TaxTMI 
TaxTMI 
2018 (12) TMI 1763
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....st of the revenue. The appellant prays that the conclusion reached by the Learned Principal Commissioner of Income-tax is erroneous and contrary to the facts of the case. 3. On the facts & circumstances of the case the appellant prays that the Learned Principal Commissioner of Income-tax has erred in concluding that in respect of the unsold flats the Learned Assessing Officer should have considered the calculation of income from house property. The amendment in the law is effective from 1/4/2018 and not applicable to A.Y. 2013-14 and in view of this it cannot be construed that order passed by the Learned Assessing Officer is erroneous and prejudicial to the interest of the revenue. The appellant prays that provisions of Section 23 are not applicable in respect of the unsold flats. The appellant prays that order passed by the Principal Commissioner of Income-tax u/s. 263 with reference to computation of income from house property is not justified and be deleted. 4. On the facts & circumstances of the case the complete information about the unsold flats was available with the Assessing Officer during the assessment proceedings and he was aware about the fact of unsold flats as on....
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....or Assessment Year 2013-14 on 30.09.2013 declaring total income at Rs. 28,94,92,970/-. The return of income was selected for scrutiny. The assessment was completed on 24.02.2016 under section 143(3) of the Act. The Assessing Officer while passing the assessment order made addition of interest expenditure of Rs. 14.27 Crore and disallowance under section 14A of Rs. 14,851/-. The assessment order was revised by ld. PCIT by invoking the provisions of section 263 vide its order dated 27.03.2018. The ld. PCIT issued show-cause notice under section 263 dated 28.02.2017 for proposed revision on two issues i.e. (i) that assessee has shown unsold flat of Rs. 66.39 Crore in closing stock. However, the assessee has not offered any income from the said unsold flats under the head "Income from House Property" in its computation of income. The Assessing Officer should have considered the unsold flat for taxing at least 8% of the value of the stock as income of the assessee from the said flats in view of the decision of Hon'ble Delhi High Court in CIT v. Ansal Housing Finance & Leasing Co. Ltd. [2013] 29 taxmann.com 303 : 213 Taxman 143 : 354 ITR 180. And No. (it) The Assessing Officer while ....
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....stake in calculating the capital work-in-progress and that no excess capital work-in-progress forwarded in the subsequent Assessment Years. Thus, the order passed by Assessing Officer is neither erroneous nor prejudicial to the interest of Revenue. 4. The assessee further explained that as per notice that work-in-progress as on 31.03.2012 was Rs. 733.46 crore after disallowing interest of Rs. 13.22 Crore. The closing work-in-progress (CWIP) should have been Rs. 720.24 Crore. According to notice under section 263 the CWIP as on 01.04.2012 should have been taken at Rs. 720.24 Crore whereas the Assessing Officer has taken CWIP at Rs. 739.56 Crore. Thus, as per the notice, there is a mistake in determining the opening CWIP as on 01.04.2012 and consequently the CWIP is carry forward more for Rs. 19.32 Crore. The assessee explained that Assessing Officer has taken CWIP as per the books of account at Rs. 739.56 Crore to reduce the interest already disallowed at Rs. 27.66 Crore and determined closing CWIP as on 31.03.2012 at Rs. 711.90 Crore and furnished the breakup of the ld. PCIT. It was explained that Rs. 27.66 Crore includes interest disallowance for Assessment Year 2012-13 amounting....
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....essment proceeding complete details were furnished to the Assessing Officer regarding both the issues sought to be revised by ld. PCIT. The Assessing Officer after examining both the issues has taken a possible view. Thus, the order passed by Assessing Officer is not erroneous and in view of the law laid down by Hon'ble Apex Court in CIT(Central) v. Max India Ltd. [2008] 166 Taxman 188 no revision is permissible. The ld. AR of the assessee further submits that sub-section (5) of section 23 is inserted by Finance Act, 2017 and applicable w.e.f. 01.04.2018 only. Thus, the provision not applicable for the year under consideration. The ld. AR of the assessee further submits that insofar as the decision of Ansal Housing Finance & Leasing Co. Ltd. (supra) referred and relied by ld. PCIT. The ld. AR of the assessee submits that there is another decision of Hon'ble Gujarat High Court in CIT v. Neha Builders (P.) Ltd. [2007] 164 Taxman 342 wherein it was held that a property is used as stock-in-trade then said property would become or partake character of stock and any income derived from such stock would be "Income from Business" and not from "Income from House Property". Therefore....
