TaxTMI 
TaxTMI 
2015 (6) TMI 607
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....ch was subsequently re-opened by recording the following reasons to believe:- "It was seen that as per Note B-8 of Schedule P of the accounts contained in the annual report for the y ear ending 31.03.2007, the assessee company entered into development agreement with Godrej Waterside Properties P. Ltd. during the year ending 31.3.2007 for development of its land and the developer had to bear all the costs and the assessee will get 39% of the total built up area as well as parking area. The Note B-8 is reproduced below- "The company has entered into development agreement with Godrej Waterside Properties P. Ltd. For the 5.5978 acres of lease hold land at Salt lake, Sector-V, Kolkata, whereby the developer will incur all the developmental costs as envisaged in the said agreement and upon completion of construction the company shall be entitled to the 39% of the total built up area as well as parking area". Schedule F in respect of fixed assets shows leasehold land at Rs. 1,89,74,418/-. Schedule E in respect of liabilities reflects Joint Development deposit at Rs. 5 crore. It is thus apparent that there was transfer of the land, being capital asset during the year ending ....
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....w-cause notice reads as under:- "During the F.Y. 2006-07 relevant to A.Y. 2007-08 the assessee company had an agreement with M/s. Godrej Water Side Properties Pvt. Ltd. on 07.02.2007 for allowing the permission to M/s .Godrej Waterside Properties Pvt. Ltd. for the purpose of carrying out of the construction of the I.T .Project. It was agreed that for consideration for providing land by the assessee company towards the development of I.T. Project by the Godrej Waterside Properties Pvt. Ltd. and after completion of I.T Project, 39% out of total constructed area of I.T. Project together with amenities and therein shall belong to assessee company and balance 61% constructed area with facilities shall belong to the Godrej Waterside Properties Ltd. Similarly, the entire common area, open area whatsoever nature shall be apportioned on the similar proportion i.e. 39% and 61%. During the course of assessment, it has been claimed by the assessee that the Capital gain tax is payable in the F.Y. 2010-11 & 2011-12 when the consideration provided in the agreement was actually payable on 39% of total constructed area transferred and the Assessing Officer had accepted the assessee's subm....
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.....2015 at 12.00 noon for this purpose. In case of failure to respond to this notice, decision may be taken on merits of the case". 4. From the said show-cause notice it is apparent that the CIT has invoked the jurisdiction under section 263 only on two issues, the first issue was in respect of the development agreement entered into by the assessee with Godrej Waterside Properties Pvt. Ltd., the capital gain has arisen to the assessee during the impugned assessment year in the opinion of the CIT, assessing officer erroneously not assessed the capital gain during the impugned assessment year in respect of transaction under the said development agreement which assessee entered into with Godrej Waterside properties P Ltd., and also that the Assessing Officer has wrongly allowed excess depreciation of Rs. 3,03,21,882/- considering the current assets as fixed asset s. The assessee vide its letter dated 04.03.2015 objected to the proceeding being initiated under section 263 both on legal grounds as well as on merit s stating that the order passed by the Assessing Officer is neither erroneous nor prejudicial to the interest of the revenue. In this regard, reliance was placed on the follo....
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....30.03.2013. The company is engaged in the business of developing, operating and maintaining information Technology Parks. The Company set up its first IT Park known and titled as "Infinity Think Tank" at Plot A/3, Block GP, Salt Lake Electronic Complex, Sector-V, Kolkata-700 091. The said park consisted of two Towers. The development of the said IT Park commenced in and around 1996-97 and proceeded in phases over the years. The first Tower was developed and construction was completed in financial year 2000-01. Construction and development of the second Tower which progressed in phases was completed in assessment year 2006-07. The company owns operates and maintain the said IT Park, part of which is owned by the company and part of which is leased on longterm basis to several transferees. However, for operating and maintaining the IT Park, the company had made substantial investment in attendant facilities and amenities which are needed to operate the I.T. Park. Substantial cost was incurred in installing plant and machineries for operation of IT Park. The plant & machineries installed inter alia included central air conditioning plant, elevators, fi re fighting equipment s, buildin....
