ANHEUSER BUSCH INBEV INDIA LTD.,MUMBAI vs. PR CIT,CIRCLE-1, MUMBAI

O R D E R PER S. RIFAUR RAHMAN (AM)

1. These appeals are filed by the assessee against different orders of the Learned Principal Commissioner of Income Tax, Mumbai-1 [hereinafter in short “Pr.CIT”] dated 31.03.2021 for the A.Ys. 2013-14 and 2014-15, passed u/s. 263 of the Act.

3. Brief facts of the case are that, the original return of income was filed by the assessee for A.Y. 2013-14 on 29.11.2013, declaring total income at ₹.(-) 81,27,45,632/-. The case was selected for scrutiny and assessment was completed u/s. 143(3) r.w.s. 144C(13) of the Income-tax Act, 1961 (for short “Act”) on 30.10.2017 thereby making certain additions/disallowances aggregating to ₹.48,10,85,765/- and assessing the total income at ₹.(-) 33,16,59,867/-. Ld. Pr.CIT perused the assessment records and observed that the Assessing Officer while completing assessment has allowed the ‘advertisement and publicity expenses amounting to ₹.107,07,17,247/-. He observed that Advertising alcoholic beverages has been banned in India as per the Cable Television Network (Regulation) Amendment Bill which came into effect on 8th September 2000. The law is very clear that if the expenditure is an offence or prohibited by law, then it shall not be allowed as an expenditure u/s.37(1) of the Act by virtue of insertion of explanation to Section 37 of the Act by Finance Act, 1998 w.e.f. 01-04-1962. He observed that the Assessing Officer without appreciating the legal position allowed the 3 & 942/MUM/2021 (A.Ys: 2013-14 & 2014-15) M/s. Anheuser Busch InBev India Ltd., ‘advertisement and publicity expenses’ amounting to ₹.107,07,17,247/-. Accordingly, he came to the conclusion that Assessment Order passed on 30.10.2017, u/s.143(3) r.w.s. 144C(13) of the Act for A.Y. 2013-14 is erroneous but also prejudicial to the interests of the Revenue. Hence he issued show cause notice u/s.263 of the Act dated 05.03.2021 to the assessee.

4. In response assessee company filed detailed submissions vide letter dated 17.03.2021. Ld. Pr.CIT observed that, the assessee in its submissions has stated that, revisionary assessment proceedings cannot be initiated unless the conjunctive conditions of Sec. 263 of the Act are satisfied. Further, it is stated that, revision proceedings are not valid where Assessing Officer has duly examined all the records at the time of assessment proceedings with due application of mind and revisionary assessment proceedings cannot be initiated on the possibility of further enquiry. Assessee relying on various judicial pronouncements submitted that the company has not incurred any advertisement and publicity expenditure for any purpose which is prohibited by law. No advertisement expenses are incurred for sale of alcoholic liquor by the company at 4 & 942/MUM/2021 (A.Ys: 2013-14 & 2014-15) M/s. Anheuser Busch InBev India Ltd., platforms which is prohibited by law. Further, assessee submitted in the same letter dated 17.03.2021 as under: - “Without prejudice to the above, the company submits that it has not incurred any advertisement and publicity expenditure for any purpose which is prohibited by law. ‘Other expenditure’ of Rs.86,43,33,466/- debited to the advertisement and publicity head in the profit and loss account are by no stretch of imagination in that nature of advertisement in television media and is therefore, not prohibited under the regulations of the Cable TV Laws. The same have been incurred wholly and exclusively for the purpose of expenditure u/s.37 of the Act. Further, with respect of the expenditure of Rs.20,63,83,780/- incurred for advertisement of non-alcoholic products in Television Media, we wish to humbly submit that they are regulated under the provisions of the Cable TV Laws and are duly permitted. This is evident from the fact that no adverse action has been taken by any regulatory authority for airing the promotional films of non-alcoholic products made by the assessee in the television media”

