TaxTMI 
TaxTMI 
2011 (9) TMI 1008
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....year under consideration was income from warehousing, which was declared under the head "income from business". The assessee was a partnership firm and the business of the assessee firm was renting the godown/warehouse to government and private parties. The assessee had claimed depreciation on the aforesaid building. The case of the assessee was picked for scrutiny by issue of requisite notice and the assessment was completed u/s 143(3) of the Act. During the course of assessment proceedings the Assessing Officer issued questionnaire dated 10.3.2008 alongwith notice u/s 142(1)/143(2) of the Income Tax Act. The copy of the questionnaire alongwith notices are placed at pages 39 to 42 of the Paper Book. The assessee in addition to the other queries raised was asked to give a note on the business activities and also the premises from where the activities were being performed alongwith the list of godowns let out by the assessee. Further the assessee was asked to furnish the details of various expenses as per query No.30. The reply of the assessee is enclosed at pages 43 to 45 of the Paper Book in which the assessee explained that it was engaged in the business of storage of different c....
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....further held that "there is no express or tacit examination of the issue by the Assessing Officer as to whether the rent received by the assessee from PSWC was business income or income from "house property". The CIT reproduced the convenants of the agreement between the assessee and M/s Punjab State Warehousing Corporation at page 5 of the order and vide para 5 observed as under 5. The main features and the conditions of the agreement are enumerated as under :- 1.It is an agreement to take/let out the godown on rent. 2.The rent is fixed on the area of the godown @ per sq.ft (refer cl.3) 3. It is rent and not service charges. (cl.4) 4. There is no requirement/liability of the assessee except to keep the godown fit for storage and to undertake casual repair. 5.There is nothing in the agreement for provision of any service such as security etc." 9.The CIT thus held that the assessee was receiving bare rent for letting the godown to PSWC, which in turn was given for 10 years and no complex commercial activity was involved in the case. Accordingly, the CIT was of the view that the said rental income derived by the assessee was the income from house property ....
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....T. Further reliance was placed on various decisions of the Tribunal for the proposition that the income from warehousing is to be assessed as income from business. 11.The learned D.R. for the Revenue pointed out that there was no dispute that the assessee was getting rent from letting of property and the assessee had no liability except to kept the godown fit and to undertake the repairs. The learned D.R. for the Revenue further pointed out that no security was provided by the assessee. Further the management of the stock was not in the hands of the assessee. The contention of the learned D.R. for the Revenue was that there was no application of mind by the Assessing Officer as even the agreement of lease available with the Assessing Officer, was not examined which led to loss of revenue and hence the order passed by the Assessing Officer was prejudicial to the interest of Revenue. It was stressed by the learned D.R. for the Revenue that in view of express provisions of the Income Tax Act, it could not be said that the Assessing Officer had taken a plausible view. The learned D.R. for the Revenue further placed reliance on the ratio laid down in CIT Vs. Ralson Industries Ltd. [(....
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.... to the interests of the Revenue." The High Court held (page 138) : "In this context, it must be regarded as involving a conception of acts or orders which are subversive of the administration of revenue. There must be some grievous error in the order passed by the Income-tax Officer, which might set a bad trend or pattern for similar assessments, which on a broad reckoning, the Commissioner might think to be prejudicial to the interests of Revenue administration." In our view, this interpretation is too narrow to merit acceptance. The scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the Revenue. If due to an erroneous order of the Income-tax Officer, the Revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the Revenue". The phrase "prejudicial to the interests of the Revenue" has to be read in conjunction with an 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 an Income-tax Officer adopted one of th....
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....ot be treated as prejudicial to the interest of the revenue. In cases where the Assessing Officer adopts one of the courses permissible in law or where two views are possible and the Income-tax Officer has taken one view, the Commissioner of Income-tax cannot exercise his powers under Section 263 to differ with the view of the Assessing Officer even if there has been a loss of revenue. Of course, if the Assessing Officer takes a view which is patently unsustainable in law, the Commissioner of Income-tax can exercise his powers under Section 263 where a loss of revenue results as a consequence of the view adopted by the Assessing Officer. It is also clear that while passing an order under Section 263, the Commissioner of Income-tax has to examine not only the assessment order, but the entire record of the profits. Since the assessee has no control over the way an assessment order is drafted and since, generally, the issues which are accepted by the Assessing Officer do not find mention in the assessment order and only those points are taken note of on which the assessee's explanations are rejected and additions / disallowances are made, the mere absence of the discussion of the prov....
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....the purpose of construing the provisions of Section 80IB(13) read with Section 80IA(9). It was only a legal consideration as to whether the deduction under Section 80HHC was to be computed after reducing the amount of deduction under Section 80IB from the profits and gains. There is no doubt that the Assessing Officer had allowed the deduction under Section 80HHC without reducing the amount of deduction allowed under Section 80IB from the profits and gains. He did not say so in so many words, but that was the end result of his assessment order. Since he was holding in favour of the assessee, as has been observed in Hari Iron Trading Company (supra) and Eicher Limited (supra), generally, the issues which are accepted by the Assessing Officer, do not find mention in the assessment order, it cannot be said that the Assessing Officer had not applied his mind. It cannot also be said that the Assessing Officer had failed to make any enquiry because no further enquiry was necessary and all the facts were before the Assessing Officer. Consequently, we are of the view that the decisions cited by the learned counsel for the revenue, wherein assessment orders were found to be erroneous for wa....
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....ssment orders relating to assessment years 2005-06 and 2006-07 are available on record. 19.The Courts have time and again observed that "since the assessee has no control over the way an assessment order is drafted and since, generally, the issues which are accepted by the Assessing Officer do not find mention in the assessment order and only those points are taken note of on which the assessee's explanations are rejected and additions / disallowances are made, the mere absence of the discussion of the provisions of Section 80IB(13) read with Section 80IA(9) would not mean that the Assessing Officer had not applied his mind to the said provisions. 20.The Hon'ble Delhi High Court in CIT Vs. Honda Siel Power Products Ltd. (supra) in similar circumstances had cancelled the order passed by the CIT u/s 263 of the Act. Further the Hon'ble Supreme Court in CIT Vs. Max India Ltd. (supra) had held that if the view expressed by the Assessing Officer was a possible view the CIT had not jurisdiction to interfere with such a view by way of exercise of jurisdiction u/s 263 of the Act 21.In view of the above said precedent laid down by the Hon'ble Supreme Court and various Hi....
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....f deduction u/s 80IC and Audit Report of Parwanoo Unit is being filed before the CIT and in the interest of justice & equity and for the sake of argument can be considered now. The CIT has failed to address and adjudicate the plea of the assessee regarding allowability of deduction u/s 80IC of the Act in view of the relevant documents being filed. We uphold the order of CIT in holding that the assessee is not entitled to the claim of deduction u/s 80 IB of the Act. However, the alternate plea of the assessee in respect of claim of deduction u/s 80 IC of the Act needs to be examined and decided by the CIT in accordance with law. The matter is remitted back to the file of CIT to decide and examine the alternative plea raised by the assessee, in accordance with law, after affording a reasonable opportunity of hearing to the assessee." 23.In the facts of the present case before us the assessee had received a notice u/s 154 of the Act in view of the audit objection on the issue of assessability of the income under the head "income from property/income from business". The reply of the assessee was filed before issue of show cause notice u/s 263 of the Act. In the above said reply the ....