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....2006. The Assessing officer noted that during the financial year 2006-07, the assessee transferred on long-term lease basis certain office spaces and received lump sum from the transferee. According to the Assessing officer, the company was liable to disclose short term capital gains on transfer of office space whereas in its computation of income the company had reduced the sale proceeds received from the transferee from the opening of the written down value of the building block in conformity with section 50 of the Act and on the resultant reduced written down value the depreciation was claimed. The Assessing Officer held that the proportionate written down value of the office block was required to be reduced from the gross sale consideration to arrive at short-term capital gains which in his opinion was liable to be assessed. The Assessing Officer accordingly assessed Rs. 1,50,26,623/- under the head "short-term capital gains" on sale of depreciable asset s. The Assessing Officer did not consider the IT Park building to be part of company's current assets. To the extent, part of the office building was sold, the Assessing Officer assessed short-term capital gains as on sale of d....
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....greement and since the capital gains was not so assessed in the order under section 143(3), he formed his reasons to believe that income chargeable to tax for the assessment year 2007-08 had escaped assessment. The assessee objected to the reopening vide its letter dated 17.02.2012. The Assessing Officer vide order dated 21.02.2012 disposed of the objection raised by the assessee and by referring to the decision of the Courts which inter alia, included the decisions in the case of Chaturbhuj D. Kapadia -vs.- CIT reported in 260 ITR 491 (Bombay) and J.S. Sarkaria reported in 294 ITR 196 (AAR) observed that capital gain was chargeable in assessment year 2007-08. 10. The Assessing Officer after disposing the assessee's preliminary objections, conducted the hearings from time to time and ultimately after considering the submissions of the assessee, the copy of which is available at pages 188 to 208 of the paper book, passed the assessment order on 30.03.2013 in which he did not assess the capital gains since he was fully satisfied that transfer of capital asset did not take place in the relevant year and hence no capital gain was legally chargeable to tax in assessment year 2007-08.....
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....id that the assessing Officer was not aware to the facts as stated in the showcause notice by the CIT. On detailed examination of the facts, documents and evidences on record and after considering the applicable legal provision, the Assessing Officer was satisfied that no capital gain was legally chargeable to tax in the assessment year 2007-08. The Assessing Officer had also perused the fact that the development agreement was executed by the assessee in July, 2005 and the development work had also commenced thereafter. The Assessing Officer was satisfied that the capital gain ultimately offered in the later years was much higher than the capital gains that would have been legally chargeable if assessed in assessment year 2007-08. It was also submitted that subject to passing of the order under section 147/143(3), the Assessing Officer completed the assessment for the assessment years 2011-12 and 2012-13 wherein the capital gains on transfer of assessee's rights in the leasehold land at Salt lake was assessed on substantive basis. Our attention was drawn towards the assessment order of this assessment years, which is available in the paper book at pages 234 to 244. Thus it was cont....
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....sion referred to by the CIT it was pointed out that the CIT's reliance on the judicial decisions cited in the order is al so inappropriate because most of the decisions were rendered prior to the decision of the Hon'ble Supreme Court in the case of CIT -vs.- Max India Limited (292 ITR 282) and the decision of CIT -vs.- GreenWorld Corporation (314 ITR 81). In these decisions, the Hon'ble Supreme Court has held that in respect of any debatable issue the CIT cannot exercise revisionary powers if the Assessing Officer has taken one of the possible view. 14. In respect of the second issue relating to the depreciation it is submitted that the CIT did not deal with the submissions of the assessee challenging his jurisdiction. In this case, the issue concerning allowance of depreciation was the subject matter of regular assessment. The Assessing officer had allowed the depreciation in the original assessment, which was completed in 2009. In this assessment, the Assessing officer had allowed the depreciation after carrying out adjustment in the written down value of the building block. In the circumstances even if there was alleged error of allowing depreciation, it was committed in the ....