5. After considering the detailed submissions of the assessee, Ld. Pr.CIT rejected the same and set aside the Assessment Order with the following observations: - “5.3 From the perusal of records, it can be observed that the assessee is advertising for alcoholic products under the guise of non- alcoholic beverages. Therefore, the AO should have verified the same and made disallowances accordingly. But the Assessing Officer failed to do so, making the assessment order under consideration erroneous and prejudicial to the interest of revenue. 5.4 In addition to the above, it can be observed that the assessee being in the business of mainly alcohol beverage has incurred such advertisement expenses, which are not permissible as per law and hence cannot be allowed u/s.37 of the Income Tax Act, 1961 in light of judicial pronouncement in the case of Liva Healthcare Ltd, Mumbai on 12 September, 2016 held vide 2013. Section 37 is a residuary provision. An assessee is entitled to deduction of all 5 & 942/MUM/2021 (A.Ys: 2013-14 & 2014-15) M/s. Anheuser Busch InBev India Ltd., expenditure which is wholly and exclusively laid out or expended for the purposes of the business which has not been expressly covered by any other specific provision of the Act. In order to be eligible for an allowance under this residuary provision, the following conditions are required to be fulfilled: “(i) The expenditure must not be governed by the provisions of sections 30 to 36. (ii) The expenditure must have been laid out wholly and exclusively for the purposes of the business of the assessee. (iii) The expenditure must not be personal in nature. (iv) The expenditure must not be capital in nature." The Explanation to sub-section (1) was inserted by the Finance (No. 2) Act, 1998, with retrospective effect from April 1, 1962, which reads thus: “Explanation.- For the removal of doubts, it is hereby declared that any expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession and no deduction or allowance shall be made in respect of such expenditure.” The purpose for incorporation of this Explanation had been explained by the Central Board of Direct Taxes in Circular No. 772, dated December 23, 1998 ([1999] 235 ITR (St.) 35, 53) as under : "20. Disallowance of illegal expenses. 20.1 Section 37 of the Income-tax Act is amended to provide that any expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purposes of business or profession and no deduction or allowance shall be made in respect of such expenditure. This amendment will result in disallowance of the claims made by certain assessees in respect of payments on account of protection money, extortion, hafta, bribes, etc, as 19 ITA 904 and 945/Mum/2013 business expenditure. It is well decided that unlawful expenditure is not an allowable deduction in computation of income.”

7. It is found from the assessment records that the AO while making the impugned assessment has failed to verify the claim of assessee made towards expenditure incurred for ‘Advertisement and Publicity’ amounting to Rs.107,07,17,246/-, ignoring the legal provisions that, the expenditure if it is in an offence or prohibited by law shall not be allowed as expenditure u/s.37(1) of the Act. The advertising alcoholic beverages has been banned in India as per Cable Television Network (Regulation) Amendment Bill which come into effect on 08th September, 2000. The law is very clear that the expenditure if it is an offence or prohibited by law shall not be allowed as an expenditure u/s.37(1) of the Act by virtue of insertion of expenditure to Sec.37 of the Income tax Act, 1961 by Finance Act, 1988 w.e.f. 01.04.1962.

8. Considering the facts of this case and the submission made by the assessee, it is apparent that the assessment, made by the Assessing officer on the issues raised in the Show Cause Notice and replied by the assessee, needed examination and verification. As per explanation 2 to section 263 of the I.T. Act-For the purpose of this section , it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interest of the revenue, if, in the opinion of the Principal Commissioner or commissioner — a) the order is passed without making inquiries or verification which should have been made; b) The order is passed allowing any relief without inquiring into the claim.

1. It has also been held in many cases that the Commissioner is not necessarily required to record a final conclusion on the point on the issue in hand. An order found erroneous will generally be 7 & 942/MUM/2021 (A.Ys: 2013-14 & 2014-15) M/s. Anheuser Busch InBev India Ltd., prejudicial to the interest of revenue, if it has implication of revenue escapement.

Similarly, facts being identical Ld. Pr.CIT issued same directions for the Assessment Year 2014-15.

