TaxTMI 
TaxTMI 
2017 (8) TMI 739
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....ssing Officer made assessment u/s. 143(3) of the Act determining the total income at Rs. 7,05,47,380/- after denying exemptions u/s. 11 & 12 of the Act. The Commissioner examined the record of proceedings and show caused the assessee as to why the assessment order dated 29.03.2014 (supra), be not treated as erroneous and prejudicial to the interests of the Revenue. The Commissioner noted that while computing the total income the Assessing Officer worked out the income under the head "Income from house property" at Rs (-)11,19,070/- after allowing the deduction for municipal taxes paid, etc. The Commissioner further noted that while computing income under the head "Income from other sources", the Assessing Officer had allowed deductions u/s. 57 of the Act, which, inter-alia, included a sum of Rs. 2,23,92,358/- representing, expenditure on property other than property taxes. In the show cause notice, the Commissioner further observed that the said expenditure was in the nature of ground, electrical, general expenses and that, such details were disclosed in schedule 15 of the Annual Accounts of the assessee. On this basis, the Commissioner inferred that the expenses of Rs. 2,23,92,358....
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.... further appeal before us. 4. Before us, the learned representative for the assessee vehemently pointed out that the Commissioner erred on facts and in law in assuming the jurisdiction u/s. 263 of the Act, in as much as the expenditure of Rs. 2,23,92,358/-, was relating to properties other than those assessed under the head 'Income from House Property' and though it was allowed by the Assessing Officer u/s. 57 (which was otherwise allowable u/s. 37(1)) and, therefore, it would have had no impact on determination of the total income. At the time of hearing, the learned representative for the assessee referred to appropriate pages of the Paper Book, wherein are placed the relevant extracts from the Annual Accounts of the assessee and also correspondences with and the queries by the Assessing Officer during the assessment proceedings to point out that the assessment order could not be said to have been passed without due application of mind. It has also been sought to be demonstrated that the assessment order could not be labelled as based on incorrect assumption of facts or incorrect application of law. In sum and substance, the plea of the assessee is that the Commissioner has exce....
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....riefly touch upon the relevant facts. Notably, in the assessment order, the Assessing Officer has determined the total income at Rs. 7,05,47,380/- under three heads of income, viz. 'Income from house property' at Rs (-)11,19,070/-, 'Income from business & profession' at Rs. 13,47,50,419/- and 'Income from other sources' at Rs (-)6,30,83,974/- thereby determining the total taxable income at Rs. 7,05,47,380/-. The income under the head 'Income from house property' reflects the rental income derived by the assessee of Rs. 2,82,35,927/- which is corresponding to schedule 12 of the Annual Accounts of the assessee, which is placed at page 27 of the Paper Book. Notably, in schedule 15 of the Annual Accounts, copy of which is placed at page 29 of the Paper Book, total expenditure on various counts viz. ground, electrical, general, property tax, rates and taxes, ground rent to State Government, property insurance, stadium redevelopment expenses, water and sewerage charges have been enumerated at Rs. 7,95,34,044/- under the head 'Expenditure in respect of Property'. The amount of property taxes of Rs. 5,71,41,686/- has been considered while computing the income under the head 'Income from ho....
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....operties including the properties from which the income earned has been assessed under the head 'Income from house property'. Considering the factual matrix which has been brought out and which was very much available before the Commissioner, it does not justify the assertion of the Commissioner that the expenditure of Rs. 2,23,92,358/- related to the income assessed by the Assessing Officer under the head 'Income from house property'. In our considered opinion, the Commissioner has been influenced by the heading of schedule 15 of the Annual Accounts viz. "Expenditure in respect of Property". In any case, once the assessee had brought to his notice the wrong factual notion entertained by him at the time of issuing the show cause notice, it was imperative for the Commissioner to have considered the same in an appropriate manner. Though the Commissioner in para 4.1 of his order has specifically noted this submission of the assessee but there is no negation of the same. Therefore, the very foundation of the Commissioner to embark on the exercise of invoking section 263 becomes susceptible to error. Admittedly, the Commissioner has proceeded to show cause the assessee on the ground tha....
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....up the total income in para 6 of the assessment order also reflects that he has considered the matter appropriately. If one looks at the computation of income made under the head 'Income from other sources', it is clear that while determining the deduction u/s. 57 of the Act , the Assessing Officer takes up the figure of Rs. 7,95,34,044/-, which was the expenses depicted in schedule 15 under the head 'Expenditure in respect of property' and has reduced therefrom a sum of Rs. 5,71,41,686/- being property tax, as the same was considered by him separately while computing income under the head 'Income from house property'. In our considered opinion, the queries raised by the Assessing Officer and the manner in which he has computed the income finally in para 6 of the order clearly points out that he was conscious of the fact that the expenditure in question was not related to the income being assessed under the head 'Income from house property', an aspect which is supported by the fact-situation. Therefore, the charge made by the Commissioner in the order that the assessment order has been made without making enquiries and verification is factually untenable. 8. Before parting, we may....