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....contrary view and hold that the building was a current asset. 17. Our attention was drawn to page 20 of the impugned order and on that basis it was contended that the CIT has incorrectly alleged that the depreciation has been claimed in respect of the building which was received under the Joint development Agreement with Godrej properties Limited and, therefore, it has to be treated as current asset s. This finding clearly shows that the CIT has not even applied his mind to the jurisdictional facts. As is evident from records, the building under the development agreement with Godrej Waterside properties Limited was not constructed and delivered to the assessee till assessment year 2011- 12. Therefore, there was no question of its accounting in the assessee's books nor had the assessee claimed depreciation on the said asset s. The assessee has been claiming in respect of IT Park building known as "Infinity Thinktank" which the assessee itself had constructed in two phases and whose construction was completed in financial year 2005-06. All the relevant fact s pertaining to cost of construction incurred by the assessee in respect of this building were discussed in the order under s....
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....te 1990's. In connection with the business of development of IT Park, the assessee had obtained land parcel son lease from West Bengal Electronic Industrial Development Corporation (WEBEL), which is a Government of West Bengal Undertaking entrusted with development of the Electronic Industry in the State of West Bengal. 20. Subsequently we noted that the Assessing Officer initiated the proceedings under section 147 on 30.09.2011 by issuing a notice under sect ion 148. The reasons recorded read as under:- "It was seen that as per Note B-8 of Schedule P of the accounts contained in the annual report for the y ear ending 31.03.2007, the assessee company entered into development agreement with Godrej Waterside Properties P. Ltd. during the year ending 31.3.2007 for development of its land and the developer had to bear all the costs and the assessee will get 39% of the total built up area as well as parking area. The Note B-8 is reproduced below- "The company has entered into development agreement with Godrej Waterside Properties P. Ltd. For the 5.5978 acres of lease hold land at Salt lake, Sector-V, Kolkata, whereby the developer will incur all the developmental costs as envis....
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....n of construction, the assessee would be entitled to 39% of the total built-up area as well as parking area. The Assessing Officer, in the recorded reasons, further stated that Schedule E of the financial statement s was in respect of liabilities reflected 'Joint Development Deposit' at Rs. 5 crores. Referring to these information available in the audited account s for the year ended 31.03.2007, the Assessing officer observed that there was a transfer of the land being the capital asset during the year ending 31.03.2007 relevant to assessment year 2007-08 and the resultant capital gain was assessable in assessment year 2007-08 as per decisions of various Courts in respect of development agreement s but since the assessee did not disclose any capital gain in the return and no capital gain was assessed to tax for the assessment year 2007-08. Thus there was an escapement of income in assessment within the meaning of section 147 of the Act. 21. The re-assessment proceedings were al so initiated on appraisal of facts, which were available on the assessment record during the impugned assessment year. We noted that the assessee when filed a writ petition before the Hon'ble Calcutta Hig....
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....sessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Chief Commissioner or Director General or Commissioner authorised by the Board in this behalf under section 120; (b) "record" shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. (2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. (3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of or to give effect to, any finding or direction contained in....
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....istake or error committed by the Assessing Officer cannot be said to be an error. An order can be said to be erroneous if there is an incorrect assumption of fact or incorrect application of law in the order passed by the Assessing Officer. If the Assessing Officer after making the enquiries and examining the records, taken one of the possible views, it cannot be said that the order passed by the Assessing Officer is erroneous. 24. It is also apparently clear that the powers of the CIT are three folds. One is prior to the initiation of the proceedings u/s 263. Second is at the time of initiation of the proceedings. Third, is the final outcome after the initiation of the proceeding. Power of the CIT prior to the initiation includes 'call for and examine the records' of any proceedings under this Act. The word 'record' is very important, because on the basis of the record of the proceedings the CIT will form an opinion that the order passed is erroneous as well as prejudicial to the interest of the Revenue and once he forms an opinion, he has to give an opportunity to the assessee of being heard and after making or causing the enquiry he can pass an order. Moreover the inquiry is ....
