TaxTMI 
TaxTMI 
2010 (10) TMI 814
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....e from house property and not as business income. Accordingly, income was assessed by the Assessing Officer u/s 143(3)/147 as income from House property and assessee's claim of depreciation as business expenditure was declined. By the impugned order the ld. CIT(A) confirmed the action of AO against which assessee is in further appeal before us. Following common grounds have been taken by the assessee in all the years under consideration. "Ground No. 1 Issuance on Notice u/s 148 is invalid That on the facts and in the circumstances of the case and in the law, the Ld. CIT(A) erred in holding that the reopening of assessment u/s 147 by issuance of notice u/s 148 was valid. Ground No .2 Order passed u/s 143(3)/148 is barred by limitation : That the Ld. CIT(A) further erred in holding that the order passed u/s 143(3)/148 was valid and was not barred by limitation in view of section 153(2) and in view of judgment of Hon'ble M.P. High Court in the case of Jijeebai Shinde v. CGT 46 CTR 122, ignoring that : (a) the Order should have been passed up to 31.3.2006 and the passing thereof should be evidenced by its dispatch up to 31.3.2006, only putting th....
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....ts and law, upholding the validity of reopening. From the record we found that the assessee is an investment company of Grasim Group of Industries. Return was filed at a loss, which was processed u/s 143(1) for the relevant assessment year under consideration and the returned income was accepted. Thereafter, the AO recorded detailed and specific reasons for issue of notice u/s 148 to the effect that rental income declared by the assessee was to be charged under the head "Income from House property" and the depreciation claimed on such property was not allowable as business expenditure and such excess claim has resulted in to under assessment of income. Contention of ld. Authorized Representative was that office premises were being used for the purpose of assessee's business, hence, the question of taking rentals in respect thereof as income from house property does not arise. He further contended that the assessee is the exclusive owner of these office premises and the same have been given on lease and licence basis in the normal course of business of the assessee. The ld. Authorized Representative drawn our attention to the terms of lease and licencing agreement and submitted that....
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....f Rajesh Jhaveri Stock Brokers (P.) Ltd. (supra), wherein it was held that in case of intimation u/s 143(1), the AO can reopen the assessment if there are reasons to believe that income of assessee has escaped assessment. As per the ld. CIT DR, the assessee has wrongly claimed income from house property as income from business in respect of the office premises given on lease and licence agreement, accordingly, claim of depreciation under the business head was wrong, which necessitated reopening of assessment u/s 147. Reliance was also placed on the decision of Hon'ble Supreme Court in the case of Raymond Wollens Mills Ltd. 236 ITR 34, whrein reopening of assessment was held to be justified u/s 147(a). 5. We have considered the rival contentions, carefully gone through the orders of the authorities below and also deliberated on the case laws cited by the ld. Authorized Representative, dealt with by lower authorities in their respective orders and also case laws cited by ld. CIT DR in the context of factual matrix of the case. From the record, we found that the assessee was earning rental income in respect of building given on lease and licence. The assessee was claiming such inco....
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....sible, but which was not claimed in the return was to be allowed; and (c) any loss carried forward, relief claimed in the return which on the basis of the information as available in such return, accounts or documents were prima facie inadmissible was to be disallowed. 7. What were permissible under the first proviso to section 143(1)(a) to be adjusted were (i) only apparent arithmetical errors in the return, accounts or documents accompanying the return, (ii) loss carried forward, deduction, allowance or relief, which was prima facie admissible on the basis of information available in the return but not claimed in the return, and similarly, (iii) those claims which were on the basis of the information available in the return, prima facie inadmissible, were to be rectified/allowed/disallowed. What was permissible for correction of errors apparent on the basis of the documents accompanying the return? The Assessing Officer had no authority to make adjustments or adjudicate upon any debatable issue. In other words, the Assessing Officer had no power to go behind the return, accounts or documents either in allowing or in disallowing deduction, allowance ....
