ITAT dismisses PwC’s Claim for Expenditure worth 10.63 Crores [Read Order]

PwC - Taxscan

A division bench of the Kolkata ITAT, last week dismissed an appeal filed by a Big Four Firm, Pricewaterhouse Coopers Pvt. Ltd wherein the Tribunal confirmed a revision order denying a claim for deduction of expenditure worth 10.63 rupees to the assessee.

Assessee-Company is engaged in the business of providing management consultancy services and also accounting and business advisory services. Claimed deduction of 10.63 crores in respect of expenditure incurred under the head ‘Repairs & Maintenance – Buildings’. Initially, the claim was allowed by the Assessing Officer. Subsequently, the Commissioner of Income Tax revised the order by invoking his jurisdiction under section 263 and held that the AO has not enquired the claim during the assessment. He further held that the expenditure claimed by the assessee amounts to ‘’capital expenditure.”

Challenging the order before the appellate authorities, the assessee maintained that the expenditure were incurred on rented / leased premises for which, all expenditure in respect of repairs are allowable under the Income Tax Act. Further, the expenditure incurred on account of renovation, interior decoration, etc ought to be considered as an allowable revenue expenditure as such expenses were required to keep the office building and premises not only operational but also in presentable and good condition, which is necessary for smooth and efficient running of the business of the assessee.

While answering the question on the invoking of revisional jurisdiction of the CIT, the bench noted that during the course of original assessment, no query was raised by the AO with regard to the issue of repairs and maintenance of buildings. “We find that absolutely no query was raised or any enquiry was carried out by the ld AO in this regard. Hence this is a clear case of lack of enquiry on the part of the ld AO for which the revisionary jurisdiction under Section 263 of the Income Tax Act could be invoked by the ld CIT.”

Upholding the order of the Commissioner, the bench noted that “when the requisite enquiry that is warranted in the facts of the instant case was not made, then that itself would make the order of the ld AO erroneous and prejudicial to the interest of the revenue. Hence we do not find any infirmity in the revision order passed by the ld CIT u/s 263 of the Income Tax Act.”

Read the full text of the Order below.

taxscan-loader