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TMI Blog2024 (1) TMI 1186X X X X Extracts X X X X X X X X Extracts X X X X ..... ized by the AO during the framing of the assessment under section 143(3), it becomes evident that there is no justifiable ground for the Principal CIT to invoke power u/s 263 of the Act. As important to note that there is no revenue implication, and no prejudice has been inflicted upon the Revenue, as the applicable tax rate for the invoice payment in the subsequent year, during which the invoice payment was properly accounted for, included the appropriate TDS deduction. Considering the lack of substantial grounds for the CIT to exercise authority u/s 263 of the Act, and in light of the absence of justifiable reasons to alter the assessment framed by the AO u/s 143(3) we hereby quash and set aside the impugned order of the CIT passed u/s 263 and restore the original assessment order of the AO passed under section 143(3) of the Act. Assessee appeal allowed. - Shri Ramit Kochar, Accountant Member And Ms. Madhumita Roy, Judicial Member For the Assessee : Shri Mehul K. Patel, AR For the Revenue : Shri Kamlesh Makwana, CIT-DR And Shri Ashok Kumar Suthar, Sr.DR ORDER PER MADHUMITA ROY, JUDICIAL MEMEBR: The above two appeals are filed by the assessee; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. The facts leading to the present case, as can be noticed from the relevant orders of the Revenue authorities are that the assessee is Government of Gujarat undertaking engaged in transmission of power. In assessment framed under section 143(3) of the Act, the AO had assessed business income of the assessee at NIL, while book profit under section 115JB of the Act was determined at Rs. 88,81,40,000/- and passed assessment order accordingly. Thereafter, it was noticed by the ld.Pr.CIT that the assessee had credited payments amounting to Rs. 84,92,987/- and Rs. 84,51,863/- totaling to Rs. 1,69,44,850/- to the accounts of contractors, viz. M/s.Sintex Industries, Kalol, and M/s.Hiren B. Engineer, Surat respectively. The ld.Pr.CIT observed that since no TDS was made on these payments/credits, the amount was required to be disallowed u/s.40(a)(ia) of the Act. The ld.Pr.CIT accordingly show caused the assessee as to why the amount of Rs. 1,69,44,850/- should not be disallowed under section 40(a)(ia) of the Act. It was explained by the assessee that during the assessment proceedings, the assessee had produced a letter dated 29.1.2013, containing Annexure-A, wherein the names of two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsequent year i.e. Asst.Year 2011-12. These payments were made towards running account bills (RA Bills) and final bills were booked in capital work-in-progress. The assessee had given work-order to the Sintex Industries only on 8.3.2010 and Shri Hiren B. Engineer on 19.2.2010. Copy of work order is placed at pg. no.5 to 32 and 35-43 of the paper book. Assessee has filed a copy of ledger accounts of Sintex Industries and Hiren B. Engineer, at page no.64-65 of the PB wherein it has been showed that the work has been completed on 15.6.2010 in the case of Sintex Industries, and in the case of Hiren B Engineer on 18.6.2010. Therefore, all the details and evidence would substantiate the claim of the assessee that the impugned transactions pertained to subsequent assessment year, and same is required to be treated accordingly. Though all these details were before the AO during the assessment proceedings, and the AO considered and appreciated that the same and accepted the assessee s submission that the list of the above two parties were inadvertently included, which otherwise have to be considered for the subsequent year, but the ld.Pr.CIT had taken a different view, contrary to the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature of the mistake in including these two names in the data compilation, the Pr.CIT deemed the non-consideration of payments to the aforementioned parties in the assessment order as both erroneous and prejudicial to the interests of the Revenue. Consequently, Pr.CIT directed the AO to treat the assessee as being in default for the failure to deduct TDS on the payments made to these parties and to apply the provisions of section 40(a)(ia) of the Act accordingly. 9. In the light of the above submissions made by the assessee, supported by the material evidence on record, it is apparent that the Pr.CIT has misinterpreted/misconstrued the factual aspects presented by the assessee while exercising authority under section 263 of the Act. The assessee has demonstrated, as indicated on page no. 62 of the paper book, that invoices were indeed raised and payments were made to the mentioned parties during the subsequent financial year, i.e., Financial Year 2010-11, for which the TDS was duly deducted and remitted to the Government. In support of its claims, the assessee has furnished a copy of the work orders, Form No.16A, a comprehensive chart delineating the details of the invoices, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d enquiry the assessment has been completed. Thus, it is not a case of lack of enquiry or lack of proper enquiry. The PCIT does not in as many words states that there was lack of enquiry or lack of proper enquiry and all that is said is that the assessing officer did not verify these aspects which is factually incorrect. Therefore, it is not a case where the PCIT could have invoked his jurisdiction under Section 263 of the Act. 12. With regard to the second issue, the learned tribunal had noted the facts that the invoices issued by the LINKED IN towards advertisement expenses in June 2014 were admitted as liability and crystallized for payment in the year under consideration owing to the fact that the LINKED IN being non-resident had furnished the necessary documents in the such as TRC under Section 90(4) of the Act read with Rule 21 AB of the Rules and no PE certificate etc. only in the assessment year under consideration. Further the tribunal noted it is not the case where these expenses were charged as deduction in the preceding year more importantly, the tribunal noted that there is no revenue implication and no prejudice is caused to the revenue since the tax rate app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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