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....n order for purposes of section 246 between 1-6-94 to 31-3-95 and under section 264 between 1-10-1991 and 31-5-1999. The expressions 'intimation' and 'assessment order' have been used at different places. Contextual difference between the two expressions has to be understood in the context of the expressions used. Assessment is used as meaning some times 'the computation of income' some times 'the determination of the amount of tax payable' and some times 'the whole procedure laid down in the Act for imposing liability upon the tax payer'. In the scheme of things the intimation under section 143(1)(a) cannot be treated to be an order of assessment. The distinction is also well brought out by the statutory provisions as they stood at different points of time. Under section 143(1)(a) as stood prior to 1st April 1989, the Assessing Officer had to pass an order if he decided to accept the return, but under the amended provisions, the requirement of passing of an assessment order has been dispensed with and instead an intimation is required to be sent. 11. The Central Board of Direct Taxes (CBDT) had issued various circulars in this regard explaining the purpose behind the provisions....
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....section 147, the existence of only the first condition would suffice. In other words, if the Assessing Officer for whatever reason has reason to believe that income has escaped assessment, it confers jurisdiction to reopen the assessment. It is, however, to be noted that both the conditions must be fulfilled, if the case falls within the ambit of proviso to section 147 as stood after amendment. 15. Thus as per the amended provisions of section 147, for re-opening of an assessment there should be a reason to believe that income chargeable to tax had escaped assessment for any assessment year. Such reason to believe can be raised in any manner and is not qualified by a pre-condition of faith and true disclosure of material facts by an assessee as contemplated in pre-amended section 147(a) and the Assessing Officer can, under the amended provisions, legitimately re-open the assessment in respect of income which had escaped assessment. Viewed in that angle, power to reassessment is much wider under the amended provisions and can be exercised even after assessee has disclosed fully and truly all material facts. Reasons which may weigh with the Assessing Officer may be the result of h....
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....rmissible and nothing more can be inferred from the deeming provision. Thus, there is no assessment u/s 143(1)(a) of the Act. 17. It is crystal clear from the above decision of the Hon'ble Supreme Court which is having binding effect on us under Constitution of India that the processing of return u/s 143(1) does not amount to assessment order. Therefore, neither any opinion is formed nor there is a question of change of opinion. Since intimation u/s 143(1) is not an assessment, there is no question of any new material to empower the AO to reopen the assessment u/s 147, when there is a reason to believe that there is escapement of income. In the instant case before us, the return was processed u/s 143(1) and no assessment was framed by issue of notice u/s 143(2). Under these facts and circumstances, the proposition of law laid down by the Hon'ble Supreme Court in the case of Rajesh Jhaveri is clearly applicable. It is pertinent to mention here that section 147 authorizes the AO to assess or reassess income chargeable to tax, when, he has reason to believe that income for any assessment year has escaped assessment. In the instant case, the observation of the AO to the effect that ....
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....rd to charging of leave and licence as income from house property, we found that the office premises of the assessee was given on rent and the rental income was offered as income from business against which various expenditure including expenditure under the head "Depreciation on Building" was claimed. The issue as regard taxing of income relatable to a property has been elaborately discussed by Hon'ble Calcutta High Court in the case of Shambhu Investment (P.) Ltd. 249 ITR 47, which has been subsequently affirmed by the Hon'ble Supreme Court and reported at 263 ITR 143. It was held by Hon'ble Court that while taxing the income in respect of immovable property what is to be seen is what was the primary object of the assessee while exploiting the property. If it is found by applying such test that main intention is letting out the property or any portion thereof, the same must be considered as rental income or income from house property. However, if it is found that main intention is to exploit the property by way of complex commercial activity, in that event, it must be held that it is assessable as "business income". In the instant case before us, after going through the terms and....
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.... decision of the I.T.A.T. Calcutta Bench in the case of PFH Mall & Retail Management Ltd. 110 ITD 337, wherein it was held that income derived by Shopping Malls, Departmental Stores and business centres of properties owned by it and let out to various users which were providing host of service/facilities/amenities in the said Mall/Business Centres, the income therefrom was assessable as "Business income". We had carefully gone through this decision of the Tribunal wherein the facts were very peculiar and the assessee company had developed a shopping mall/business centres on the properties owned by it, the same were let out to various users, alongwith letting out the assessee has also provided host of services/facilities/amenities in the said malls/business centres. By going through peculiar terms and conditions of the agreement so entered with the use of shops, malls etc., the Tribunal found that the basic intention of assessee was commercial exploitation of its properties by developing them as shopping mall/the business centres and, therefore, income derived therefrom was assessable as business income. Accordingly, the action of CIT u/s 263 was set-aside, who has held that order o....