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TMI Blog2024 (7) TMI 954X X X X Extracts X X X X X X X X Extracts X X X X ..... uct further enquiry as deemed necessary, but no such enquiry was conducted to prove that the claim of the assessee was not admissible. PCIT has only examined the details and evidences filed before the AO in the course of assessment and on that basis she had a different opinion about the admissibility of the claim. The powers u/s 263 of the Act cannot be exercised only on the basis of change of opinion. It had to be first established that order was erroneous and prejudicial to the interest of the revenue and, this condition is not found fulfilled in this case. Assessee appeal allowed. - Ms. Suchitra Raghunath Kamble, Judicial Member And Shri Narendra Prasad Sinha, Accountant Member For the Appellant : Shri S. N. Soparkar, Sr. Advocate And Shri Parin Shah, A.R. For the Respondent : Dr. Darsi Suman Ratnam, CIT. DR ORDER PER SHRI NARENDRA PRASAD SINHA, AM: This appeal is filed by the assessee against the order of the Principal Commissioner of Income Tax-3, Ahmedabad, (in short the PCIT ) dated 25.03.2023 in exercise of the revisionary powers under Section 263 of the Income-tax Act, 1961 [hereinafter referred to as the Act in short], for the Assessment Year 2018-19. 2. The brief facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2 The PCIT erred in facts and in law in holding that the contention raised by the appellant necessitates re-verification of the matter in its entirety without appreciating that section 263 does not confer the power to re-review the same set of records. It is submitted it be so held now. 2.3 The learned PCIT erred on facts in considering that the assessee has failed to submit the relevant necessary documents during the course of assessment proceedings. It is submitted that it be so held now. 3. The learned PCIT has erred in law and in facts in not appreciating that the expenses are incurred purely for the purpose of business and are allowable as business expenditure and it is not impaired by explanation 1 to section 37(1) of the Act. It is submitted that it be so held now. 3.1. The learned PCIT has erred in not appreciating that the expenditure incurred are not in violation of MCA guidelines and incurred wholly and exclusive for the business purpose and no disallowance is called for in respect of business promotion expenditure. It is submitted that it be so held now. 5. Shri S. N. Soparkar, Sr. Advocate appearing for the assessee submitted that the issue of business promotion expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Accordingly, the Ld. PCIT had rightly exercised the revisional jurisdiction to set aside the matter for fresh examination of this issue. The Ld. CIT.DR also submitted that though it was not explicitly mentioned in the notice, the Explanation-2 to Section 263 of the Act was implicitly invoked by the PCIT. He further submitted that the order of the AO was cryptic, only accepting the returned income of the assessee, and there was no evidence of application of mind by the AO on this issue. The ld. CIT-DR also submitted that the decisions relied upon by the Ld. Counsel were distinct on facts and he strongly supported the order of the PCIT. 7. In rejoinder, the Ld. Sr. Counsel submitted that once the AO had made enquiries and applied his mind and was satisfied with the claim of the assessee, there was no requirement that such satisfaction should be documented and recorded in the assessment order. He reiterated that the order of the AO was not at all erroneous and, therefore, the assumption of jurisdiction by the Ld. PCIT under Section 263 of the Act, was not proper. 8. We have considered the rival submissions. There is no dispute to the fact that the Ld. PCIT had inherent power to rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctor, fees paid, TDS rate etc. was furnished by the assessee. Similar details in respect of all other expenses was filed by the assessee before the AO. 11. Thus, it is apparent from the above facts that the details of business promotion expenses was called for and examined in detail by the AO in the course of assessment proceeding. After examining the details as brought on record by the assessee, the AO has taken a considered decision that no disallowance on account of business promotion expenses was called for. It is evident from the details of business promotion expenses that the expenditure was not in the nature of freebies/monetary grant and that all the payments were not made to Doctors as observed by the ld. PCIT. There was advisory fee payment of Rs. 1,68,02,443/- which can be held as payment to Doctors and liable for disallowance. This payment was explained and justified by the assessee on the basis of agreement with the respective Doctors for giving advisory information for the drugs effect on the patients coming to their clinic. This expenditure was explained to be of professional in nature and TDS under Section 194J of the Act was also deducted thereon, wherever applicab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in the matter. It is only in cases of lack of inquiry that such a course of action would be open. The present case cannot be treated as a case of lack of inquiry as the AO had deeply examined the issue in the course of assessment proceeding. Even if the inquiry was not adequate in the opinion of the Ld. PCIT, this doesn t give him jurisdictional power to review the order of the AO. The scope of Commissioner s power under Section 263 of the Act would be available when the AO conducts no enquiry or no proper enquiry or doesn t apply his mind to the legal issues arising out of the material on record; only then the revisional power is available. In the present case, the AO did conduct proper inquiries based on which he came to a legal conclusion, which was plausible and, therefore, the Ld. PCIT was not justified in invoking the revisional jurisdiction u/s 263 of the Act directing further inquiries or taking different view in the matter. 13. The Co-ordinate Bench of this Tribunal in the case of Torrent Pharmaceuticals Ltd. (supra) had held as under: 9.2 A bare reading of the Circular gives a somewhat impression that the Explanation 2 was inserted for the purpose of providing clarity o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt order can be possibly frustrated. A nuanced understanding of Explanation suggests that inadequacy in inquiry ought to be of cardinal nature to ignite the potent powers of review. 14. In that case one of the issue involved was business advancement expense and the Ld. PCIT had set aside the order of the AO under Section 263 of the Act. It was held that only in a very gross case of inadequacy in enquiry or where the enquiry is per se mandated on the basis of record before the AO and such enquiry was not conducted; the revisional power can be exercised to invalidate the action of the AO. In the present case, the AO had made the enquiry, applied his mind and came to the conclusion that no disallowance under Section 37 of the Act was called for. The Ld. PCIT had not brought anything adverse on record to substantiate her allegation that the claim of the assessee was liable to be disallowed under Section 37 of the Act. The Ld. PCIT has also not brought out any inadequacy in the enquiry as conducted by the AO in the course of assessment proceeding rather the entire foundation of the order u/s 263 of the Act is found to be based on change of opinion. As per the provision of Section 263 of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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