ABNL INVESTMENT LIMITED,MUMBAI vs. PRINCIPAL COMMISSIONER OF INCOME TAX -5, MUMBAI

आयकर अपील�य अ�धकरण, मुंबई पीठ�, मुंबई INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI BENCH: A BEFORE SMT. BEENA PILLAI, HON’BLE JUDICIAL MEMBER AND SHRI JAGADISH, HON’BLE ACCOUNTANT MEMBER

ITA 3399/MUM/2025 िनधा�रण वष�/Assessment Year: 2020-21) ABNL INVESTMENT PRINCIPAL LIMITED COMMISSIONER OF INCOME TAX -5 A-4, ADITYA BIRLA CENTRE ROOM NO. 515, 5TH S. K AHIRE MARG, WORLI, FLOOR, AAYAKAR Vs. MUMBAI-400030, BHAVAN, M.K ROAD, MAHARASHTRA MUMBAI-400020, MAHARASHTRA अपीलाथ� Appellant ��थ� Respondent

Permanent Account Number of AAACL2757J Assessee:

अपीलाथ� �ारा/Appellant Shri Ronak Doshi, CA & represented by: Shri Riken Shah, CA ��थ� �ारा/Respondent Shri Manoj Kumar (CIT- DR) represented by:

सुनवाई की तारीख / Date of conclusion of hearing: 01-Jul-2026 घोषणा की तारीख / Date of pronouncement: 17/08/2026 आदेश / ORDER PER SMT. BEENA PILLAI, JUDICIAL MEMBER: Present appeal arises out of the order dated 17/03/2025 passed by Ld. Principal Commissioner of Income of Tax, Mumbai – 5 [hereinafter referred to as “Ld. PCIT”], for AY 2020-21, on the following grounds of appeal:- 1

ITA 3399/MUM/2025 ABNL INVESTMENT LIMITED “GROUND NO. I: IMPUGNED ORDER PASSED BY INVOKING PROVISIONS OF SECTION 263 OF THE ACT IS BAD IN LAW: 1.1 On the facts and in the circumstances of the case and in law, Hon'ble Pr. CIT erred in invoking the provisions of Section 263 of the Act and cancelling the order passed u/s 143(3) r.w.s. 144B of the Act as erroneous and prejudicial to the interest of the revenue. 1.2 The Appellant prays that impugned order be held as bad-in law and thereby be quashed. WITHOUT PREJUDICE TO GROUND NO. I: GROUND NO. II: HOLDING THAT THE BUSINESS EXPENDITURE OF THE APPELLANT IS NOT ALLOWABLE UNDER SECTION 37 OF THE ACT: 2.1 On the facts and in the circumstances of the case and in law, Hon'ble Pr. CIT erred in holding that in absence of business and business income during the year under consideration, the expenditure incurred to maintain the legal structure of the Appellant company should not be allowed u/s 37 of the Act. 2.2 On the facts and in the circumstances of the case and in law, Hon'ble Pr. CIT erred in holding that the vacant land of the Appellant is not used for business purpose and therefore no business expenditure can be claimed against it. 2.3 The Appellant prays that it be held that the business expenditure of Rs. 19,27,360/- claimed by the Appellant is allowable u/s 37 of the Act. GENERAL: The Appellant craves leave to add, amend, modify, rescind, supplement or alter any of the Grounds stated hereinabove, either before or at the time of hearing of this appeal.”

The assessee is engaged in the business of making investments in securities and immovable properties. During the relevant previous year, the assessee had leased out several immovable properties and also held certain vacant plots of land which were not let out during the year, along with one property that was under development.

2.1. The case was selected for complete scrutiny, inter alia, to examine the substantial investments made by the assessee in non- 2

ITA 3399/MUM/2025 ABNL INVESTMENT LIMITED business assets, investments in immovable properties and the deduction claimed under Chapter VI-A.