6. Aggrieved assessee preferred appeal before us raising following identical grounds for both the appeals under consideration: - “On the facts and circumstances of the case and in law, the learned PCIT has: On validity of the revision proceedings: 1. erred in initiating the revision proceedings under section 263 of the Act, without appreciating that section 263 of the Act cannot be invoked unless the conjunctive conditions that assessment order passed is erroneous in law as well as prejudicial to the interests of the revenue, are satisfied; 2. erred in initiating revisionary assessment proceedings under section 263 of the Act, with a view to start the fishing/ roving enquiries in the matter without establishing that the order passed by the learned Assessing Officer (“AO”) is not in accordance with law, therefore the initiation of revisionary assessment proceedings is bad in law; 3. erred in initiating revisionary assessment proceedings under 263 of the Act, without appreciating that section 263 cannot be 8 & 942/MUM/2021 (A.Ys: 2013-14 & 2014-15) M/s. Anheuser Busch InBev India Ltd., invoked in case where the view taken by the learned PCIT is based on a presumption that no enquiry or verification was made at the time of regular assessment proceedings, whereas the learned AO had made sufficient enquires, verification of the facts and submissions made by the Appellant; 4. erred in setting-aside the issue with directions to the learned AO for reframing the assessment afresh after considering prevailing law and submissions of the Appellant, without appreciating the fact that the learned AO has considered the submissions of the Assessee in the original assessment and cannot be said to be erroneous/ prejudicial to the interest of the revenue; On merits of allowability of Advertisement and Publicity expenses: 5. erred in holding that the entire advertisement and publicity expenses incurred by the Appellant are not permissible under The Cable Television Networks (Amendment) Rules, 2009 (“Cable TV Rules"), without appreciating the fact that out of the total advertisement and publicity expenditure of Rs 107,07,17,246 debited to the profit and loss account, only Rs 20,63,83,780 is governed and permitted under the Cable TV Rules, and the balance expenditure of Rs 86,43,33,466 is in the nature of sales promotion, market research, brand promotion etc. which are not regulated nor prohibited under the Cable TV Rules. 6. erred in holding that the Appellant is advertising for alcoholic products under the guise of non-alcoholic beverages without appreciating the fact that the media advertisements of the Appellant are towards non-alcoholic products which are not prohibited under any law 7. erred in holding that the Appellant being in the business of mainly alcoholic beverages has incurred such advertisement and publicity expenses which are not permissible under law and cannot be allowed under section 37 of the Act, without appreciating the fact that the expenditure incurred by the Appellant is wholly and exclusively incurred for the purpose of its regular business, which is not in violation of any law and is accordance with the principles of commercial expediency. 8. erred in directing the AO to frame a fresh assessment to verify and decide the allowability of the advertisement and publicity expenditure incurred by the Appellant under the Cable TV Rules, without appreciating that the adjudication of a contravention by the Appellant under the Cable TV Rules is outside the purview of powers

9 & 942/MUM/2021 (A.Ys: 2013-14 & 2014-15) M/s. Anheuser Busch InBev India Ltd., and functions of the learned PCIT / AO under the provisions of the Act. where there were no adverse findings by any regulatory authority under Cable TV Rules for the impugned expenditure incurred by the Assessee. Any consequential relief, to which the Appellant may be entitled under the law in pursuance of the aforesaid grounds of appeal, or otherwise, may thus be granted. The Appellant craves leave to add, alter, vary, omit, amend or delete one or more of the above grounds of appeal at any time before, or at the time of, hearing of the appeal, so as to enable the Hon'ble Tribunal to decide this appeal according to law.”

10 & 942/MUM/2021 (A.Ys: 2013-14 & 2014-15) M/s. Anheuser Busch InBev India Ltd., “Brief background 1. Anheuser Busch InBev India Limited (formerly known as SABMiller India Limited) was incorporated as a public limited company under the Companies Act, 1956 on 18 November 1988 and is primarily engaged in the business of brewing, packaging, distribution, marketing and sale of beer. Assessment proceedings 2. For the year under consideration, the Appellant filed its original return of income on 29 November 2013 declaring a loss of Rs 81,27,45,632.

3. The said return was subsequently selected for complete scrutiny by issue of a notice under section 142(1)7143(2) of the Income Tax Act, 1961 ("Act") dated 15 September 2014.

5. Specifically, the learned AO vide a notice dated 10 November 2015 sought for information relating to the major expenses debited to the trading and profit and loss account for the year. Advertisement and publicity expenditure being one of the major heads of its expenditure, the Assessee vide its letter dated 3 August 2016 filed a detailed break-up of the advertisement and publicity expenditure debited to the profit and loss account as below along with the party wise details of the expenditure incurred by the Assessee. (Refer Page No 79-93 of the paperbook for the copy of the letter dated 3 August 2016) PARTICULARS AMOUNT (RS.) Prints and Production 6,46,07,713 Media-TV/Outdoor 20,63,83,780 Media - Radio and Others 1,34,32,338 Agency Fees 4,72,82,254 Public Relations 27,96,195 Events & Promotions 18,86,62,157 Market Survey expenses 6,02,97,270 General Marketing Expenses 3,10,90,258 Trade Promotion and Advocacy 6,97,51,727 Outlet Tie-up expenses 64,76,339 POS/Signages 15,22,37,920 Merchandise/ Giveaways 93,07,428 Other marketing expenses 21,83,91,867 Total 1,07,07,17,246 11 & 942/MUM/2021 (A.Ys: 2013-14 & 2014-15) M/s. Anheuser Busch InBev India Ltd., 6. Accordingly, all the information/ documents which were relevant for making the decision on allowability of such expenditure under section 37 of the Act were in possession of the learned AO at the time of the assessment proceedings and it was well within the knowledge of the learned AO that the Company was claiming deduction for such expenditure. Post analyzing the case, and after due application of mind, the learned AO vide draft assessment order dated 19 December 2016 concluded that the disallowance is to be made on certain other issues and not towards the issue of advertisement and publicity expenditure under section 37 of the Act.

