TaxTMI 
TaxTMI 
TaxTMI 
2023 (11) TMI 540
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.... 1.1. The Ld. AO has applied his mind to the issue under consideration and has made proper inquiries and therefore, the order u/s 143(3) of the Act dated 22.12.2019 is not erroneous and prejudicial to the interest of the revenue. 1.2. The issue being a debatable issue, cannot be subject matter of revision u/s 263 of the Act, as the order u/s 143(3) of the Act dated 22.12.2019 cannot be considered as erroneous and prejudicial to the interest of the revenue. 2. The Ld. CIT, has violated principles of natural justice, by not considering the submissions filed by the assessee in passing order u/s 263 of the Act dated 10.03.2022. 3. The Ld. PCIT erred in holding that annual value of the property forming part of closing stock, should be taxed under the head "Income from House Property". 3.1. The Ld. PCIT failed to take into consideration the amendment brought in by Finance Act, 2017 w.e.f. AY 2018-19 in this regard. 3.2. The Ld. PCIT has also failed to take into consideration the judgments relied upon in this regard. 3.3. The Ld. PCIT has also failed to take into consideration the fact that out of 10 unsold units, advance consideration was received from buyers in respect of 8 ....
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....s and circumstances of the case and law applicable thereto. 7. In the backdrop of the aforesaid facts and circumstances of the case the sole question arises for determination is:- "The sole issue flagged by the Ld. PCIT by invoking the revisionary jurisdiction under section 263 of the Act is the AO has failed to tax the annual value of the property farming part of the closing stock under the head "income from house property".? 8. Undisputedly assessee company has got OC for B wing on 4/6/2013 and in respect of this wing the closing stock has been shown at Rs. 3,76,84,630/- as the unit of B wing was ready on 4/6/2013 more than three financial years have come into picture in relation to the year under consideration i.e. A.Y.2017-18. The Ld. PCIT has taken the view that since this project has been developed on ownership basis assessee company was owner of the property till it is sold and the annual letting value (ALV) of the unsold stock (held as stock in trade) farming part of the inventory should have been brought to tax as deemed rent under section 23(1)(a) of the Act, whereas the assessee has neither offered deemed rent of unsold flats nor the AO brought the same to tax. 9. T....
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....Amount of purchase consideration Cost of improvement if any Details of TDS deducted on above transaction 11. The Ld. A.R. for the assessee further contended that pursuant to the queries raised the detailed reply was filed vide letter dated 09.07.2019 available at page 38 to 41 of the paper book, the relevant paras thereof are as under: "(v) The commercial Project "Damji Shamji Corporate Square" has been undertaken by the assessee-firm which consists of 3 wings. The details of all the each wing is as under:- * The Commencement Certificate for Wing A has been received on 08.09.2006 and 64.61% of the construction was completed as on 31.03.2017 on the basis of construction cost incurred till 31.03.2017 to total projected construction cost. However no gross profit had been declared as Gross Profit had been overbooked in previous years. The copy of WIP A/c and Working of Gross profit till 31.03.2017 has been attached herewith. * Occupation certificate for Wing B has been received on 04.06.2013. During the year, gross profit of Rs. 2,56,58,922/- is declared in respect of Wing B, on account of sale of Opening Stock. The copy of WIP A/c reflecting the details of area in stock and....
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.... as on 3 1.03.2017 A Calculation of stock value as on 31.03.2015 Land cost 186,275,180 Finance cost 42,921,508 Construction cost 335,624,400 Indirect cost (Admin & selling expenses) 14,339,496 Add : Gross profit booked till 31.03.2015 579,160,584 8,218,025 Less : Sale booked till 31.03.2015 587,378,610 (445,538,526) 141,840,083 B Unsold area as on 31.03.2015 sq. ft. 23336.00 C Cost per sq.ft. [A/B] 6078.17 D Unsold area as on 31.03.2017 sq. ft. 6,200 E Closing stock value as on 31.03.2017 (C*D) 37,684,630 13. Thereafter Ld. A.R. for the assessee further contended that vide further notice under section 142(1) dated 12.10.2019 the AO called details of all projects/wings in the form of date of commencement, date of completion, number of units, flat constructed along with supporting proof and also to furnish a statement giving details of units/flats sold wing-wise in the given format. In response to the aforesaid queries assessee filed submissions dated 11/11/2019 by duly exp....
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....we would like to see the settled principle of law for exercising the jurisdiction under section 263 of the Act. Hon'ble Supreme Court of India in case of The Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83 (SC) laid down that twin conditions are required to be satisfied before invoking the jurisdiction under section 263 of the Act which are: 1. That the order of AO must be erroneous and 2. As consequence of passing an erroneous order prejudice is caused to the interest of revenue. 18. It is further held that in the following circumstances the order of AO can be held to be erroneous: "(i) if the Assessing Officer's order was passed on assumption of incorrect facts; or assumption of incorrect law; (ii) Assessing Officer's order is in violation of the principles of natural justice; (iii) if the AO's order is passed by the without application of mind; or (iv) if the AO has not investigated the issue before him." 19. Hon'ble Supreme Court in case of The Malabar Industrial Co. Ltd. (supra) further held that the phrase "prejudicial to the interest of revenue" has to be read in conjuncture with erroneous order passed by the AO. Hon'ble Supreme Co....
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....ifies the notional income in respect of house property as under: "17.1 Section 23 of the Income-tax Act provides for the manner of determination of annual value of house property. 17.2 Considering the business exigencies in case of real estate developers, the said section has been amended to provide that where the house property consisting of any building and land appurtenant thereto is held as stock-in-trade and the property or any part of the property is not let during the whole or any part of the previous year, the annual value of such property or part of the property, for the period up to one year from the end of the financial year in which the certificate of completion of construction of the property is obtained from the competent authority, shall be taken to be nil. 17.3 Applicability: This amendment takes effect from 1st April, 2018 and will, accordingly apply from assessment year 2018-19 and subsequent years." 23. So the AO, after examining the complete details filed by the assessee, proceeded to decide the issue in question by following the CBDT circular No.2/2018 by framing the assessment by not determining the national income from unsold flats held by the assessee as ....