National Stock Exchange of India Ltd Vs PCIT Tax-7 (ITAT Mumbai)
ITAT Mumbai held that invocation of revisionary proceedings under section 263 of the Income Tax Act not justified since AO has taken plausible view. Accordingly, order passed u/s. 263 set aside and appeal of assessee allowed.
Facts- Subsequent to completion of assessment u/s. 143(3) of the Income Tax Act, PCIT initiated revision proceedings u/s. 263 of the Income Tax Act. It was alleged that the assessee has contributed an amount of Rs.170 crore towards Contribution to NSCCL Core Settlement Guarantee Fund (“Core SGF”) and debited the same in the Profit & Loss account under the head “Office Expenses”, which is a contingent liability of the assessee, and therefore is not permissible deduction under section 37 of the Act. Accordingly, it was alleged that the assessment order passed allowing the contribution to the Core SGF is erroneous insofar as it is prejudicial to the interest of the revenue, as the AO failed to make relevant and meaningful inquiry as warranted by the facts of the present case.
Conclusion- Held that the statutory contribution made by the assessee to the Core SGF is allowable under section 37(1) of the Act as the said contribution has been made exclusively during the course of carrying on its business as a stock exchange. Thus, the decision of the Co- ordinate Bench of the Tribunal in the assessee’s own case cited supra further supports the conclusion reached by the AO in allowing the claim of contribution to the Core SGF. Since the view taken by the AO has also been affirmed by the Co-ordinate Bench of the Tribunal in the assessee’s own case in subsequent years, there cannot be any dispute that the same is a plausible view. Therefore, in light of the decision of the Co-ordinate Bench of the Tribunal cited supra, we are of the considered view that the learned PCIT has erred in concluding that the assessment order is based on a wrong assumption of facts and a wrong application of law. Accordingly, we are of the considered opinion that the learned PCIT erred in invoking the provisions of section 263 of the Act. Hence, the impugned order passed under section 263 of the Act is set aside, and the grounds raised by the assessee are allowed.
