No Sec. 263 revision if invoice of AY 2015-16 accounted in AY 2016-17 as tax rates are same: HC

Case Details: PCIT vs. Britannia Industries Limited - [2022] 145 taxmann.com 618 (Calcutta)

Judiciary and Counsel Details

• • T.S. Sivagnanam & Hiranmay Bhattacharyya, JJ.
  • Amit Sharma, Adv. for the Appellant.
  • R.K. Muraka, Sr. Adv. Ms Sutapa Roy Choudhury & Ms Aratrika Roy, Advs. for the Respondent.

Facts of the Case

Assessee-company filed its return of income for the Assessment Year 2016-17 and the assessment was completed by the Assessing Officer (AO). Later, the Principal Commissioner of the Income Tax (PCIT) invoked section 263 on the ground that the assessee claimed advertisement expense which was a prior period item. Such expense was related to Assessment Year 2015-16.

The assessee approached the Tribunal against section 263 revision and got relief. Aggrieved-PCIT filed the instant appeal before the Calcutta High Court.

The assessee pointed out that such expenses were not claimed in Assessment Year 2015-16 as the assessee was not able to obtain the essential documents from the payee. Such documents were provided in the Assessment year 2016-17 and hence the assessee accounted for the bill only during that Assessment Year.

High Court Held

The Calcutta High Court held that the Tribunal recognized that the non-resident’s invoices (payee) for advertisement expenses in June 2014 were accepted as a liability and recognized for payment in the current year because the non-resident provided the required documents (such as TRC and no PE certificate) only during the current assessment year.

Further, there was no impact on revenue and no harm to the revenue since the tax rate applicable to the assessee during the assessment year 2015-2016 (when the invoices were issued) and the tax rate applicable during the assessment year 2016-2017 (when the invoices were accounted and paid) were the same.

Therefore, there was no basis for PCIT to invoke jurisdiction under section 263.