2.2. During the course of the assessment proceedings, the assessee submitted that it had made investments in debt mutual fund units and in immovable properties forming part of a development project at Belapur. It was further submitted that the assessee had claimed deduction u/s 80GGB amounting to Rs.4,00,00,000/-, being the contribution made to political parties through the purchase of electoral bonds under the Electoral Bond Scheme, 2018, notified by the Ministry of Finance, Department of Economic Affairs, vide Notification dated 02/01/2018.

2.3. Upon considering the details and documentary evidences furnished by the assessee, the Ld. AO completed the assessment by accepting the total income returned by the assessee at Rs.7,56,992/-. Subsequently, on verification of the assessment records, the Ld. PCIT observed that the assessee is a wholly owned subsidiary of Grasim Industries Limited and had disclosed income of Rs.3,66,08,639/- under the head "Income from House Property" and Rs.60,75,711/- from investments. The Ld. PCIT noted that no business activity was reflected from the balance sheet and that the tax auditor had reported that there was no inventory or business transactions during the relevant previous year. The Ld. PCIT was, therefore, of the prima facie view that the business expenditure claimed by the assessee ought to have been disallowed, as there was no business activity during the year.

2.4. The Ld. PCIT further observed that, while computing income from house property, the assessee had claimed the statutory deduction u/s 24 of the Act and had also claimed business

ITA 3399/MUM/2025 ABNL INVESTMENT LIMITED expenditure amounting to Rs.77,42,836/-, out of which the assessee had itself disallowed a sum of Rs.41,92,052/-.

2.5. The Ld. PCIT was of the prima facie opinion that the aforesaid issues had not been properly examined by the Ld. AO during the course of the assessment proceedings. According to the Ld. PCIT, the assessment order dated 07/09/2022 was, therefore, erroneous insofar as it was prejudicial to the interests of the Revenue within the meaning of section 263 of the Act. Accordingly, the Ld. PCIT issued a show-cause notice u/s 263 of the Act dated 20/02/2025 to the assessee, the contents of which are reproduced hereunder:

ITA 3399/MUM/2025 ABNL INVESTMENT LIMITED

2.6. In response to the aforesaid show-cause notice, the assessee filed its reply dated 04/03/2025, wherein it was submitted that all the requisite details pertaining to the expenditure claimed against the business income as well as the deduction claimed u/s 24 of the Act had been duly furnished before the Ld. AO during the assessment proceedings.

2.7. It was submitted that the Ld. AO had specifically called upon the assessee to furnish, inter alia, the details regarding the nature of business activities carried on during the year, details of depreciation claimed, copies of the Annual Reports, details of tax deducted at source on remittances in respect of the expenditure incurred, details of immovable properties, copy of Form 26AS, and the details relating to the deduction claimed u/s 80GGB of the Act. The assessee submitted that all the requisite details and 5

ITA 3399/MUM/2025 ABNL INVESTMENT LIMITED documentary evidences were furnished vide replies dated 15/11/2021, 23/11/2021, and 27/07/2022.

2.8. It was contended that, after examining the aforesaid details and evidences, the Ld. AO accepted the return of income and allowed the business expenditure of Rs.19,27,360/- claimed by the assessee. It was, therefore, submitted that the conditions precedent for invoking the provisions of section 263 of the Act were not satisfied, as the issues sought to be revised had been specifically examined by the Ld. AO during the course of assessment proceedings.

2.9. The assessee further contended that the Ld. AO had adopted a plausible view after conducting the necessary enquiries and examining the material placed on record. Merely because the Ld. PCIT held a different opinion on the same set of facts, the assessment order could not be treated as erroneous and prejudicial to the interests of the Revenue so as to warrant revision u/s 263 of the Act.

3.1. The Ld. AR also relied upon the decision of the Hon'ble Bombay High Court in CIT v. Gabriel India Ltd. (1993) 203 ITR 108 6

ITA 3399/MUM/2025 ABNL INVESTMENT LIMITED (Bom.), wherein it was held that where the Assessing Officer has made enquiries and adopted one of the permissible views, the provisions of section 263 of the Act cannot be invoked merely because the Commissioner considers that a different view ought to have been taken.