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....ej Waterside Properties Pvt. Ltd. for development of its land and in which it has to get 39% of the total sanctioned constructed area and the proportionate car parking spaces. Even the notice under sect ion 148 was issued only on the same reason as escapement of capital gain in relation to the assessee's development rights in the said leasehold property being Plot No. 5, Block DP, Sector-V, Salt Lake City, Kolkata. The Assessing Officer took the view that no capital gain accrues or arises to the assessee in assessment year 2007-08 by examining the following submissions of the assessee as appearing at page 2-3 of the assessment order:- "The assessee company had entered into development agreement with Godrej Properties Limited in July 2005. Thereafter, in February 2007 the said Godrej Properties Limited nominated M/s Godrej Waterside Properties Pvt Ltd in its place to carry out the obligations under the development agreement between the assessee and Godrej Properties Limited. Under the development agreement, Godrej was to develop IT park at Plot-S, Block-DP, Sector V, Saltlake, Kolkata and will retain 61% of the built up area including car parking area and assessee's allocatio....
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....ote is reproduced as under:- I. In this case, my predecessor had initiated reassessment proceeding u/s 147 for the AY 2007-08 for bringing to tax capital gains accruing or arising to the assessee in respect of its Development Agreement with Goclrej Waterside Properties Pvt. Ltd. The "reason to believe" i.e., income chargeable to tax for the AY 200708 had escaped assessment, was based on Note 88 of the Schedule P to the Annual Report of the assessee for the year ended 31.03.2007. According to the information contained in that Note during the FY 2006-07, the assessee had entered into a Development Agreement with Godrej Waterside Properties Pvt. Ltd in respect or assessee's leasehold land at Salt Lake, Sector V, Kolkata. In terms of the said Development Agreement, the Developer was to incur all developmental costs up to completion of the construction. In consideration of assessee granting development rights in the land: the assessee was entitled to 39% of the total built up area and par king spaces. From the information available from the assessee's Newsletter dated 04.04.2011, my predecessor observed that the total space available in the newly constructed buildings amounte....
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....e was asked to furnish its explanations as to whether at any time it had offered the income by way of capital gains in respect of its Development Agreement with Godrej Waterside Properties Pvt. Ltd. The assessee explained that in terms of the Development Agreement, it had granted only a licence to Godrej Waterside Properties Pvt. Ltd and Godrej Properties I. td permitting them to enter upon the leasehold premises to undertake development or IT Park in conformity with the sanctioned building plans. At all material time the legal and beneficial ownership rights in the land vested in the assessee and the developer never received legal possession of the land, The consideration provided in the Agreement was payable in kind and the same was delivered to the assessee partly in FY 20 I 0-11 and partly in FY 2011-12, when the construction of Tower I & Tower 11 of the IT Park was completed, it is only upon completion of" IT Parks, the considerations in kind was delivered and at that Stage only the transfer of the capital asset was completed. The capital gains therefore crystalized at that time because the consideration for transfer came into existence and the same was paid to the as sessee i....
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....e on the said project which in overall scheme was quite insignificant. In this circumstance, it is difficult to hold that transfer of a capital asset took place merely when an agreement was entered into by the assessee but the corresponding consideration did not exist. 5. It also appeared from the documents on record that when the agreements were entered by the assessee, there was no definitive quantification of the area that could be developed or constructed on the leasehold land. The agreements between the assessee and Godrej nowhere spelt out the exact area that was constructible in terms of the Development Agreement. In absence of the final quantification of the area constructible; it was not possible to ascertain in monetary terms the consideration for transfer and consequently it was also not possible to assess the capital gains. From the information placed on record, it is apparent that the construction of the IT Project was completed only in FY 2011-12, it is only upon completion of the construction of Towers I & II, it was finally ascertained as to how much total area was finally constructed by the developer which together amounting to 18,55,847 sq.ft. and the assessee'....
