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TMI Blog2023 (10) TMI 1011X X X X Extracts X X X X X X X X Extracts X X X X ..... ound that the assessment order passed by the Assessing Officer ('A.O.' for short) u/s. 143(3) of the Act was neither erroneous nor prejudicial to the interest of the Revenue and the assessee has also without prejudice challenged the order of the ld. PCIT on the ground that the legal expenses of Rs. 2,99,54,061/- claimed by the assessee and allowed by the A.O. was expended wholly and exclusively for the purpose of business of the assessee and was rightly allowed by the A.O. as 'business expenditure'. 3. The brief facts are that the assessee company being an Indian company is a captive service provider of its associated enterprises (AE) on a cost plus model. The assessee had filed its return of income on 27.11.2018, declaring total i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt order u/s. 143(3) of the Act accepting the returned income filed by the assessee. The ld. PCIT invoked the provisions of section 263 of the Act for the reason that the assessment order was erroneous insofar as it was prejudicial to the interest of the Revenue and vide order dated 31.03.2023 set aside the assessment order on the issue of allowability of legal and other expenses amounting to Rs. 2,99,54,061/- and thereby directing the A.O. to conduct denovo assessment. 4. The assessee is in appeal before us challenging the impugned order of the ld. PCIT. 5. The learned Authorised Representative ('ld. AR' for short) for the assessee contended that the assessee has incurred the said expenditure for the purpose of litigating before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxmann.com 407 (Pune - Trib.). The ld. DR relied on the decision of the Hon'ble Apex Court in the case of CIT vs. Paville Projects (P.) Ltd. [2023] 149 taxmann.com 115 (SC), CIT vs. ETA Travel Agency (P.) Ltd. [2019] 109 taxmann.com 66 (Madras), CIT vs. K. V. Nellaiappan [2022] 135 taxmann.com 223 (Madras). 7. We have heard the rival submissions and perused the materials available on record. It is observed that the assessee has claimed business expenses amounting to Rs. 2,99,54,061/- (towards legal and other expenses) incurred for the purpose of litigating with OIB Properties Pvt. Ltd. for the dispute pertaining to the contract entered into by the assessee with OIB for the commercial space leased out to the assessee. The assessee's c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proposition of law. The decision relied upon by the ld. DR are contradictory in facts of the present case where the issue is not related limited scrutiny assessment and the same are distinguishable in facts of the present case and does not support the case of the Revenue. It is also trite to take support of the CBDT Instruction No. 7/2014 vide letter dated 29.12.2015 which states that the A.O. should restrict the enquiry only to the specific reason/issue for which the case was picked up for scrutiny in the case of 'limited scrutiny' and the relevant extract of the said instruction is cited hereunder for ease of ready reference: 3. As far as the returns selected for scrutiny through CASS "3. CASS-2015 are concerned, two type of cases have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d about merits of the issue(s) necessitating Complete Scrutiny' in that particular case Such cases shall be monitored by the Range Head concerned. The procedure indicated at point points (a). (b) and (c) above shall no longer remain binding in such cases. (For the present purpose, 'Metro charges' would mean Delhi, Mumbai, Chennai, Kolkata, Bengaluru, Hyderabad and Ahmedabad)." 9. It is also pertinent to point out that in case of limited scrutiny where the A.O. considers it necessary to conduct a comprehensive scrutiny, necessary approval from the concerned authority is mandatory. In the present case in hand, the Revenue has failed to substantiate that the issue related to the expenditure claimed by the assessee was before the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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