Rohan Landscape Private Limited Vs PCIT (ITAT Mumbai)
ITAT Mumbai held that revision u/s 263 was invalid where AO had conducted detailed scrutiny & taken a plausible view. The assessee, engaged in warehousing development, had set-up its business though no rental income accrued during the year. Tribunal reiterated that allowability of expenditure does not depend on earning income; once business is set-up, revenue expenses & depreciation are allowable.
PCIT invoked s.263 alleging lack of enquiry regarding finance expenses, other expenses, depreciation, share premium & capital creditors. However, record showed AO issued notices u/s 142(1), examined loan utilisation, bifurcation of interest, expense details, depreciation workings, share capital documents & creditor confirmations during complete scrutiny. Hence, it was a case of alleged inadequate enquiry, not lack of enquiry.
Tribunal observed that PCIT’s reasoning was based mainly on absence of business income, which is legally irrelevant once business is “set-up”. Reliance was placed on judicial precedents including Western India Vegetable Products Ltd. & Dhoomketu Builders to distinguish “setting-up” from “commencement”. Further, suspicion regarding share premium or creditors without independent verification cannot justify revision.
Since PCIT failed to prove that assessment order was both erroneous & prejudicial to revenue, twin conditions of s.263 were not satisfied. Consequently, revision order was set aside & original assessment u/s 143(3) restored. Appeal allowed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