3.2. The assessee further submitted that the expenditure incurred towards maintaining the corporate structure and keeping the company operational is allowable as business expenditure, notwithstanding the fact that no active business income was earned during the relevant previous year.

3.3. Insofar as the deduction claimed u/s 24 of the Act was concerned, the assessee submitted that it was the owner of certain vacant plots of land from which no rental income was derived during the year under consideration. The assessee further submitted that no rental income had been earned from the aforesaid vacant plots of land during the year under consideration. It was contended that, had the properties been let out, the receipts would have been taxable under the relevant provisions of the Act. The assessee submitted that it had incurred expenditure towards manpower services, property tax and other incidental expenses for the maintenance of the said properties. It was further contended that these expenses, together with other routine administrative expenditure incurred for maintaining the corporate existence of the company, were allowable as business expenditure u/s 37 of the Act.

3.4. In support of its contentions, the assessee placed reliance on the decision of the Hon'ble Supreme Court in CIT v. Greenworld Corporation reported in [(2009) 314 ITR 81 (SC) / 181 Taxman 111

ITA 3399/MUM/2025 ABNL INVESTMENT LIMITED (SC)], wherein the Hon'ble Supreme Court reiterated that the revisional jurisdiction u/s 263 cannot be exercised merely because another view is possible on the issue.

3.4.1. The assessee also relied upon the decisions of the Hon'ble Supreme Court in Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR 83 (SC) and CIT v. Max India Ltd. [(2007) 295 ITR 282 (SC), in support of its contention that where the Assessing Officer has adopted one of the possible views after due enquiry, the assessment order cannot be revised u/s 263 merely because the Ld. PCIT holds a different opinion.

3.5. After considering the submissions of the assessee and the material available on record, the Ld. PCIT observed and held as under:

“5. The submissions of the assessee have been considered carefully but are not found to be acceptable for the following reasons:-

5.1 The legal position regarding erroneous order being passed where even enquiries have been conducted have been summed up in the following case laws viz.

(i) Gee Vee Enterprises .Additional Commissioner of Income Tax [1975] 99 ITR 375 (DELHI), (ii) Commissioner of Income Tax- v/s. Nagesh Knitwears(P.) Ltd [2012] 22 taxmann.com 309(Delhi)).

5.1.1 In the case of Gee Vee Enterprises v. Additional Commissioner of Income- tax [1975] 99 ITR 375 (DELHI), upheld by the Hon'ble Supreme Court in Malabar Industrial Co. Ltd. v. Commissioner of Income-tax [2000] 109 Taxman 66 (SC), it has been held:

"The Income-tax Officer is not only an adjudicator but also an investigator. He cannot remain passive in the face of a return which is apparently in order but calls for further inquiry. It is his duty to ascertain the truth of the facts stated in the return when the circumstances of the case are such as to provoke an inquiry. The meaning to be given to the word "erroneous" in section 263 emerges out of this context. It is because it is incumbent on the Income-tax Officer to further investigate the facts stated in the return when circumstances would make such an inquiry prudent that the word "erroneous" in section 263 includes the failure to make such an inquiry. The order becomes erroneous because such an inquiry has not been made and not because there is anything wrong with the order if all the facts stated therein are assumed to be correct."

ITA 3399/MUM/2025 ABNL INVESTMENT LIMITED In this judgment the Hon'ble Delhi High Court has referred to earlier decisions of the Hon'ble Supreme Court in Rampyari Devi Sarogi v. CIT [1968] 67 ITR 84 (SC) and Tara Devi Aggarwal vs. CIT [1973] 88 ITR 323 (SC) wherein it has been held that where Assessing Officer has accepted a particular contention/issue without any enquiry or evidence whatsoever, the order is erroneous and prejudicial to the interest of the Revenue. After reference to these decisions, Hon'ble Delhi High Court observed:-

"These two decisions show that it is not necessary for the Commissioner to make further inquiries before cancelling the assessment order of the Income- tax Officer. The Commissioner can regard the order as erroneous on the ground that in the circumstances of the case the Income-tax Officer should have made further inquiries before accepting the statements made by the assessee in his return."

