TaxTMI 
TaxTMI 
2025 (11) TMI 632
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....irst instance the assessee initially assailed the revisionary orders passed by the Ld. PCIT (Central) Delhi-2 under Section 263 of the Act both dated 29.02.2024 before the Hon'ble High Court of Delhi by filing Writ Petitions under Article 226 of the Constitution of India and the Hon'ble Delhi High Court by and under the order dated 26.03.2025 pleased to dispose of the Writ Petitions by granting liberty to the petitioner, the assessee before us, to avail the alternative efficacious statutory remedy by filing appeals before the Tribunal and thereafter the assessee could file the appeals before us. The explanation so rendered by the assessee in preferring the appeals late is thus, found to be justified. We further find that there is no prejudice caused to the respondent department in getting the appeals admitted by us and further that unless the appeals are admitted irreparable loss and injury would cause to the appellant. Hence, the delay is condoned and both the appeals are admitted for consideration on merit. 4. Since both the appeals preferred by the assessee are on identical issues, these are heard analogously and are being disposed of by a common order by taking ITA No.1868/D....
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.... The assessee has also raised objection against the initiation of revisionary proceeding under Section 263 of the Act as mere change of opinion in the absence of any material facts brought by the revenue or at all existing in the case of the assessee. In this regard, the judgment passed by the Hon'ble Apex Court in the case of CIT Vs. Calvinator of India Ltd., reported in (2020) 320 ITR 561 (SC) was relied upon. (iv) Non-satisfaction of the jurisdictional fact i.e. basic twin conditions envisaged under Section 263 of the Act in initiating revisionary proceeding against the assessee was not fulfilled. 7. However, such submissions made by the assessee supported by relevant documents were found to be not acceptable and the Ld. PCIT concluded the proceeding under Section 263 of the Act directing the Ld. AO to pass assessment order afresh on the issue of incorrect claim of house property as already envisaged hereinabove upon considering the complete facts and circumstances of the case. Hence, the instant appeal before us. 8. Heard the rival submissions made by the respective parties and perused the relevant materials available on record. Before the Ld. PCIT the assessee b....
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....e taxable income and result in loss to the exchequer. (iv) Moreover the view taken in the above matter by the Ld. A.O., consistent with the view taken in the previous years, is correct and error free. Even if your goodself's takes an alternative view to that of the Ld.AO, the same still cannot justify lawful action u/s. 263 of the Act vide Malabar Industrial Co. Ltd. v. CIT [2000] 243 ITR 83 (SC). (v) It is respectfully further submitted that even a debatable or a plausible view cannot lawfully justify the proposed revision action u/s. 263 of the Act, as has been held in plethora of cases including most recent judgment by the Hon'ble High Court of Delhi in PCIT v. M/s. Brahma Centre Development Put. Ltd. in ITA No. 116 and 118 of 2021 dated 05.07.2021. B. DEDUCTION OF FINANCE COST AS BUSINESS EXPENSES (i) That vide show cause notice, your honour is of the view that interest expenses incurred by the assessee amounting to Rs. 87.78 Crores out of the total finance cost of Rs. 140,21,11,289 / - should be capitalized against "Non-Current Investment/Other Investment" and not be deducted as a business expenses under the head 'Profit and Gain....
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....nt show cause notice seeks to effect. This settled position of the law has been reiterated by the Hon'ble High Court of Delhi in PCIT v. M/s. Brahma Centre Development Pot. Ltd. (supra) in the following manner. "10. The standard to be adopted while dealing with the issue as to whether or not an AO has carried out an enquiry or verification, all that the Court is required to ascertain is as to whether the AO applied his mind. 10.1. The fact that the AO has not given reasons in the assessment order is not indicative, always, of whether or not he has applied his mind. Therefore, scrutiny of the record, is necessary and while scrutinising the record the Court has to keep in mind the difference between lack of enquiry and perceived inadequacy in enquiry. Inadequacy in conduct of enquiry cannot be the reason based on which powers under Section 263 of the Act can be invoked to interdict an assessment order." (underlining supplied) (vii) Your honour's kind attention is also drawn to a recent judgment of the Hon'ble High Court of Bombay in PCIT v. Shivshahi Punarvasan Prakalp Ltd. vide ITA no. 397 of 2018 dated 05.08.2022, wherein the Hon'ble Hi....
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....h that of the CIT. The Court held that merely because the CIT B. D. Prithiani itxa-397.18.doc had a different view from that reached by the Assessing Officer would not by itself make the view of the Assessing Officer erroneous. To be an erroneous order it must be in breach of law. It is axiomatic that jurisdiction under Section 263 of the Act can only be exercised on cumulative satisfaction of the twin conditions viz. Of the order being erroneous in law and the order being prejudicial to the interest of the revenue. Thus in this case, one of the two conditions precedent to exercise jurisdiction under Section 263 of the Act viz. Order being erroneous in law is not satisfied." (emphasis supplied) 26. In the case of Commissioner of Income-Tax v/s. Chandan Magraj Parmar (supra) this Court has observed as under :- "7. When it is not disputed that the land concerned would not fall under the definition of capital asset, the question of any capital gains arising also will not arise. Moreover, we also find that the ITAT has come to a factual finding that the AO has raised queries with regard to the claim of capital gain on transfer of land, Respondent vide its reply dat....
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...., the question as formulated does not give rise to any substantial question of law. Thus not entertained." (emphasis supplied) 28. In Commissioner of Income-Tax v/s. Future Corporate Resources Ltd. (supra), this Court observed that revision can only be exercised where no enquiry as required under law is carried out and in the case of inadequate enquiry by the Assessing Officer his order cannot be reviewed. Paragraph 6 of the said order is quoted as under :- "6. Mr. Tejveer Singh in fairness agreed that the law is very clear and inasmuch as if there are two possible views and the Assessing Officer has chosen one of the possible views then there is no reason to exercise power of revision and revisional powers cannot be exercised for directing a full inquiry to find out if that view taken after an inquiry is erroneous. Moreover, the power of revision can only be exercised where no inquiry as required under the law is carried out and even in case of inadequate inquiry by the Assessing Officer, the order of the Assessing Officer could not be reviewed." (emphasis supplied) (viii) Furthermore, given that the view taken by the Ld. A.O. is a correct vi....
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....r expenses" has been explained during the course of hearing as can be verified from records. 5. That after setting off losses via inter-head adjustment, the Gross Total Income declared is Rs. 217.09 Crores, against which income tax of Rs. 83,64,77,064/-has been paid by the Assessee which is again a matter of record. 6. The classification of income earned from letting out of shops under the head 'Income from house property' by the Assessee has been accepted in various previous Assessment yeaRs. Since these orders have reached finality, this issue cannot now be revised/ reviewed in the garb of proposed revision u/s. 263 of the Act vide para 2.1.1 of SCN on a mere difference of opinion without any change in material facts, same being contrary to settled law vide Commissioner of Income Tax, Delhi v. Kelvinator of India Ltd. (2010) 2 SCC 723 and Radha Soami Satsang v. CIT 193 ITR 321 (SC). 7. Accordingly, the proposition vide para 2.1 to 2.1.2 of SCN that above income claimed/ classified under the head 'Income from house property' should have been instead classified under the head 'Profits and gains from business or profession' and the ....
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....- will remain unaltered. B. Correct classification of inventory as non-current asset vide IND AS notified by MCA on February 2015 and claim of business expense of interest repayment via P&L Account not "erroneous" or "prejudicial to interests of revenue" (vide para 2.2 to 2.2.5 of SCN) 11. That the Assessee is a Private Company that is governed by the provisions of the Companies Act, 2013, which prescribes the manner in which the Assessee is to prepare its books of accounts or financial statements. 12. In February 2015, your attention is drawn to the amendment in IND AS Rules 2015, wherein a general instruction for preparation of Balance Sheet was issued, requiring the current assets will be those which expects to realize within 12 months. Copy of the said Instructions is hereby enclosed as Annexure-1. 13. In due compliance of the above law, the Assessee has accordingly classified its inventory as such and correctly claimed the interest repayment as business expense. As per the said general instructions referred above, there was only a change in the structure of the Balance Sheet and all these assets referred vide SCN were inventories and shown a....
