AI Drafter 
TaxTMI 
TaxTMI 
2016 (12) TMI 609
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....se advance of Rs. 10,00,000/- for an accommodation of 1785 Sq. Ft. Apart from this, you are paying a rent of Rs. 10,000/- per month. Even if 10 months rent is considered as rental advance, which is usually paid in all similar cases, assessee could not have paid more than Rs. 1,00,000/- as advance. On going through the rental agreement it is noticed that the lessor (first party) Sri S.R. Girish is one of the authors of the trust. Hence, there is a violation of the provisions of section 13(3). In view of the interest at 12% per annum is required to be charges on the excess payment of advance of Rs. 9,00,000/- which works out to Rs. 1,08,000/- and brought to tax. The AO failed to examine this issue. Failure on the part of the AO to examine the above issue has rendered the assessment erroneous and prejudicial to the interest of the revenue". 04. After examining the material and hearing the assessee etc, the CIT, inter alia, held that in so far as the AO failed to examine this aspect, the assessment order made on 27.03.2013 by the Income Officer , Ward-1, Davangere is erroneous and prejudicial to the interests of revenue. Accordingly, he set aside the assessment to be redone in ac....
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....ustified in stating that the lease advance amount being Rs. 10,00,000/- is non refundable in nature, had it been the case then the same would have been debited to Income and Expenditure Account in the year of payment under the facts and circumstances of the case. 10. The Commissioner of Income Tax has erred by not appreciating the settled position of law that were there are two opinions possible on an issue, section 263 cannot be exercised to invoke such an issue. 11. The learned CIT has grossly erred in revising the order passed by the learned assessing officer without appreciating that there is no error, much less prejudicial to the interests of the Revenue to warrant a revision and therefor the order passed by the learned CIT is ultra vires to the scope of Section 263 and requires to be cancelled under the facts and circumstances of the Appellant's case. 12. The learned CIT failed to appreciate that the learned assessing officer had passed the order after verifying the books, records and other documents produced and more specifically that rent agreement as is evident from the order sheet nothing dated 12-02-2013 and hence section 263 cannot be invoked under the fact....
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....ey decided to run the college in the extension area. Getting permission to run college in extension area was difficult and it was difficult to get students in the outskirts area and hence finally they started functioning in Siddaveerappa Layout, Davangere. The assessee has taken this premise on rent from Sri S R Girish, one of the authors of the trust. It had an intention to take the complete building having cellar, Ground, first and second floors for running and maintaining the college. Hence, lease advance of Rs. 10 Lakhs was paid. However, during the year the assessee had occupied the ground floor admeasuring 1785 sq ft and paid a monthly rent of Rs. 10,000/-only. In the subsequent year for acquiring and using the additional floors viz first and second floors , the assessee has paid a monthly rent of Rs. 30,000/- (TDS is made accordingly) without paying any further lease deposit. The advance estimate made by the CIT at 10 times of the rent at Rs. 1,00,000/- may be applicable to residential usages. In fact, it is very difficult to get building to run colleges as it disturbs the residents of that area. Normal way of estimation of advance is not applicable to non-residential usages....
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.... 6.1 From the above facts, the DR submitted that it is clear that the AO has not examined the impugned issue as it should have been and hence his order was erroneous and prejudicial to the interests of revenue as held by the CIT. With regard to the assessee's submission that the CIT has not followed his proposal to charge interest @ 12% p.a on the excess lease deposit of Rs. 9,00,000/- etc , the DR pointed out para 10 of the judgment in the case of CIT, Mumbai V Amitabh Bachchan 384 ITR 200, (2016) 69 taxmann.com 170 SC, (relevant portion only is extracted as under) : "10. Reverting to the specific provisions of Section 263 of the Act what has to be seen is that a satisfaction that an order passed by the Authority under the Act is erroneous and prejudicial to the interest of the Revenue is the basic precondition for exercise of jurisdiction under Section 263 of the Act. Both are twin conditions that have to be conjointly present. Once such satisfaction is reached, jurisdiction to exercise the power would be available subject to observance of the principles of natural justice which is implicit in the requirement cast by the Section to give the assessee an opportunity of being ....