5.1.2 In the case of Commissioner of Income Tax-V v/s. Nagesh Knitwears (P.) Ltd [2012] 22 taxmann.com 309 (Delhi),the Hon'ble Delhi High Court distinguished the action to be taken in the following cases: One where there is total absence of enquiry or verification in contra distinction to cases where there is inquiry but the findings are incorrect/erroneous; and where there is failure to make proper or full verification or inquiry. In the first category of cases, where there is complete lack of inquiry, the matter is settled by the Hon. Supreme Court Rampyari Devi Sarogi v/s. CIT [1968] 67 ITR 84 (SC) and Tara Devi Aggarwal V/s. CIT [1973] 88 ITR 323 (SC), wherein it has been held that where Assessing Officer has accepted a particular contention/issue without any enquiry or evidence whatsoever, the order is erroneous and prejudicial to the interests of the revenue. In such type of cases, it is not necessary for the Commissioner to make further inquiries before cancelling the Assessment Order of the Income Tax Officer as explained in the case of Gee Vee Enterprises vs. Additional Commissioner of Income Tax [1975] 99 ITR 375 (DELHI). However, in cases of full inquiry or partial verification or inquiry; "the CIT has to come to the conclusion and himself decide that the order is erroneous, by conducting necessary enquiry, if required and necessary, before the order under Section 263 is passed. In such cases, the order of the Assessing Officer will be erroneous because the order passed is not sustainable in law and the said finding must be recorded. CIT cannot remand the matter to the Assessing Officer to decide whether the findings recorded are erroneous. In cases where there is inadequate enquiry but not lack of enquiry, again the CIT must give and record a finding that the order/inquiry made is erroneous. This can happen if an enquiry and verification is conducted by the CIT and he is able to establish and show the error or mistake made by the Assessing Officer, making the order unsustainable in Law. In some cases possibly though rarely, the CIT can also show and establish that the facts on record or inferences drawn from facts on record per se justified and mandated further enquiry or investigation but the Assessing Officer had erroneously not undertaken the same. However, the said finding must be clear, unambiguous and not debatable."

5.1.3 It has been held by the Hon’ble Supreme Court in the case of Malabar Industrial Co. Ltd. v/s. CIT [2003] 243 ITR 83 (SC) that incorrect assumption of facts or incorrect application /of law will satisfy the requirement of the order being erroneous. In the same category falls, orders passed without applying the principles of natural justice or without application of mind".

5.1.4 In view of the above, it is clear that the decision of the Assessing Officer in the present case is erroneous on merits as well as the fact that he has not conducted further enquiries, when facts on record per se justified and mandated further inquiry or investigation. He has accepted the submissions made by the 9

ITA 3399/MUM/2025 ABNL INVESTMENT LIMITED assessee without a demur. Hence action u/s 263 of the Act is warranted in this case.

5.2 On perusal of the details filed by the assessee it is seen that the assessee has no inventory or has not undertaken any business transactions as reflected from Balance Sheet and has only declared income under the head "Income from House property' and 'Income from Other sources'.

5.2.1 Further, the assessee has incurred expenses which are not related to renting or investments, but which are incurred to maintain legal structure of company and claimed such expenses in business u/s. 37 of the Act without showing any corresponding business income. The assessee in para 4.7 of its submission dated 04.03.2025 has stated it is holding a vacant plot of land and, although the company has not earned any rental income on the said vacant plot of land in the year under consideration, it has incurred expenses towards manpower availing services,~ property tax, etc. for the said land. The assessee has further stated that since these expenses along with other routine expenses are incurred for continued existence of the company the same are allowable as expenditure as per the provisions of section 37 of the Act. It is however seen that the provisions of the Act distinguish between various types of income such as Business Income, House Property Income and Income from Investments. Further, contention of the assessee that the expenditure incurred towards manpower services, property tax, etc. for the vacant land is allowable business expenditure is also not correct since the vacant land in question is not being used for any business purpose whatsoever. Moreover, the vacant land is a capital asset and as such no business expenditure can be claimed against the same.