7. Further, the Appellant had claimed similar advertisement and publicity expenditure in the past years also, however, no disallowance was made by the Ld. AO/CIT on the ground that the Appellant is prohibited from advertising its products as per the Cable Television Network (Regulation) Amendment Bill.

8. Thereafter, the Assessee obtained directions from the Hon'ble Dispute Resolution Panel vide an order dated 5 September 2017 and the assessment proceedings were completed under section 143(3) read with section 144C(13) of the Act by the learned AO vide a final assessment order dated 30 October 2017 assessing the total loss of the Appellant at Rs 33,16,59,867. Proceedings under section 263 of the Act: 9. The Principal Commissioner of Income Tax -1, Mumbai (“PCIT”) vide notice dated 5 March 2021 initiated revisionary proceedings under section 263 of the Act, asking to show cause regarding the allowability of advertisement and publicity expenditure incurred by the Appellant.

11. In response to the show cause notice issued by the learned PCIT, the Appellant vide a submission dated 17 March 2021 filed a detailed objections against the initiation of revisionary proceedings as well as on the merits of the case. (Refer Page No 61-78 of the paperbook for the copy of the letter dated 3 August 2016) 12. However, the learned PCIT disregarded the submissions made by the Appellant and passed an order under 263 of the Act by setting aside 12 & 942/MUM/2021 (A.Ys: 2013-14 & 2014-15) M/s. Anheuser Busch InBev India Ltd., the order passed under section 143(3) read with rule 144C(13) of the Act dated 31 March 2021 and directed the learned AO to reframe the assessment afresh after considering prevailing law and submissions of the Appellant. Aggrieved by the said order of learned PCIT the Appellant has preferred the present appeal before your Honours. Appeal before the Hon’ble Tribunal Ground 1 to 4 - Initiation of revisionary proceedings under section 263 of the Act is without authority of law and jurisdiction Revisionary assessment proceedings cannot be initiated unless the conjunctive conditions of section 263 of the Act are satisfied 13. Section 263(1) of the Act states that: “The Principal Commissioner or The Commissioner may Call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment.” In view of the above, it is aptly clear that there are two pre-requisites for the Principal Commissioner to exercise the power of revision under section 263 of the Act:  The order passed by the AO should be erroneous; and  The error must be such that it is causes prejudice to the interests of the revenue.

19. In this view of the matter, we are of the considered opinion that firstly the A.O. has made the examination and in his opinion these expenditures were allowable. Hence, he has not made any disallowance. This is a legally permissible view. In any case, as held by the Hon’ble Apex Court in the case of Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83 (SC) and CIT vs. Max India Ltd. (2007) 295 ITR 282 (SC) if there are two views possible and the A.O. has adopted one view, with which the ld. CIT ts not in agreement, the order cannot be said to be liable to be visited with the revisionary order by the Id. CIT. Accordingly, the order under 263 passed by the Ld. CIT is hereby quashed. Accordingly, we decide the issue in favour of the assessee.  PRAVARDHAN SEEDS PVT. LTD. vs. ASSISTANT COMMISSIONER OF INCOME TAX (2019) ITA No. 667/Hyd/2017 dated 30 January 2019 (Refer Page No 127-134 of the legal paperbook)

