TaxTMI 
TaxTMI 
2018 (9) TMI 346
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....w Delhi at total income of Rs. 4,14,07,930/- against the return of income declaring loss of Rs. 7,72,570/- declared by the assessee in A.Y. 2013-2014 and at total income of Rs. 1,29,366/- against the return of income of Rs. 1,29,366/- declared by assessee in A.Y. 2014- 2015. 3. The Ld. CIT on examination of the records of assessments observed that both the assessment orders dated 31.03.2016 is erroneous, as well as prejudicial to the interests of the Revenue to the extent that assessment was completed without proper examination/verification. The A.O. completed the assessments in which he allowed the rental income as income from business and profession without proper examination/verification. Show cause notices under section 263 of the I.T. Act were issued to the assessee, pointing out that rent of house property is taxable under section 22 of the I.T. Act, 1961, which have not been verified by the A.O. at assessment stage. The assessee filed written submissions in response to the show cause notices and submitted that the main objects for which assessee-company was incorporated comprises of dealing in Real Estates by way of trade and development of properties and activities inciden....
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....ng, draining and building on lease. 3. To buy, exchange or otherwise acquire, an interest in any immovable property such as houses, buildings and lands within or outside the limits of Municipal Corporation or such other local bodies and to provide roads, drains, water supply electricity and lights within these areas, to divide the same into suitable plots and rent or sell the plots to the people for building, houses, bungalows and colonies for workmen according to schemes approved by improvement Trusts Development Boards and Municipal Boards thereon and to rent or sell the same to the public and realise cost in lump-sum installments or otherwise to start any housing scheme in India or abroad." 4.1. He has submitted that assessee-company has one of the objects to be renting out the property and in assessment years under appeals. Assessee has only income from renting out the properties which is business income of the assessee. He has submitted that detailed reply was filed before Ld. CIT, on which, no enquiry have been conducted by him and explanation of assessee-company has not been considered in proper perspective. The explanation of assessee has been supported by material evi....
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....earned as rent should be treated as 'business income', and not as 'income from house property'." 6.2. The Honourable Delhi High Court in the case of Pr.CIT-3, New Delhi vs. Delhi Airport Metro Express Pvt. Ltd., (supra), held as under : 9. It is seen in the order dated 30th March 2016, the PCIT has proceeded by setting out the contents of the SCN and the contents of the reply given by the Assessee. It appears that no inquiry, as such, was undertaken by the PCIT to come to the conclusion that the original assessment order was erroneous and prejudicial to the interests of the Revenue. 10. For the purposes of exercising jurisdiction under Section 263 of the Act, the conclusion that the order of the AO is erroneous and prejudicial to the interests of the Revenue has to be preceded by some minimal inquiry. In fact, if the PCIT is of the view that the AO did not undertake any inquiry, it becomes incumbent on the PCIT to conduct such inquiry. All that PCIT has done in the impugned order is to refer to the Circular of the CBDT and conclude that "in the case of the Assessee company, the AO was duty bound to calculate and allow depreciation on the BOT in conformity of the ....
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....n the light of the main objects of the company, there was no lack of enquiry on the part of the Officer for taxing the income under the head business income and not under the head income from house property. Thus, even if the revised return had been completely ignored by the AO that would only make the assessment order erroneous but by any stretch of imagination, it could not be said to be prejudicial to the interest of the Revenue. Thus, there was no merit in the assumption of jurisdiction by the Commissioner under section 263". 6.4. Where assessee-company claimed that it was engaged in real estate business, whether rental income was to be taxed under the Head "Business Income" or "Income from House Property" was to be decided as per objects of the assessee-company. The assessee-company filed copy of the Memorandum of Association and Learned Counsel for the Assessee referred to main objects to be pursued by the assessee-company on its incorporation which provides that assessee-company would be carrying on business for construction of any type of property and to let-out or sell the same to the public, therefore, renting-out the properties is also one of the main objects of the....