3.6. The Ld. PCIT also placed reliance on the following judicial precedents in support of the assumption of revisional jurisdiction u/s 263 of the Act and the action of setting aside the assessment order:

• CIT vs. Amitabh Bachchan [2016] 384 ITR 200 (SC) • Thalibai F. Jain vs. ITO [1975] 101 ITR 1 (Kar.) • CIT vs. Pushpa Devi [1987] 164 ITR 639 (Pat.) • Rajmandir Estates Private Limited vs. Pr. CIT (386 ITR 162) (Cal.)

ITA 3399/MUM/2025 ABNL INVESTMENT LIMITED 3.7. The Ld. PCIT, therefore, held that the assessment order dated 07/09/2022, passed u/s 143(3) r.w.s. 144B of the Act, was erroneous insofar as it was prejudicial to the interests of the Revenue within the meaning of section 263 of the Act. Accordingly, the Ld. PCIT set aside the assessment order and directed the Ld. AO to reframe the assessment after conducting the necessary enquiries and verifications as warranted by the facts of the case and after affording adequate opportunity of being heard to the assessee, by passing a speaking order.

Aggrieved by the revisional order passed u/s 263 of the Act, the assessee is in appeal before this Tribunal.

4.1. Without prejudice to the above, and on the first principle itself, the Ld. AR submitted as under:

The Ld. AR submitted that the assumption of revisional jurisdiction u/s 263 of the Act was wholly unsustainable, as the conditions stipulated in Explanation 2 to section 263 were not satisfied in the facts of the present case. It was contended that, even after the insertion of Explanation 2 by the Finance Act, 2015 with effect from 01/06/2015, the revisional jurisdiction can be exercised only in cases where there is a complete lack of enquiry by the Assessing Officer. Where the Assessing Officer has conducted such enquiries and verification as a reasonable and prudent officer would ordinarily undertake, the order cannot be 11

ITA 3399/MUM/2025 ABNL INVESTMENT LIMITED treated as erroneous merely because the Ld. PCIT considers the enquiry to be inadequate. Reliance was placed on judicial precedents holding that section 263 can be invoked only in cases of "no enquiry" and not "inadequate enquiry".

4.2. The Ld. AR further submitted that the present case does not fall within clauses (a) or (b) of Explanation 2 to section 263. It was contended that the Ld. AO was fully aware of the nature of the assessee's business activities and the claims made by the assessee, including the deduction u/s 24 of the Act and the business expenditure claimed u/s 37 of the Act. The assessee had, vide letter dated 05/11/2021, furnished the details regarding the nature of income earned during the relevant previous year together with the computation of income explaining the deductions claimed while computing the total taxable income.

4.3. It was further submitted that the assessee had also furnished complete details regarding tax deducted at source on the expenditure incurred during the year. The Ld. AO had specifically called for these details in order to verify the applicability of section 40(a) of the Act. According to the Ld. AR, such enquiry itself demonstrates that the Ld. AO had examined the allowability of the expenditure claimed u/s 37 of the Act, since the provisions of section 40(a) become relevant only where the expenditure is otherwise allowable while computing business income. Therefore, after making due enquiries, the Ld. AO consciously accepted the claim of business expenditure.