16 & 942/MUM/2021 (A.Ys: 2013-14 & 2014-15) M/s. Anheuser Busch InBev India Ltd., 9.10 Further, in our view, no doubt, AO has not applied his mind, but, the CIT has not established how the order of AO is prejudicial to the interests of revenue. Looking at the facts submitted before us and the findings of Hon'ble Jurisdictional High Court that the seeds cannot be produced without basic agricultural activities, in our view, CIT should not stop merely on finding that the order is erroneous but also has to establish that the order of AO is prejudicial to the interests of revenue. In the given case, the only missing link is the verification of lease agreement with the farmers and activities whether it is similar to the Prabhat Agri Biotech or not. This could also be verified by Id. CIT and established that it is prejudicial to the interests of revenue. Ld. CIT has failed in this aspect. This is in line with the decision of Hon'ble Supreme Court in the case of Malabar Industrial co. Ltd., 243 ITR 83(SC) and CIT Vs. Green World Corporation 314 ITR 81 (SC). Therefore, in our view, no doubt, the assessment order is erroneous but not prejudicial to the revenue considering the case law submitted before us. As per the Hon'ble AP High court, seeds cannot be produced without basic agricultural activities. The assessee has sold the seeds and must have carried out the agricultural activities in order to produce the seeds. Hence, we set aside the order of CIT passed u/s 263 of the Act and the order of the AO is restored. Accordingly, ground raised by the assessee are allowed.

16. In view of the above, it is clear that twin conditions of order being ‘erroneous’ and ‘prejudicial to the interests of the revenue’ are to be cumulatively satisfied to invoke proceedings under section 263 of the Act. Revisionary proceedings are not valid where AO has duly examined all the records at the time of assessment proceedings with due application of mind

17. During the course of scrutiny assessment proceedings for the subject AY, the learned AO issued a notice dated 10 November 2015 seeking for information relating to the expenses debited to the trading and profit and loss account including advertisement and publicity expenditure. The Assessee vide its letter dated 3 August 2016 filed a detailed break-up of the advertisement and publicity expenditure debited to the profit and loss account along with the party wise details of the expenditure incurred by the Assessee. (Refer Page No 79-93 of the paperbook for the copy of the letter dated 3 August 2016)

18. Accordingly, all the information/ documents which were relevant for making the decision on allowability of such expenditure under section 37 of the Act were in possession of the learned AO at the time of the 17 & 942/MUM/2021 (A.Ys: 2013-14 & 2014-15) M/s. Anheuser Busch InBev India Ltd., assessment proceedings and it was well within the knowledge of the learned AO that the Company was claiming deduction for such expenditure. Accordingly, post analyzing the case, and after due application of mind, the learned AO concluded that the disallowance is to be made on certain other issues and not towards the issue of advertisement and publicity expenditure under section 37 of the Act.

18 & 942/MUM/2021 (A.Ys: 2013-14 & 2014-15) M/s. Anheuser Busch InBev India Ltd.,  Amrik Singh [2003] ITA no. 230 (Mag.) (Chd.) (Trib.) dated 2 August 2001 Refer Page No 217-222 of the legal paperbook)  Baljees [2003] ITA no. 427 & 428 (Chd.) (Trib.) dated 28 November 2002 Refer Page No 223-226 of the legal paperbook) 23. In the instant case, the learned AO had requested for details of the expenditure during the assessment proceedings and after duly considering the submission filed by the Assessee, has allowed the claim.

19 & 942/MUM/2021 (A.Ys: 2013-14 & 2014-15) M/s. Anheuser Busch InBev India Ltd., Condition Reason Clause (a) During assessment proceedings The order is passed without making the AO had issued notice dated 10 inquiries or verification which should November 2015, where the have been made learned AO has enquired into Clause (b) various expenses debited to Profit The order is passed allowing any & Loss account. The Appellant relief without inquiring into the claim filed the details of advertisement and publicity expenses incurred by the Company and provided break-up of the expenditure debited under the head 'Advertisement and Publicity'. The Assessee has also furnished party wise details of major payments under this head. The AO after examining the documents, did not make any addition to the total income. Therefore, it is not a case of order being passed without inquiries. Accordingly, condition a) and b) is not satisfied Clause (c) The order has not been made in The order has not been made in violation of any order, direction or accordance with any order, direction instruction issued by the CBDT or instruction issued by the Board under section 119 of the Act. under section 119; Accordingly, condition c) is not satisfied Clause (d) The AO has not passed the order The order is not against any decision disregarding any decision of the which is prejudicial to the assessee jurisdictional Bombay High Court rendered by the jurisdictional High or the Supreme Court as there are court or Supreme Court in the case no decision which squarely cover of the assessee or any other person the Appellant's case. Accordingly, condition d) is not satisfied 28. In the present case none of the above-mentioned reasons are satisfied. Revisionary assessment proceedings cannot be initiated in case of Inadequate enquiry versus lack of enquiry 29. Without prejudice to the Appellant's contention that submissions have been made by the Appellant pursuant the enquiry made by the AO during the course of assessment proceedings, in respect of issue which is subject matter of proceedings under Section 263 of the Act, the Appellant 20 & 942/MUM/2021 (A.Ys: 2013-14 & 2014-15) M/s. Anheuser Busch InBev India Ltd., further contends that based on facts of the case, this case can at the most be considered to be of an inadequate enquiry as against lack of enquiry. The assessment order cannot be set aside and revised under Section 263 of the Act, merely because the Commissioner felt that inadequate enquiry has been made and further enquiry could have been made by the AO while making an assessment.

