Case: Commissioner of Income-Tax-I, Pune Vs. Bramha Bazar Hotels Limited

3. During the Assessment Yeare had debited a sum of Rs.3.45 Crores to its profit and loss account. This being expenditure incurred towardsof shares. The Assessing Officer by his order dated 29th December, 2009 passed under Section 143(3) of the Act accepted the same while determining the taxable income.4. Thereafter, on 31st March, 2011, the Commissioner of Income Tax in exercise of its powers under Section 263 of the Act passed an order in Revision, setting aside the Assessment Order dated 29th December, 2009 for the Assessment YearFurther the inter alia, directed the Assessing Officer to add an amount of Rs.3.45 Crores to the taxable income of the Respondent as it is capital expenditure and cannot be allowed as deduction.5. On further appeal, the Tribunal by the impugned order dated 28th September, 2012 recorded the fact that there was a dispute between two groups of share holders in theCompany from the yearonwards. The dispute between the share holders was carried to the Company Law Board in proceedings for oppression and mismanagement. This dispute between the warring groups affected the business of theresulting in an arrangement being reached before the Company Law Board by which theck shares of one of the group of share holders and cancel the same. This was done by theto only ensure that its business can prosper. The extra amount paid over and above the face value of the shares to the departing group of share holders was debited as revenue expenditure. The Tribunal by the impugned order held that the issue arising before it stands covered by its own decisions in Echjay Industries Ltd. v. Dy. CIT [2004] 88 TTJ (Mum.) 1089   and in Chemosyn Ltd. v. Asstt. CIT [2012] 139 ITD 68/25 taxmann.com 325 (Mum.) rendered on 7th September, 2012.Where on an identical facts, the Tribunal held that the amount paid by the Company to one of the warring group of share holders toand cancel the shares was in the nature of Revenue expenses. Therefore, the impugned order took a view that the decision taken by the Assessing Officer could not be said to be erroneous for the purpose of exercising powers of revision under Section 263 of the Act.

Court's reasoning:
7. We find that the Commissioner of Income Tax while exercising the power of revision under Section 263 of the Act has specifically recorded that the facts situation in the case of Echjay Industries Ltd. (supra) as well as in the present case are similar. Nevertheless he exercised his powers of revision as he was not clear whether the Revenue has accepted the order of the Tribunal in the case of Echjay Industries (supra). The memo of appeal also specifically states that the facts situation in Echjay Industries Ltd. (supra) and the present case are identical.We find that the Commissioner of Income Tax while exercising the power of revision under Section 263 of the Act has specifically recorded that the facts situation in the case of Echjay Industries Ltd. (supra) as well as in the present case are similar. Nevertheless he exercised his powers of revision as he was not clear whether the Revenue has accepted the order of the Tribunal in the case of Echjay Industries (supra). The memo of appeal also specifically states that the facts situation in Echjay Industries Ltd. (supra) and the present case are identical.In view of the above, it cannot be said that the order of the Assessing Officer is erroneous for the purpose of exercising of power under Section 263 of the Act. In any event, at the very highest, the issue would be a debatable issue and in these circumstances, the exercise of power by the Commissioner of Income Tax under section 263 of the Act is not valid. Accordingly, we find no substantial question of law arises for our consideration.