4.4. The Ld. AR also relied upon the decision of the co-ordinate Bench of the Mumbai Tribunal in the case of Grasim Industries Ltd. reported in [(2024) 158 taxmann.com 686 (Mumbai - Trib.)], wherein,

ITA 3399/MUM/2025 ABNL INVESTMENT LIMITED on similar facts, it was held that where adequate enquiries had been conducted by the Assessing Officer and one of the possible views had been adopted after considering the material on record, the revisional jurisdiction u/s 263 could not be invoked merely because the Ld. PCIT held a different opinion. The Tribunal had also observed that where the revision proceedings were initiated merely on the basis of an audit objection without any independent application of mind by the Ld. PCIT, the assumption of jurisdiction u/s 263 was unsustainable.

4.5. Summarising the above submissions, the Ld. AR contended that the Ld. AO had made adequate enquiries during the assessment proceedings, called for all the relevant details, applied his mind to the material placed on record and, after being satisfied with the explanations furnished by the assessee, accepted the returned income. Consequently, clauses (a) and (b) of Explanation 2 to section 263 had no application to the present case.

4.6. The Ld. AR further submitted that clauses (c) and (d) of Explanation 2 were also inapplicable, as there was nothing on record to suggest that the assessment order had been passed in contravention of any order, direction or instruction issued by the CBDT u/s 119 of the Act or contrary to any binding decision of the Hon'ble Jurisdictional High Court or the Hon'ble Supreme Court. It was also pointed out that even the show-cause notice issued by the Ld. PCIT did not allege violation of either of the aforesaid conditions. Accordingly, it was submitted that the assumption of jurisdiction u/s 263 of the Act was without authority of law and liable to be quashed.

ITA 3399/MUM/2025 ABNL INVESTMENT LIMITED 4.7. The Ld. AR further placed reliance on the decision of the Hon'ble Supreme Court in Malabar Industrial Co. Ltd. v. CIT [(2000) 243 ITR 83 (SC)], and submitted that the twin conditions prescribed u/s 263, namely that the assessment order should be both erroneous and prejudicial to the interests of the Revenue, must co- exist before revisional jurisdiction can be assumed. It was contended that where the Assessing Officer has adopted one of the permissible views after conducting the necessary enquiries, the order cannot be treated as erroneous merely because the Ld. PCIT holds a different opinion or considers that a more elaborate enquiry ought to have been made. Accordingly, it was submitted that the impugned order passed u/s 263 is contrary to the ratio laid down by the Hon'ble Supreme Court in Malabar Industrial Co. Ltd. (supra) and is liable to be quashed.

4.8. Per contra, the Ld. DR strongly supported the impugned order passed by the Ld. PCIT u/s 263 of the Act. It was submitted that the Ld. AO had failed to conduct any meaningful enquiry during the original assessment proceedings regarding the allowability of the business expenditure claimed by the assessee, despite the fact that no business activity had been carried on and no business income had been earned during the relevant previous year. According to the Ld. DR, the assessment order had been passed without examining the allowability of the expenditure claimed u/s 37 of the Act, thereby rendering the assessment order erroneous insofar as it was prejudicial to the interests of the Revenue.

4.9. The Ld. DR further submitted that the Ld. PCIT had rightly exercised the revisional jurisdiction u/s 263 of the Act by directing the Ld. AO to conduct the necessary enquiries and verification. In support of the above contentions, reliance was placed on the 14

ITA 3399/MUM/2025 ABNL INVESTMENT LIMITED decision of the Hon'ble Bombay High Court in KEC International Ltd. v. DCIT [(2025) 171 taxmann.com 54 (Bom.)] and the decision of the Hon'ble Karnataka High Court in CIT v. Alloy Steels reported in [(2013) 36 taxmann.com 514 (Kar.)], to contend that where the Assessing Officer fails to make the enquiries warranted by the facts of the case, the revisional jurisdiction u/s 263 of the Act is validly invoked.

We have perused the submissions advanced by both sides in light of the records placed before us.