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....sed to be in control or its land, The assessee along with the developer jointly remained in control and management of the land and the project. At the time when the agreement was entered there was no finality with regard to total constructible area which was to accrue to both the parties. In absence or the final crystallization of total constructible area there could not have been determination of the consideration which was the essential ingredient for assessment of capital gains. When the assessee entered into agreement with Godrej Properties Ltd., the consideration in kind did not even exist and therefore, quantification of the consideration and consequently capital gain accruing there from was impossible. Further the consideration which was actually received came only in FYs 2010-11 & 2011-12. It was only at that point of time was possible to determine with certainty the costs incurred by the developer, based on which the income by way of capital gain could be assessed. In the background of the fact that in FY 2006-07 the cost of construction was not even incurred and the constructed space did not exist, the determination or quantification of consideration would be an act of ab....
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....y and without giving benefit of discounted present value of the consideration. Such course in my opinion will be for more beneficial for the Revenue. 10. In support or the contention that capital gain is assessable in the y ear in which consideration is actually received. decision of the Madras High Court in the case of CIT Vs. K. Jeelani Basha 256 ITR 282 (Madras) is relevant In this case the assessee had agreed to sell its land for a consideration of Rs. 57 crores which was to be paid within the time prescribed in the agreement. The transferee was able to pay only Rs. 22 lacs and in consideration thereof the assessee parted with only one third of the possession. The AO assessed full capital gain in the year in which the agreement was executed on the ground that the assessee had delivered part possession in performance of agreement for sale. On appeal the Tribunal and thereafter the High Court held that since the assessee received consideration of only Rs. 22 lacs during the relevant year the capital gain was assessable only with reference to the consideration which was actually received by the assessee in that year. In other words, the High Court held that capital gain can onl....
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....the assessee vide its letter dated 21.903.2013 that if it is presumed that the transfer of the capital asset took effect when the development agreement was entered then it will mean that 61% of the lease holds interest in land was transferred in favour of the developer. On that date, the consideration in kind was not in existence and therefore, a non-existent consideration could not be evaluated for assessing capital gains. In the circumstances what could be adopted for the purpose of assessing the income by way of capital gains, was the market value of the leasehold interest in land as existing on the date of the agreement. The fair market value of the leasehold interest in land could be assessed and determined only with reference to the Gazette Notification of West Bengal Govt. According to which the fair market value of 61% of our leasehold interest was only Rs. 6.15 crores. In fact, the said method of de termination of the consideration is now statutorily incorporation in provisions of section 50D of the IT Act which were enacted through the Finance Act, 2012. In the circumstances if one assumes that the capital gain on transfer of company's 61% interest in leasehold land accru....
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....h the CIT invoked jurisdiction under section 263. It is not a case of lack of enquiry on the part of Assessing Officer the Assessing Officer after making enquiries allowed the claim of the assessee on that issue. It is not necessary that the Assessing Officer should discuss in detail the finding in his order, although the Assessing Officer has given clear-cut finding in this regard. 29. If the Assessing Officer has not discussed the inquiry made by him in the case of assessee in respect of which, he issued show-cause to assessee, we cannot say that order is erroneous as the Assessing Officer has not made any inquiry into the matter. The assessee cannot dictate the Assessing Officer what should he incorporate in the assessment order and how he should draft the assessment order. We find that the Hon'ble Bombay High Court in the case of CIT -vs.- Gabriel India Limited reported in 203 ITR 108 has held in this regard as under:- "Held, that the Income Tax Officer in this case had made enquiries in regard to the nature of the expenditure incurred by the assessee. The assessee had given a detailed explanation in that regard by a letter in writing. All these were part of the record of....
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.... may come out. For making a valid order under section 263 it is essential that the CIT has to record an express finding to the effect that order passed by the AO is erroneous which has cause loss to the Revenue. Furthermore, where acting in accordance with law the AO frames certain assessment order, same cannot be branded as erroneous simply because according to the CIT, the order should be written more elaborately". 32. In the case of DIT -vs.- Jyoti Foundation, 357 ITR 388 (Del.), the Hon'ble Delhi High Court has held as under:- "Revisionary power under section 263 is conferred by the Act on the Commissioner/Director of Income Tax when an order passed by the lower authority is erroneous and prejudicial to the interest of the Revenue. Orders which are passed without inquiry or investigation are treated as erroneous and prejudicial to the interest of the revenue, but orders which are passed after inquiry/investigation on the question/issue are not per se or normally treated as erroneous and prejudicial to the interest of the revenue because the revisionary authority feels and opines that further inquiry/investigation was required or deeper or further scrutiny should be undert....
