TaxTMI 
TaxTMI 
2016 (3) TMI 1141
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....see with M/s Dimple Realtor Ltd., the developer has to incur all construction and development related expenses. However, the assessee has claimed various expenses including opening balance of WIP of Rs. 2.86 crores. (b) The assessing officer has allowed the claim of the assessee including the opening value of WIP without realising that the assessee is not entitled to claim the same. Accordingly, he initiated revision proceedings u/s 263 of the Act. 3. Before Principal CIT, the assessee explained the reasons or necessity to incur the various expenses. It was submitted that the assessee herein has purchased the land from various owners as per deed of conveyance dated 7th September, 2006. Prior to the sale of land to the assessee herein, the owners had entered agreement to develop land with two other persons, but the same could not be executed. The concerned persons have put their claim over the land and the assessee had to settle the matter by paying compensation. It was further submitted that the assessee was entitled to receive 21 flats as per the development agreement entered with M/s Dimple Realtor Ltd. The assessee claimed that it has made value addition to those flats so th....
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....sessing officer should also examine any other claim which on examination is found to be not allowable or genuine. Aggrieved by the revision order passed by Ld Principal CIT, the assessee has filed this appeal before us. 5. The Ld A.R submitted that the Ld Principal CIT has not demonstrated as to how the order passed by the assessing officer was erroneous and prejudicial to the interests of the revenue. He further submitted that the Ld Principal CIT has merely entertained suspicions and proceeded to pass the revision order on surmises and conjectures. He further submitted that the directions given by Ld Principal CIT to examine the opening WIP allows the assessing officer to examine the expenses relating to earlier years and further his direction to examine any other claim for expenses gives open hand to the assessing officer to carry out fresh assessments by making roving enquiries. He submitted that the provisions of sec. 263 of the Act requires that the Principal CIT should be specific on the points, which he considers to be erroneous and prejudicial to the interests of the revenue. However, the directions given by the Ld Principal CIT requires the assessing officer to redo the....
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....fficer has issued notice dated 27-01-2015 u/s 142(1) of the Act, wherein he has asked specific queries with regard to the various expenditure claims including those related to purchases, commission & supervision charges, labour charges, land purchase details, Joint venture details, sales details etc. The AO has also called for the books of account and bank books also. The assessee, in response thereto, has supplied all the details that were called for by the AO. The assessing officer, after due examination of the various details furnished by the assessee, has accepted the claim of the assessee. The Ld A.R took us through the notices issued by the AO and various letters furnished by the assessee to the AO in support of his submissions. Accordingly, the Ld A.R submitted that the Ld CIT(A) was not correct in presuming that the assessing officer has allowed the claim of the assessee without carrying out necessary examination. He further submitted that the assessee has made value addition to the flats allotted to it by incurring these expenses, which has helped it to fetch more sale price to the flat. Accordingly, the ld A.R submitted that the commercial decision taken by the assessee s....
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....ct assumption of fact or an incorrect application of law, will satisfy the requirement of the order being erroneous. An order passed in violation of the principles of natural justice or without application of mind, would be an order falling in that category. The expression "prejudicial to the interests of the Revenue", the Supreme Court held, it is of wide import and is not confined to a loss of tax. What is prejudicial to the interest of the Revenue is explained in the judgment of the Supreme Court (headnote) : "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 the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the Income-tax Officer is u....
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....see has purchased the land from the owners, who had earlier entered into an agreement with two other parties. Hence the possibility of creating hindrances by the concerned persons should have been available and the assessee was constrained to clear all of them, lest assessee's project should suffer. However, the Ld Principal CIT has taken the assessee has incurred those expenses on humanitarian grounds or gratuitously and hence the same cannot be considered as business expenses. We are of the view that the learned CIT has merely taken a different view of the matter, where as it is seen that the view taken by the assessing officer in allowing the claim was one of the possible views, since the same has been incurred in furtherance of the business objectives. It is well settled proposition that the assessment order would not be rendered prejudicial to the interests of the revenue, if the assessing officer has taken a possible view of the matter. 12. Similarly, the view taken by the Ld CIT that the expenditure incurred by the assessee on the flats allotted to it as per the development agreement cannot be considered to be non-business expenditure is his own view. Normally a businessman....