Nature of Expense Amount Audit Fees 173,005 526,791 Property tax on properties not let out Vacant Land Rates & Taxes - ROC Fees, Profession Tax etc. 42,436 254,734 Security expenses of property not let out Vacant Land Legal and professional fees (GST audit, TDS compliances 87,800 etc.) Directors Sitting Fees 255,000 190,592 Electricity charges (for property not let out) Vacant Land Interest expense 11,043 Bank Charges 5,504 Annual Custody Fees - NSDL 75,000 Miscellenous expense 13,077 15

ITA 3399/MUM/2025 ABNL INVESTMENT LIMITED Nature of Expense Amount Amount disallowed u/s. 43B in AY 19-20 - Allowed on payment basis in AY 20-21 (Property tax on properties not 284,808 let out) (computation of income of AY 19-20 attached) Education cess (refer note 1) 7,570 Total 1,927,360

5.1. The Ld. AR invited our attention to the details of the expenditure appearing in the aforesaid table and submitted that the expenses were incurred towards the maintenance of the vacant land held by the assessee. It was further submitted that a sum of Rs.2,84,808/-, claimed on payment basis, had been suo motu disallowed by the assessee u/s 43B of the Act while filing the return of income for the relevant assessment year.

5.2. The Ld. AR further drew our attention to page 57 of the paper book, containing the computation of income, and submitted that the aforesaid expenditure had been claimed as a business loss, which was duly examined and accepted by the Ld. AO while completing the assessment. It was, therefore, contended that all the relevant particulars and supporting details pertaining to the impugned expenditure had been furnished before the Ld. AO during the assessment proceedings. After examining the material placed on record and conducting the requisite enquiries, the Ld. AO had accepted the claim by taking one of the plausible views permissible under the provisions of the Act. Accordingly, it was submitted that the assumption of revisional jurisdiction by the Ld. PCIT u/s 263 of the Act was not justified merely because he entertained a different opinion on the allowability of the expenditure.

ITA 3399/MUM/2025 ABNL INVESTMENT LIMITED 6. The limited issue for our consideration is whether the Ld. PCIT was justified in invoking the revisional jurisdiction u/s 263 of the Act by holding that the assessment order passed by the Ld. AO was erroneous insofar as it was prejudicial to the interests of the Revenue on the ground that the allowability of business expenditure claimed by the assessee had not been examined.

6.1. Before adverting to the facts of the present case, it is apposite to refer to the settled legal position governing the exercise of powers u/s 263 of the Act. The Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. v. CIT [(2000) 243 ITR 83 (SC)] has categorically held that the assumption of jurisdiction u/s 263 is permissible only when the twin conditions, namely, (i) the order of the Assessing Officer is erroneous; and (ii) such error is prejudicial to the interests of the Revenue, co-exist. The Hon'ble Supreme Court further held that where the Assessing Officer adopts one of the courses permissible in law or where two views are possible and the Assessing Officer adopts one such view, the order cannot be treated as erroneous merely because the Commissioner does not agree with the view so adopted.

6.2. We note that Explanation 2 to section 263, inserted by the Finance Act, 2015, only expands the circumstances in which an order may be deemed to be erroneous. However, the said Explanation does not dispense with the requirement that the Ld. PCIT must demonstrate that the Assessing Officer had failed to make enquiries or verification which were called for in the facts of the case. Where the Assessing Officer has conducted the necessary enquiry, examined the material placed before him and thereafter taken a conscious and plausible view, the revisional jurisdiction cannot be exercised merely because the Ld. PCIT is of the opinion 17

ITA 3399/MUM/2025 ABNL INVESTMENT LIMITED that a further or more elaborate enquiry ought to have been conducted.

6.3. In the facts before us, we find that the assessment records belie the observations of the Ld. PCIT that no enquiry had been conducted by the Ld. AO. The notices issued during the course of assessment proceedings specifically required the assessee to furnish, inter alia, the details regarding the nature of business activities carried on during the year, details of expenditure claimed, depreciation, tax deducted at source on the expenditure incurred, details of immovable properties, Annual Reports, Form 26AS and the deduction claimed u/s 80GGB of the Act. In response thereto, the assessee furnished detailed replies dated 15/11/2021, 23/11/2021 and 27/07/2022, enclosing the complete details and documentary evidences called for by the Ld. AO.

