Section 263 revision upheld where godown rent failed agricultural income conditions and assessment lacked supporting reasoning.

Revision under section 263 was upheld because the rental receipt from the godown did not satisfy the statutory conditions for agricultural income under section 2(1A)(c). The Assessing Officer had accepted the claim without recording reasons showing how the building ownership, occupation, and other mandatory provisos were met, so the assessment order was treated as erroneous and prejudicial to the interests of the Revenue. The assessee's alternative grounds were not examined by the Commissioner and were remitted to the Assessing Officer for fresh consideration.

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Issues: Whether the Commissioner was justified in invoking revisionary jurisdiction under section 263 of the Income-tax Act, 1961 on the ground that the assessee's rental receipt from the godown was not agricultural income under section 2(1A)(c) but income from house property.

Analysis: The Assessing Officer had accepted the assessee's claim after enquiry, but the order contained no reasoning showing how the statutory conditions for agricultural income were satisfied. For income to fall within section 2(1A)(c), the building must be owned and occupied by the receiver of rent or revenue of agricultural land, or be occupied by a cultivator or receiver of rent-in-kind in the manner contemplated by the provision, and the provisos must also be satisfied. The assessee failed to establish that it was the receiver of rent or revenue of the land, that the building was occupied by it in the statutory sense, or that the other mandatory conditions of the provision were met. On these facts, the view taken by the Assessing Officer was not a possible view in law, and the Commissioner was right in treating the assessment order as erroneous and prejudicial to the interests of the Revenue. The alternative grounds raised by the assessee were not adjudicated on merits by the Commissioner and were therefore sent back for fresh consideration by the Assessing Officer.

Conclusion: The invocation of section 263 was upheld and the assessee's challenge to the revisionary order failed. The alternative contentions were remitted to the Assessing Officer for decision.

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