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TMI Blog2023 (8) TMI 1337X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of show cause notice issued u/s 263 of the Act is baseless, wrong and contrary to facts of the 5. For that the Ld. PCIT, Kolkata-1 ought to have properly considered the submissions of the appellant and the reference to the judicial pronouncements before rejecting the contentions raised by the appellant. 6. For that the Ld. PCIT, Kolkata-1 erred in passing an order u/s 263 of the Act without pointing out as to in what respect the order passed u/s 143(3) of the Act on 04.03.2021 is erroneous and prejudicial to the interest of 7. For that the appellant craves leave to amend, alter, modify, substitute, add to, abridge and/or rescind any or all of the above grounds. 2. The fact emerges from the impugned order of ld. PCIT are as under: 'From the scrutiny of the assessment records, it was observed from Note-28, Other Expenses of the profit and loss account for the year ended on 31st March, 2018 that the assessee had claimed an amount of Rs.1,28,95,729/- towards Registration Exp. for Pataka House. Since, these expenses are of the nature of capital expenditure, therefore, these expenses are not allowable as revenue expenses of the assessee as per the provisions of section 37 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commercial space beginning from 22.10.2017 till 27.10.2044. (d) As required under the Transfer of Property Act the Lease Deed was got registered and for this purpose an amount of Rs. 2,47, 76,208/- was paid towards Stamp Duty. The Lessee reimbursed an amount of Rs. 1,18,80,479/- on account of registration charges and the balance of Rs. 1,28,95,729/- was borne by the assessee debited in the accounts. (e) This amount of Rs. 1,28,95,729/ has been claimed as expenditure since the expenses towards registration of Stamp Duty has to be considered in the light of the provisions of Sec.37(1) of the Act. 6. In this regard following judicial pronouncements on this issue may kindly be taken note of: - The Hon'ble Bombay High Court in the case of Cinecita Pvt. Ltd. 137 ITR 652 has held "The impugned expenditure did not involve any element of premium in the amount claimed as expenditure. It was incurred only to draw up and get registered an effective and proper lease deed and would have remained the same irrespective of the period of lease as long as it was more than one year. Further the period of lease itself could not be decisive of the question whether the asset was of enduing n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Cinecita Pvt. Ltd. 137 ITR 652 has held "The impugned expenditure did not involve any element of premium in the amount claimed as expenditure. It was incurred only to draw up and get registered an effective and proper lease deed and would have remained the same irrespective of the period of lease as long as it was more than one year. Further the period of lease itself could not be decisive of the question whether the asset was of enduing nature. On these facts, the impugned expenditure was revenue in nature. b. A similar view was taken by the Hon'ble High Court of Bombay in the case of Hoechst Pharmaceuticals Ltd. 113 ITR 877 and in the case of Octavious Steel and Co. Ltd. 221 ITR 810. Considering the nature of expenditure in the light of the judicial decisions, legal expenses have to be allowed u/s 37(1) of the Act. We order accordingly. 5. He further submitted that since there is no such irregularity in so far as the claim of the assessee made u/s 37(1) of the Act is concerned as the ld. AO allowed the claim of the assessee after thorough examination of the facts. Therefore, proceeding was initiated by the ld. PCIT may kindly be dropped. 6. On the other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clusion and such a conclusion cannot be considered erroneous simply because the ld. PCIT does not feel satisfied with the conclusion. In this regard, we take into consideration the decision of Hon'ble Rajasthan High Court in the case of CIT vs Ganpat Ram Vishnoi, 296 ITR 292. Even otherwise, provisions of Section nowhere allow to challenge the judicial wisdom of the AO or to replace the wisdom in the guise of revision unless the view taken by the AO is not at all sustainable in law. We are of the view that extent of enquiry cannot be stretched to any level by forcing the AO to go through the assessment process again and again. We have also gone through the decisions of the Coordinate Bench in the cases Annu Agrotech Private Ltd. (ITA No. 9/JP/2021), apropos assumption of jurisdiction u/s 263 by the ld. PCIT laid down the following ratio:- ''1.14 (i). Every loss of Revenue as a consequence of the order of the AO cannot be treated as prejudicial to the interest of the Revenue. If the AO has adopted one of the two or more courses permissible in law and it has resulted in loss of revenue, or where two views are possible and AO has taken one view with which the PCIT does not agree, it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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