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....he view taken by the assessing officer is unsustainable in law. Where a sum not earned by a person is assessed as income in his hands on his so offering the order passed by the assessing officer accepting the same without application of mind as such will be erroneous and prejudicial to the interest of revenue. In the case of CIT vs. R.K. Construction Co., Hon'ble Gujarat High court 313 ITR 65 (Guj.) as confirmed by supreme court has held as under:- "The details of sub-contractors examined by the AO as per the directions of CIT in revision proceedings, inter alia, include the names of these sub-contractors, their permanent account numbers, their permanent addresses, amount given to them, name of work entrusted to them, nature of such work and statements recorded by the AO, etc. These details reveal that during the course of examination under s.131, no question was put to many of these sub-contractors as to the variation in their signatures. Similarly, no question was put to them for the reasons of discounting with the Shroff. It is the stand of the assessee right from the beginning that all these sub-contractors were mainly working for the assessee and they did not have any offic....
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.... which were collected by the CIT in revisional proceedings, the CIT has taken a different view. However, in the revisional proceedings under s. 263, it is not open for the CIT to take such a different view. No substantial questions of law arise out of the order of the Tribunal and hence, the appeal filed by the Revenue deserves to be dismissed. - CIT vs. Arvind Jewellers (2002) 177 CTR (Guj) 546 : (2003) 259 ITR 502 (Guj) and Malabar Industrial Co. Ltd. vs. CIT (2000) 159 CTR (SC) 1 : (2000) 243 ITR 83 (SC) relied on)." 35. Hon'ble Supreme Court in the case of CIT vs. Max India Limited, 295 ITR 282 (SC) has held as under:- "The phrase "prejudicial to the interests of the Revenue" in section 263 of the Income-tax Act, 1961, has to be read in conjunction with the expression "erroneous" order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the Revenue. For example, when the Assessing Officer adopts one of two courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Assessing Officer has taken one view with which the C....
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....the Incometax Act, 1961. The matter cannot be remitted for a fresh decision to the Assessing Officer to conduct further enquiries without a finding that the order is erroneous. In such matters, to remand the matter to the Assessing Officer would imply the Commissioner has not examined and decided whether or not the order is erroneous but has directed the Assessing Officer to decide the question. The order of the Assessing Officer may or may not be wrong. The Commissioner cannot direct reconsideration only when the order is erroneous. An order of remit cannot be passed by the Commissioner to ask the Assessing Officer to decide whether the order was erroneous. This is not permissible. The Commissioner must after recording reasons hold that the order is erroneous. A distinction must be drawn in the cases where the Assessing Officer does not conduct an enquiry ; as lack of enquiry by itself renders the order erroneous and prejudicial to the interests of the Revenue and cases where the Assessing Officer conducts an enquiry but the finding recorded is erroneous and which is also prejudicial to the interests of the Revenue. In the latter cases, the Commissioner has to examine the order....
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....evenue expenditure without a detailed investigation. After considering all the materials furnished by the assessee the Commissioner took the view that the accounting practice followed by the assessee to debit the entire cost of tools and dies in the year of installation was not correct and he remitted the case to the Assessing Officer for re-examination. The Tribunal allowed the claim of the assessee. On appeal : _Held,_ dismissing the appeal, (i) that the Assessing Officer allowed the claim on being satisfied with the explanation of the assessee. Such decision of the Assessing Officer could not be held to be erroneous simply because in his order he did not make an elaborate discussion in that regard. The Assessing Officer had called for explanation on the very item from the assessee and the assessee had furnished its explanation. This fact was conceded by the Commissioner himself in his order. This showed that the Assessing Officer had undertaken the exercise of examining as to whether the expenditure incurred by the assessee in the replacement of dies and tools was to be treated as revenue expenditure or not. Therefore, it could not be said that it was a case of lack of inquir....