6.4. From the material placed before us, including the details forming part of the paper book, we also find that the assessee had furnished a complete break-up of the expenditure claimed, the computation of income, and the details explaining that the impugned expenditure represented routine administrative expenses incurred for maintaining the corporate existence of the company and the vacant immovable properties held by it. We further note that a sum of Rs.2,84,808/- had been suo motu disallowed by the assessee u/s 43B of the Act, thereby indicating that the computation of the expenditure had also been examined by the assessee itself before filing the return.

6.5. The contention of the Revenue that no enquiry whatsoever had been conducted by the Ld. AO, therefore, does not find support from the assessment records. Once the Assessing Officer had

ITA 3399/MUM/2025 ABNL INVESTMENT LIMITED specifically called for the relevant details, examined the replies furnished by the assessee and thereafter accepted the claim, the order cannot be branded as erroneous merely because the Ld. PCIT is of the opinion that a different conclusion ought to have been arrived at.

6.6. We also find merit in the contention of the Ld. AR that the impugned expenditure had consistently been allowed in the earlier assessment years and no disallowance had been made in the scrutiny assessments completed for those years. The Revenue has not brought on record any change either in facts or in law warranting a different treatment during the year under consideration. This also fortifies the conclusion that the Ld. AO had adopted a plausible and consistent view while completing the assessment.

ITA 3399/MUM/2025 ABNL INVESTMENT LIMITED 7.1. Similarly, the decision of the Hon'ble Karnataka High Court in CIT v. Alloy Steels (supra) is also distinguishable. In the said case, the assessment order was found to have been passed without due application of mind to the relevant facts. In the present case, however, the material on record clearly establishes that the Ld. AO had applied his mind to the issue after calling for the necessary details and verifying the explanation furnished by the assessee. Moreover, the expenditure under consideration had consistently been accepted by the Revenue in the preceding assessment years during scrutiny proceedings. Therefore, the factual foundation on which the aforesaid decision proceeds is entirely absent in the present case.

7.2. In view of the foregoing discussion, we are of the considered opinion that the Ld. AO had conducted the enquiries warranted by the facts of the case, examined the material placed before him and thereafter taken a conscious and plausible view in allowing the expenditure claimed by the assessee. Merely because the Ld. PCIT holds a different opinion regarding the allowability of the expenditure, the assessment order cannot be held to be erroneous insofar as it is prejudicial to the interests of the Revenue so as to justify invocation of section 263 of the Act.

In view of the foregoing observations, Ground No. 1 raised by the assessee is allowed and the impugned order passed by the Ld. PCIT u/s 263 of the Act is hereby quashed.

ITA 3399/MUM/2025 ABNL INVESTMENT LIMITED framed in pursuance thereof cannot survive. Accordingly, adjudication of Ground No. 2 has become purely academic and is, therefore, not considered. The same is rendered infructuous.

In the result, appeal filed by assessee is allowed.

Order pronounced in the open court on 17/08/2026.

Sd/- Sd/- JAGADISH BEENA PILLAI ACCOUNTANT MEMBER JUDICIAL MEMBER

Mumbai Dated: 17/08/2026 SC, Sr. P.S.

ITA 3399/MUM/2025 ABNL INVESTMENT LIMITED Copy to: ABNL INVESTMENT LIMITED , A-4, ADITYA BIRLA CENTRE S. K 1 AHIRE MARG, WORLI, MUMBAI-400030, MAHARASHTRA PRINCIPAL COMMISSIONER OF INCOME TAX -5, 2 ROOM NO. 515, 5TH FLOOR, AAYAKAR BHAVAN, M.K ROAD,, MUMBAI-400020, MAHARASHTRA 3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE