TaxTMI 
TaxTMI 
2024 (3) TMI 532
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.... the following grounds: 1. Ground No. 1 - General 1.1 On facts and circumstance of the case and in law, the order passed by the learned PCIT under Section 263 of the Income Tax Act is arbitrary, capricious and contrary to the settled principles of law. The learned PCIT has erred in not verifying that twin conditions for initiating proceedings under section 263 of the Act 2. Ground No. 2 - Order passed by Assessing Officer is not erroneous and prejudicial to the interest of revenue 2.1 On facts and circumstances of the case, the learned PCIT erred in concluding that order passed by the learned AO is erroneous and prejudicial to the interests of the revenue without appreciating that: * The assessing officer has applied the correct legal principles and has arrived at a reasonable and valid conclusion based on the facts of the case. * The mere fact that another view is possible does not render the order passed by the assessing officer erroneous. * The order passed by the assessing officer is based on a proper appreciation of the facts. The learned PCIT cannot substitute his own view for that of the assessing officer, if the view taken by the assessing officer is a....
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....320/-. Therefore, on one hand, the assessee has treated rental income as business income and claimed depreciation on such house property under the Companies Act, but on the other hand the assessee has treated the rental income as "income from house property" for income tax purposes, which is irregular. The PCIT was of the view that by availing standard deduction on "other non-operating income" by treating it as house property has resulted in under assessment of Rs. 3,74,74,320/- and consequent short levy of tax of Rs. 1,76,37,993/-. The PCIT issued notice under Section 263 of the Act dated 17.02.2023, in response to which the assessee filed reply dated 06.03.2023. After taking the submissions, of the assessee on record, the PCIT observed that the property on which rental income has been earned by the assessee has been classified as non-current investments in Schedule 11 of the Audited Annual Accounts. The PCIT was of the view that while passing the assessment order Assessing Officer has not made any inquiries as to why such rental income should not be classified as "income from business" and failed to make detailed inquiries on certain aspects like why the property was classified a....
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....tructed? If such property was not classified as investment in earlier years or since inception and later on reclassified, claim of assessee to treat such income from house property cannot be accepted, (ii) Whether assessee has claimed depreciation on such assets in books of account as well as in income tax since inception or not? If deprecation is claimed on such property at any of earlier period, nomenclature of income would change. These facts need to be ascertained. Whether property related maintenance and other expenditure are disallowed or not while computing taxable income needs to be verified. (iii) Once the AO has already held such income as Income from business or profession in earlier years, such treatment ought to have been followed. While passing the assessment order, AO has failed to make proper inquires relating to claim of assessee for treating such income as "income from house property" which makes present assessment order to be erroneous and prejudicial to interest of revenue. 4.1 So far as claim of assessee that treatment in books of account is not relevant to determining nature of income is concerned and assessee is not in business of letting out of p....
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....allowed only on the basis of difference in treatment in books of accounts and under the Income Tax Act. The Counsel for the assessee placed reliance on several decisions which have held that the accounting treatment given by the assessee in it's books of accounts is not relevant to examine the claim put forth by the assessee for income tax purposes. Further, the Counsel for the assessee submitted that while filing the return of income, the assessee company had disallowed depreciation as per Companies Act pertaining to investment property on which rental income has been received. Accordingly, it was submitted that the assessee has not claimed any depreciation under Section 32 of the Act in relation to the aforesaid house property, which was held as investment by the assessee company. 7. Accordingly, it was submitted that there is no infirmity in the order of Ld. AO looking into the instant facts so as to call for any interference. 8. In response, Ld. D.R. relied upon the observations made by the Ld. PCIT in the 263 order. 9. We have heard the rival contentions and perused the material on record. 10. In the instant facts, we observe that the assessee is engaged in the business of....