21 & 942/MUM/2021 (A.Ys: 2013-14 & 2014-15) M/s. Anheuser Busch InBev India Ltd., Without Prejudice to the above no revisionary proceedings can be initiated if assessment order is in pursuance of DRP directions 33. The power of revision of PCIT is restricted only to orders which are passed by the AO. Under new scheme of assessment, draft order is passed by learned AO against which assessee may file objections before the DRP. Further, the directions issued by the DRP are binding on the learned AO and final order is passed by the learned AO without further going into the merits of the case.

25 & 942/MUM/2021 (A.Ys: 2013-14 & 2014-15) M/s. Anheuser Busch InBev India Ltd., 44. Given the above, your Honour would appreciate that the expenses to the tune of Rs 86.43,33,466 debited to the advertisement and publicity head in the profit and loss account are not in the nature of media advertisements and hence are not governed by the provisions of the Cable TV Rules which are applicable only for advertisements made in Television Media.

30 & 942/MUM/2021 (A.Ys: 2013-14 & 2014-15) M/s. Anheuser Busch InBev India Ltd., lt would be conducive to judicial discipline and maintaining of certainty and uniformity in administering the law that the taxing authorities should proceed on the basis that the recognition granted and available for any particular assessment year implies that the provident fund satisfied all the conditions under rule 4 of Part A of the Fourth Schedule and should not sit in judgment over it.  ACIT vs. A.K. Menon & Ors. (215 ITR 364) [SC] (Refer Page No 339-342 of the legal paperbook) wherein it was held that Special Court has no jurisdiction to sit in appeal over the assessment of the tax liability of a notified person by the authority or Tribunal or Court authorised to perform that function by the statute under which the tax is levied. The Special Court has, therefore, has no jurisdiction to determine whether or not any assessment of the tax liability of a notified person by the appropriate authority is bona fide or reasonable or justified or enforceable.  K.N.Narayana lyer vs. CIT (202 ITR 774) [Karnataka HC] (Refer Page No 343-346 of the legal paperbook) wherein it was held that When the liquidator himself does not choose or find it necessary to avoid a particular transfer, or to recover the property concerned, itis not open to a stranger like the ITO to ignore it and treat the transferred asset as remaining with the liquidator relying on section 531A of the 1956 Act  Keerthi Estates P Ltd (ITA 271/Hyd/2016) (Refer Page No 347-355 of the legal paperbook), wherein after considering the decision of Karnataka High Court in case of Mamta Enterprises which was relied upon by the DR the Tribunal held as under; 8……..It is fact that at the time of approval, the corporation and the builders aware that it is not possible to complete the project as per the proposed plan as there are certain adjustments need to be made at the time of actual execution. As long the actual completion of the projects are within the parameters of approval, the corporation/approving authorities permit the projects as approved willy the nominal fine or compounding fee This is the reason, the corporation has the clause intact in the rules books If the projects are illegal, which is an offence and cannot be cured, the whole project cannot be approved by the approving authorities, as the same is subject matter of public safety. The penalty can be classified as two types; one charged for violation of law in the nature of offence, which cannot be pardoned by compounding and the second is charged for violation of certain rules which are not in the nature of offences and can be cured by compounding. In the 31 & 942/MUM/2021 (A.Ys: 2013-14 & 2014-15) M/s. Anheuser Busch InBev India Ltd., case of housing/commercial projects, the corporation aware that there will be certain deviations at the time of approval and no project can be completed without any deviation, The question is, the extent of deviation In case it is within the permissible limits, the approving authorities, allow with compounding the deviation by levying compounding fees, In the given case, the project was completed and the deviations are within the limits, for which the Bangalore Mahanagar Palike has approved the project by compounding fees, which is not in the nature of offence nor prohibition of any law. Henco, it is allowable u/s 37(1) of the Act.”  Max Hospital, Pitampura vs. Medical Council of India (W.P. No. 1334/2013) (Delhi HC) (Refer Page No 357-364 of the legal paperbook) dated 10 January 2014 wherein it was held that The observations dated 27.10.2012 made by the Ethics Committee do reflect upon the infrastructure facilities available in the Petitioner hospital and since it had no jurisdiction to go into the same, the observations were uncalled for and cannot be sustained. Since the MCI had no jurisdiction to go into the infrastructure facilities, need not also go into the aspect that in the year 2011, the facilities available in the hospital were inspected and were found to be in order. Prayer: 60. Given all of the above, after considering the factual details/ documents and legal submissions, the Appellant wishes to humbly submit that the expenditure incurred by the Appellant is wholly and exclusively for the purpose of the business and in accordance with principles of business expediency and allowable under section 37 of the Act.

