Insight Print Communications Private Limited Vs PCIT (ITAT Mumbai)
ITAT Mumbai Upholds PCIT’s Revision u/s 263 for Allowing Higher Education Cess as Business Expense Despite Faceless Assessment
he Mumbai ITAT “C” Bench dismissed the appeal of Insight Print Communications Pvt. Ltd. and upheld the revisionary order passed by PCIT, Mumbai-4 u/s 263 for AY 2020-21, holding that allowance of Higher Education Cess as a business expenditure rendered the assessment order erroneous & prejudicial to the interest of Revenue.
The Assessee’s case was completed under faceless regime u/s 143(3) r.w.s. 144B pursuant to limited scrutiny, one of the identified issues being “business expenses.” The PCIT noticed that Higher Education Cess of ₹4,14,040 was claimed as deductible expenditure while computing business income, which according to him was impermissible in view of Explanation 3 to Section 40(a)(ii) inserted retrospectively by Finance Act, 2022 w.e.f. 01.04.2005. Revision proceedings u/s 263 were therefore initiated.
Before the Tribunal, the Assessee contended that (i) PCIT lacked jurisdiction to revise an order passed by an Assessment Unit (AU) under faceless scheme, (ii) two views were possible on deductibility of Education Cess prior to the Supreme Court decision in JCIT vs Chambal Fertilisers & Chemicals Ltd. (450 ITR 164), and (iii) revision could not be invoked when appeal on limitation was pending before CIT(A).
Rejecting these contentions, the Tribunal held that:
