TaxTMI 
TaxTMI 
2023 (11) TMI 540
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....s 263 of the Act dated 10.03.2022 is bad in law. 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 th....
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....ies to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts 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....
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....r in following format along with copy of sale deed and supporting vouchers/ledgers substantiating your claim. Description of asset Date of sale Consideration (Rs.) Date of purchase 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....
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....nce." 12. The Ld. A.R. for the assessee further taken us through the working of closing stock as on 31/3/2017 for the year under consideration regarding wing B project available at page 44 which is as under: M/S CORONATE CONSTRUCTIONS Asst. year 2017-18 WING B PROIECT Working of closing stock 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 th....
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....as made any discussion as to the deemed rent and relied upon the decision rendered by Hon'ble Bombay High Court in case of Sane & Doshi Enterprises (High Court of Bombay) 58 taxmann.com 111, Gundecha Builders (High Court of Bombay) 102 taxmann.com 27 and order passed by coordinate bench of Tribunal in case of Inorbit Malls P. Ltd. in ITA No.2220/M/2021 order dated 11.10.22 and Dimple Enterprises 129 taxmann.com 66. 17. Before discussing the legality and validity of the impugned order passed under section 263 of the Act 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 or....
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....tion raised by the Ld. D.R. for the Revenue that AO had not applied his mind. The assessee has also brought on record during assessment proceedings occupation certificate of flats dated 4.6.2013 which shows that out of 10 flats flagged by the Ld. PCIT, assessee has taken the advance in 8 flats and two flats were used for stocking raw material etc. 22. The Ld. A.R. for the assessee further contended that CBDT vide its circular No.02/2018 (F.No.370142/15/2017-TPL) has given explanatory notes to provisions of Finance Act, 2017 vide order dated 15.02.2018 as item No.17 and classifies 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 yea....
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....rdered to be set aside. 26. Resultantly the appeal filed by the assessee is allowed. Order pronounced in the open court on 09.11.2023. ============= Document 1 GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTME TU, CORONATE CONSTRUCTIONS GR FLR, MEGHDOOT, VALLABH BAUG LANE GHAJRUPAR (E) MUMBAI 400077, Maharashtra PAN/TAN: AY: 大 AAEFC129ers 2017-0 DIN & Notice No. Elite NOTICUTOR THE HEARING Dated: 21922022 1961-Assessment Year 2017-18. COMNE TAX ACT, In this regard. a hearing in the matter is fixed on 28/02/2022 at 03:04 PM. You are requested to attend in person or through an authorized representative to submit your representation , if any alongwith supporting documents/information in support of the issues involved (es mentioned below). If you wish that the Revtelen pronting Be concluded on the basis of your written submissions/representations fled in this office, on or before the said due date, Bioh your personal hondance not requires. You link: also have the ponta fe your submission from the sing portal using the Incometaxdinding.n Please be the above AY DEPARTMENT. On pe....