9. In the rejoinder Ld. AR submitted that the issue is not on allowability of expenses rather non verification of the expenses by the Assessing Officer as per the facts on record. Assessing Officer has made exhaustive verification.

10. Considered the rival submissions and material placed on record, we observed that Ld. Pr.CIT while verifying the assessment records observed that assessee has incurred advertisement and publicity expenses 33 & 942/MUM/2021 (A.Ys: 2013-14 & 2014-15) M/s. Anheuser Busch InBev India Ltd., amounting to ₹.1,07,07,17,247/- and Assessing Officer allowed the expenses without appreciating the legal position. He observed that assessee manufactures and markets alcoholic beverages which is banned in India for advertisement as per Cable Television Network (Regulation) Amendment Bill which came into effect on 08th September, 2000. He is of the view that the advertisement made by the assessee in Cable Television in order to promote the alcoholic drinks manufactured by the assessee but it advertises nonalcoholic beverages in order to promote the alcoholic beverages which is against the regulations of the cable television laws. However, Ld. AR submitted before Ld. Pr.CIT as well as before us that the expenditure claimed by the assessee under the head “advertisement and publicity expenses” which includes sales promotion expenses, branding activities, sponsorship and event management expenses and market research and survey expenses, these are all regular business expenditure incurred wholly and exclusively for the purpose of business which does not fall under the category of advertisement in television. Therefore, these expenses are the sales promotion expenditure to the extent of ₹.86,43,33,466/-. Therefore, these expenses are not the expenditure which Ld. Pr.CIT has raised the issue of the expenditure which is spent on activities which is unlawful and in the 34 & 942/MUM/2021 (A.Ys: 2013-14 & 2014-15) M/s. Anheuser Busch InBev India Ltd., nature of contravening any other laws. Therefore, the issue to be addressed on the issue of illegal expenses only to the extent of ₹.20,63,83,780/-. We observe from the record that Ld. Pr.CIT initiated the revision proceedings with the view that the advertisement and publicity expenses incurred by the assessee in the television are not admissible due to the fact that these are illegal and contravenes the Cable Television Networks (Regulation) Act, 1995. On a careful consideration we observe that assessee is advertising in the same mode of advertisement in earlier years as well as continued to advertise in subsequent years, we also observe that no authority who approves the advertising in the television has initiated any proceedings under the Cable Television Networks (Regulation) Act, 1995 as per which assessee has contravened any of the Act of the Cable Television Networks (Regulation) Act or levied any fines/penalties. In absence of any proceedings against the assessee, it clearly indicates that the advertisement made by the assessee in the televisions are within the provisions of the above said Cable Television Networks (Regulation) Act, 1995. Therefore, in the absence of any such proceedings the Income-tax authorities have no jurisdiction to presume that assessee has contravened any provision of the Cable Television Networks (Regulation) Act merely because assessee 35 ITA NOs 941 & 942/MUM/2021 (A.Ys: 2013-14 & 2014-15) M/s. Anheuser Busch InBev India Ltd., has several products to market some of them may be prohibited to advertise and others are not. One cannot presume that the assessee is only promoting the products for which advertisements are prohibited as long as the advertisements are allowed to broadcast in the televisions which is approved by the proper authority, the assessee cannot be penalized by invoking the provisions of Cable Television Networks (Regulation) Act, 1995. On a careful consideration of the records we observe that in the absence of any adverse remark or penalties levied by the broadcasting authorities the Assessing Officer need not go into verification of regular expenditure which assessee was regularly claiming over the years. We observe that Assessing Officer has also collected several information before allowing the expenses claimed by the assessee. Therefore Ld. Pr.CIT cannot invoke the provisions of section 263 of the Act to reassess the completed assessment merely on the basis of presumption or with the view that assessee may have contravened the Cable Television Networks (Regulation) Act, 1995. Therefore, in this case Assessing Officer has allowed the expenditure in the absence of any adverse actions against the assessee. Ld. Pr.CIT cannot initiate revisionary proceedings in order to initiate another possible enquiry. ITAT Benches of Delhi and Chandigarh has held that Ld. Pr.CIT cannot initiate 36 & 942/MUM/2021 (A.Ys: 2013-14 & 