TaxTMI 
TaxTMI 
2020 (12) TMI 337
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....by Lido and balance 98% is distributed amongst the assessee company and other co-owners. The assessee has reflected only 98% of the receipts for the purpose of computing house property income, although entire receipts of 100% of its share should have been taken into account for arriving at the annual value of the property. b) The assessee has given the work of maintenance relating to the building given on lease by it to Lido. As per the agreement with the tenants they are required to pay the common area maintenance charges directly to Lido and this maintenance charge is not being reflected by the assessee as part of its annual value of the property. In this regard, it is important to look into the decision of Hon'ble Punjab and Haryana High Court in the case of Sunil Kumar Gupta vs. ACIT (2016) .73 taxmann.com 374 (Punjab & Haryana High Court) where it has been held that maintenance charges would form part of the annual let out value of the property. c) The assessee is claiming an expenditure of Rs. 3,44,17,926/- as interest against the house property income. However, it is observed that in Me initial period a loan was taken by the assessee for its constructio....
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.... license fee/rent constitutes "annual letting value" as per provisions applicable to income from House property and hence, the entire amount of license fee/rent, i.e 100% should have been taken as the Annual Letting value and accordingly, the assessee should have offered 50% of licence fee/rent receipts, instead of 49%, as annual letting value. Similarly, the Ld. Principal CIT took the view that revenue generated by way of other income including advertisements, parking, kiosk, Mall promotions, should have formed part of annual value of the property and 100% of revenue should have been offered by the owners as income from house property. It may be recollected that the Mall owners were getting only 25% of the other income while 75% was retained by M/s. Lido. 7. Before Ld. Principal CIT, the assessee raised various contentions, but all of them were rejected by Ld. Principal CIT. Since the A.O. did not examine these issues, the Principal CIT took the view that the order is erroneous and prejudicial to the interest of the revenue. Accordingly, he set aside the assessment order and directed the A.O. to re-do the assessment by bringing to tax the annual value of "1 MG Mall" as house pr....
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....roposition, the Ld. A.R. placed his reliance on the decision rendered by Hon'ble Supreme Court in the case of CIT Vs. Sital Das Tirath Das (41 ITR 367). 10. The Ld.A.R. further submitted that the maintenance charges paid to the service provider for maintenance of rented premises could not be treated as rent taxable in the hands of the owners. In support of this proposition, he placed his reliance on the decision rendered by Hon'ble Delhi High Court in the case of CIT Vs. DLF Office Developers (25 Taxmann.com 258). Accordingly, the Ld. A.R. submitted that the views expressed by Ld. Principal CIT on merits are not sustainable under law and hence on this count also, the impugned revision order is liable to be quashed. 11. On the contrary, the Ld. D.R. invited our attention to page 84 of the paper book, wherein the copy of notice issued by A.O. u/s 142(1) of the Act during the course of assessment proceedings is placed. The ld. D.R. submitted that the A.O. has raised as many as 31 queries in the notice issued u/s 142(1) of the Act. None of the queries relates to the two issues raised by Ld. Principal CIT in the revision proceedings. The Ld. A.R. submitted that the assessee has de....
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....r cancelling the assessment and directing a fresh assessment. The key words that are used by section 263 are that the order must be considered by the Commissioner to be "erroneous in so far as it is prejudicial to the interests of the Revenue". This provision has been interpreted by the Supreme Court in several judgments to which it is now necessary to turn. In Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83, the Supreme Court held that the provision "cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer" and "it is only when an order is erroneous that the section will be attracted". The Supreme Court held that an incorrect 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) ....
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.... A. L. Goodhart, "the principle of a' case is determined by taking into account the facts treated by the Judge deciding a case as material and his decision as based thereon." The ratio of the decision in Calcutta Discount Company's (10) case cannot apply to the facts of the present case for the following reasons :- (I) Under section 34, the duty of the assessed is only to state the material facts necessary for the purpose of .assessment. Once these facts are accepted and an assessment is made, the Income Tax Officer cannot reopen the assessment unless he had reason to believe that the material facts were not truly disclosed.. The reason why the reopening of the assessment is thus made somewhat difficult is to preserve the finality of the previous decision which should not be destroyed except for a good reason. Once it is found that the disclosure of facts was complete, no jurisdiction could arise for the reopening of the assessment. (II) On the other hand, the condition for the assumption of jurisdiction under old section 33B and the new section 263 is easier to fulfill. The reason is that it is not the Income Tax Officer but a superior Officer like the Co....
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....urry........,...The assessed made a declaration giving the facts regarding initial capital, the ornaments and presents received at the time of marriage, other gifts received from her father-in law, etc., which should have put any Income Tax Officer on his guard. But the Income Tax Officer without making any inquiries to satisfy himself passed the assessment order ....... A short-typed assessment order was made for each assessment year......No evidence whatsoever was produced in respect of the money-lending business done. ............No names were given as to the partics to whom the loans were advanced." In Tara Devi Aggarwai v. Commissioner of Income Tax, (1973) 88 I.T.R. 323, also the Income Tax Officer, Howrah, while remarking that the source of income of the assessed was income from speculation and interest on investments stated that neither the assessed , able to produce the details and vouchers of the speculative transactions made during the accounting year nor was there any evidence regarding the interest received by the assessed from different parties on her investments. Notwithstanding these defects the Income Tax Officer did not investigate into the various source....
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.... further investigate the facts stated in the return when circumstances would make such an inquiry prudent that the word "erroneous" in section 263 includes the failure to make such an inquiry. The order becomes erroneous because such an inquiry has not been made and not because there is any thing wrong with the order if all the facts stated therein are assumed to be correct." 16. The ld. A.R. took us through various documents, information and explanations furnished by the assessee before the A.O. Though the agreement entered by the assessee with M/s. Lido states that M/s. Lido would retain 2% of license fees/rent receipts and 75% of the other income, we notice that the A.O. has not examined the tax implication of the agreement in the context of section 23 & 24 of the Income tax Act, as the Mall income has been offered by the assessee under the head "Income from house property". As rightly pointed out by Ld. D.R. the tax on income from house property is charged on the annual letting value and term "Annual letting value" has been defined u/s 23 of the Act. Further, the assessee is entitled to claim only those expense which are listed out in section 24 of the Act from the annual le....