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....a in the IT Park has been leased out on short term basis and the lessees pay monthly lease rent and also operating and maintenance expenses. The rent and the maintenance charges recovered from the short term lessees is al so assessed as business income of the assessee. The income earned by the assessee is regularly assessed under the head business. The depreciation on the actual cost/ written down value of the fixed asset s of the IT Park Undertaking had been claimed and allowed in the income tax assessments of the assessee in assessment year 2002-03 and onwards. 40.1. The assessments for the assessment year 2004-05 and 2005-06 were completed under section 143(3) of the Act, wherein the depreciation on the fixed asset s of the IT Park Undertaking including IT Park Building was allowed by the AO after discussion. There were disputes with regard to calculation of depreciation and the assessee's claim for depreciation on fixed assets of the IT Park Undertaking including the IT Park Building, which was subsequently allowed by the CIT(Appeals) and by the Tribunal for assessment years 2004-05 and 2005-06.In the impugned assessment year, the return of income was declared by the assesse....
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....s a depreciable asset. I, therefore, agree with the A/R that if provision of section 50 of the Income Tax Act, 1961 are applied (which in this case is applicable) there will be no amount of capital gain chargeable to tax as computed by the Assessing Officer". Thus CIT(Appeals) in his order had specifically dealt with the nature of the IT Park building and having found that the said IT Park building was a depreciable asset held that capital gain could not be computed when only part of the building was transferred and the WDV of the block had not turned negative. 42. We noted that the Revenue challenged the order of the CIT(Appeals) with regard to the deletion of Rs. 86,74,200/- being refundable deposit s which was considered as part of sale consideration, but did not challenge the finding of the CIT(Appeal s) as regard to the lump sum premium of Rs. 2,40,95,000/-. The Tribunal noted that the opening written down value of the building as on 1.4.2006 was Rs. 32,60,17,820/- and if the same was considered in the light of section 43(6)/50, no capital gain arose to the assessee. The relevant finding has been given by the Tribunal in Para 10, which reads as under:- "We agree with ....
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.... of the appellate authority before the issue of the so cause notice by the CIT. Even this issue does not arise out of the order passed under section 147 read with section 143(3) as in that order no addition has been made by the assessing officer on the basis of the reasons recorded. It is the settled laws in view of the decisions of Mumbai High court in the case of CIT -vs. - Jetairways 331 ITR 236( Bom), Rajasthan High court in the case of CIT Vs. Devendra Gupta 336 ITR 59 (Raj.) and that of Delhi High court in the case of Ranbaxy Laboratories Ltd Vs. CIT 336 ITR 136 (Delhi) that no addition can be made in the order passed u/s 147 r.w.s. 143(3) unless the addition has been made in respect of the escaped assessment for which the reasons were recorded for the reopening of the assessment. 45. A perusal of the order of the CIT indicates that the assessment order passed by the Assessing Officer under section 147 read with section 143(3) was set aside on these two issues. As has been discussed by us in the preceding paragraphs, these issues have duly been examined and considered by the Assessing Officer in framing the assessment. Thus, in our considered opinion, these issues cannot b....
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....ready quashed the order of Principal CIT on this issue for the assessment year 2007-08 in the preceding paragraph 43. Respect fully following our aforesaid order, we quash the order of Principal CIT passed under section 263 on this issue. 49. So far as the other issue relating to the allowing wrong deduction by the Assessing Officer in passing the order under section 143(3) in respect of the donation, the only submission made by the ld. A.R. is that allowing the donation to the extent of Rs. 92,57,650/- while computing the business income merely a mistake apparent from record and this mistake could have been rectified by the Assessing Officer under section 154. Therefore, the invocation of the jurisdiction under section 263 is not for carrying out the rectification of the mistake. 50. Ld. D.R., before us on the other hand, relied on the order of Principal CIT on this issue. 51. After hearing the rival submissions and carefully considering the same, we noted that there is no bar under the Income Tax Act on the power of CIT under section 263 that if the order could have been rectified under section 154, CIT could have not exercised the jurisdiction under sect ion 263. This i....