2014-15) M/s. Anheuser Busch InBev India Ltd., such actions, for the sake of brevity we, reproduce the decision of the ITAT Delhi bench in the case of Solara International Ltd., v. Addl. CIT in ITA.No. 1999/Del/2004 dated 14.01.2005. “19. As to the specific issues raised by the learned CIT in the impugned order under section 263, he has alleged that the assessing officer routinely accepted Chartered Accountant's certificate in respect of bad debts and deviation from provisions of section 145A. However, the learned CIT has not pointed out any omission or defect or infirmity in the certificate submitted by the Chartered Accountant during the course of assessment proceedings. In respect of expenditure on discount, commission and incentives, the learned CIT has not able to state anything specifically except that according to him, business promotion expenses included entertainment expenditure of Rs. 10,46,913. There is no further finding in the order of the learned CIT that the assessment order resulted into under- assessment on that score. It is pointed by the learned counsel for the assessee that in the order passed by the assessing officer in pursuance to the impugned order under section 263, no such disallowance has been made. In respect of MODVAT accounting and its impact on valuation of goods, the learned CIT has held that the assessing officer should have consulted an expert. We find that no such expert was consulted while completion of the assessment order for the earlier assessment years as well as the assessment orders made subsequent to impugned order under section 263. It is noteworthy that learned CIT did not feel it necessary to do so himself before making the impugned order. The observations of the learned CIT in relation to rate of interest paid to directors are based on scant material, The same applies to the finding of the learned CIT that royalty paid by the assessee represented capital expenditure and should not have been allowed. The learned CIT has not based these observations on any proper examination of the facts of the case. It is important to bear in mind that it is equally true that a disallowance should not be made without. proper enquiry and in a perfunctory manner. We do not see any basis for the observation of the learned CIT that royalty payments of the assessee were disallowable as capital expenditure. That being so the impugned order under section 263 itself has been made on subjective opinion without indepth examination of facts of the case. In the case of Malabar Industrial Co. Ltd. (supra), the Hon'ble Supreme Court have held that an order cannot be said to be erroneous and prejudicial to the interest of revenue merely because the superior officer takes a different view of the matter. We find considerable substance in the contention of 37 & 942/MUM/2021 (A.Ys: 2013-14 & 2014-15) M/s. Anheuser Busch InBev India Ltd., the learned counsel for the assessee that the impugned order under section 263 has been made without finding any prima facie error in the assessment order, except the unsubstantiated finding that royalty payments represented capital expenditure. As to the bad debts here again the claim of the assessee was supported by a certificate of the Chartered Accountant. The learned CIT has not pointed out as to in what manner or in what respect the Chartered Accountant had gone wrong. In short, we find that the learned CIT has cancelled the assessment in question more or less on the allegation that the assessment was completed routinely without proper enquiry. For the purpose of holding an assessment order to be erroneous and prejudicial to the interests of revenue on that ground, there should be omission or failure to make such enquiry as was essential on the facts and circumstances of the case. Merely because from a perfectionist point of view it is felt that some more enquiries and verifications could have been made by the assessing officer, the order cannot be declared to be erroneous. In the case before us, we find that the assessment order has been made by the assessing officer in accordance with the past history of the case. For the main objection raised by the learned CIT in relation to royalty allowed by the assessing officer no prima facie case has been made out that the view taken by the assessing officer is erroneous. We, therefore, hold that the impugned order under section 263 is not legally sustainable. We quash the order under section 263 and allow this appeal filed on 263 and allow this appeal filed by the assessee.”

38 & 942/MUM/2021 (A.Ys: 2013-14 & 2014-15) M/s. Anheuser Busch InBev India Ltd., 12. Since the issue involved in A.Y. 2014-15 are exactly similar to A.Y.2013-14, we dismiss the order passed u/s. 263 in A.Y. 2014-15 also. We order accordingly.

Order pronounced on 28.01.2022 as per Rule 34(4) of ITAT Rules by placing the pronouncement list in the notice board.