In a major relief to Universal Music India, a division bench of the Bombay High Court has upheld an order of the Income Tax Appellate Tribunal (ITAT) quashing a revisional order passed under section 263 of the Income Tax Act, 1961.
The CIT initiated the revisional proceedings under section 263 of the Act on two issues, firstly, disallowance of Fringe Benefit Tax (FBT) paid of Rs.10,72,532/- included in miscellaneous expenses and not allowed by the Assessing Officer and secondly, provision of Rs.1,40,98,685/- in respect of slow moving and absolete inventories.
On appeal, the Tribunal set aside the order finding that no such issue was ever raised by CIT in the notice served upon the assessee and the assessee was not even confronted by the CIT before passing the Order dated 20th March, 2013. ITAT concluded that the said ground therefore cannot form the basis for revision of assessment order under Section 263 of the Act.
On further appeal, Justices K.R. Shriram and N.R. Borkar has held that no issue was raised by the CIT in respect of particulars of payment made to persons specified under Section 40A(2)(b) of the Act and even the show cause notice is silent about that.
“In our view, the Tribunal has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analyzed and correct test is applied to decide the issue at hand, then, we do not think that question as pressed raises any substantial question of law,” the High Court held.
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