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....r erroneous nor prejudicial to the interest of Revenue. The ld. AR for the assessee further submits that if two view are possible and the assessing officer has adopted one of the possible view the order is not erroneous. For revising the assessment order the twin condition as provided in section 263 must be fulfilled. In support of his submission, the ld. AR of the assessee relied upon the following decision: (i) Malabar Industrial Co. Ltd. v. CIT [2000] 109 Taxman 66 : 243 ITR 83 (SC) (ii) CIT v. Max India Ltd. [2008] 166 Taxman 188 : [2007] 295 ITR 282 (SC) (iii) CIT v. Ashish Rajpal [2009] 180 Taxman 623 (Delhi) (iv) Neelam Mercantile (P.) Ltd. v. ITO [2009] 31 SOT 278 (Mum.) (v) Marico Industries Ltd. v. Asstt. CIT [2009] 27 SOT 73 (Mum.) (URO) (vi) Oil India Ltd. v. CIT [1982] 9 Taxman 262 : 138 ITR 836 (Cal.) (vii) Sonal Garments v. Jt. CIT [2005] 95 ITD 363 (Mum.) (viii) Remex Constructions v. First ITO [1986] 28 Taxman 323 (Bom.) On issue of non-applicability of section 23 in respect of unsold flats, the ld. AR relied upon the following decisions: (ix) Ansal Housing & Construction Ltd. v. Asstt. CIT [2018] 95 taxmann.com 17 : 256 Taxman 294 (SC) (x) Ch....
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....u under it, is that the order of ITO is erroneous, so far as it is prejudicial to the interest of revenue. The CIT has to be satisfied twin conditions, namely (1), the order of AO sought to be revised is erroneous and (2) it is prejudicial to the interest of revenue. If one of them is absent- if the order of ITO is erroneous but is not prejudicial to the revenue or if it is not erroneous but is prejudicial to the revenue - recourse cannot be had to section 263(1) of the Act. The provision cannot be invoked to correct each and every type of mistake or error committed by the AO; it is only when an order is erroneous that the section will be attracted. An incorrect assumption of fact or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principle of natural Justice or without application of mind. The 'phrase prejudicial to the interest of revenue' is not an expression of art and is not defined in the Act. Understood it is ordinary meaning it is of wide import and is not confined to loss of tax. The scheme of the Act is to levy and collect tax in accordance with the provision of....
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....come himself at the higher figure. This is because ITO has exercised the quasi-judicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be termed to be erroneous, simply because the CIT does not feel satisfied with the conclusion. It may be said in such a case that in the opinion of the CIT the order in question is prejudicial to the interest of revenue. But that by itself would not be enough to vest the CIT with the power to suo motu revision because the first requirement, namely that the order is erroneous, is absent. Similarly, if an order is erroneous but not prejudicial to the interest of the revenue, then the power of suo motu revision cannot be exercised. And every erroneous order cannot be subject matter of revision because the second requirement must be fulfilled. There must be some prima facie material on record to show that tax which was lawfully eligible has not been imposed or that by the application of the relevant statute, on an incorrect or incomplete interpretation, a lesser tax than what was just has been imposed. When exercise of statutory power is dependent upon the existence of certain objective facts, the aut....
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.... not "Income from House Property". Therefore, keeping in view the contrary decision of non-jurisdictional High Court, we are of the view that issue is debatable and two views are possible. The Hon'ble Supreme Court in Max India Ltd.'s case (supra) held that when two views are inherently possible, the provision of section 263 would not attract. We may refer here that the unsold flat was treated by assessee as stock-in-trade in its books of account. The flats sold by the assessee were assessed under the head "Income from Business". Therefore, in our considered view that the order for not bringing the unsold flats to tax at notional letting value under the head "Income from Other Sources" is not erroneous. The assessing officer has taken one of the possible views. Even otherwise, sub-section (5) in section 23 was inserted by Finance Act, 2017 and is applicable only from 01.04.2018 and not for the Assessment Year under consideration. Therefore, the twin condition as prescribed under section 263 are not fulfilled in respect of first issue i.e. taxability of unsold flats under the head "Income from House Property". 14. So far as, disallowance of interest under section 36(1)(iii)....