error in setting aside the assessment made by the Commissioner, after invoking jurisdiction under section 263 of the Income Tax Act.