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.... submissions of the Assessee vide para 6 to 9 be perused in reply to the same. 17. Further, against the statement that similar additions were made and accepted by the Assessee, it is submitted that this is incorrect as explained in preceding paragraphs describing the legal position as above. D. Appropriate and adequate clarifications on "business loss" claimed (vide para 2.4 and 2.4.1 of SCN) 18. The allegation that the Assessee did not submit any clarification on the issue of "business loss" claimed for the subject AY during scrutiny assessment proceedings, despite being required to do so vide notice issued u/s.143(2) of the Act and that the same remained unverified, is ex facie incorrect and contrary to the records. The records of the concerned AO which reflects that all details were duly filed and verified by the AO. 19. Reliance is also placed on the decision of the Hon'ble Jurisdictional Delhi High Court in PCIT v. M/s. Brahma Centre Development Put. Ltd (ITA No.116&118/2021) dated 05.07.2021, wherein the Hon'ble High Court has clearly laid down mere "inadequacy" of enquiry by an Assessing Officer (AO) cannot be ground for validly exercising ....
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....tter. It is only in cases of "lack of inquiry", that such a course of action would be open." Non-satisfaction of jurisdictional facts (pre-conditions or "limbs") u/s. 263 It is settled law that for the lawful and valid exercise of power of revision u/s. 263 of the Act, your goodself must concurrently/ conjointly satisfy the two pre-conditions or "limbs" thereunder (vide Commissioner of Income- tax, Mumbai vs. Amitabh Bachchan [2016] 69 taxmann.com 170 (SC)) i.e. the scrutiny order is both: (i) erroneous, and (ii) prejudicial to the interest of revenue. (iii) As submitted above, the proposed revision vide para 2.1 to 2.1.2 will result in loss of tax (collected vide ITR and scrutiny order), whilst para 2.2 to 2.4.1 are based on patently erroneous interpretation of (settled) law by your goodself. It is also settled law that when two views are possible and the AO has taken one view with which your goodself does not agree with, the scrutiny order cannot be treated as erroneous or prejudicial to the interest of the revenue, unless the view taken by the AO is unsustainable in law. In the present case, as submitted above, the v....
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....ance of other expenses amounting to Rs. 13,68,61,227/- in regard to the house property income, details whereof is appearing at page 58 of the paper book filed before us. In the event, the assessee is directed to reclassify the rent receipts as business income, the assessee would be entitled to claim deduction of the above expenses along with an additional depreciation claim of Rs. 60,19,18,398/- being 10% of the building value under Section 32 of the Act. The calculation whereof appearing at page 50 of the paper book is as follows: 11. On a standalone basis the effect of such reclassification of rent receipts as business income on the overall income of the assessee is as follows: Computation as per Section 263 order Amount (in Rs.) Reference to paper book Profit & Loss Account (PBT) 17,09,20,004 Pg. 58 - Computation of income Add: Depreciation as per Companies Act 10,00,54,347 Add: CSR Expenditure 30,36,000 Gross Total - (A) 27,40,10,351 Computation as per Section 263 order Amount (in Rs.) Reference to paper book Less: Depreciation as per the Act - (B) (60,19,18,398) Annexure 3....
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....l (in Acres) 8.00 Purchase Cost of land of Mall 54,57,584 Add : Misc Expense incurred 6,16,300 Total Cost of Land as per Balance Sheet of ADIPL 60,73,884 15. We have considered the 7 deed of sales, executed between the assessee and the owner of the properties, one of which being Sr. No. 3 of the above list is reproduced herein below: 16. From the above documents it is crystal clear that the assessee before us is the owner of the shops in dispute income whereof has been directed to be treated as 'business income' instead of 'income from house property' income by the revisionary order under Section 263 of the Act passed by the Ld. PCIT. This is admittedly an incorrect finding of fact which cannot justify the order passed by the Ld. Assessing Officer accepting rental income of the assessee in respect of shops in question as erroneous. Thus, the first condition envisaged under Section 263 of the Act in exercising revisionary jurisdiction by the Ld. PCIT fails. The second condition as to whether the order passed by the Ld. AO is prejudicial to the interest of revenue has already been dealt with in the foregoing paragraph justifies, the treatment made by the as....
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....unsustainable in law. The order of Ld. AO may not be wrong neither the PCIT can direct reconsideration on this ground but only when the order is erroneous. The order of the Ld. AO who had conducted inquiries and had acted as an investigator cannot be said to be erroneous unless further enquiry is conducted by the Ld. PCIT concluding with a definite finding on merit establishing the fact of order of Ld. AO being erroneous. Thus, the Ld. AO's order could be said to be erroneous unless the PCIT holds and records reason why it is erroneous. On this issue, the following observation was made by the Hon'ble Delhi High Court: "16. Thus, in cases of wrong opinion or finding on merits, the CIT has to come to the conclusion and himself decide that the order is erroneous, by conducting necessary enquiry, if required and necessary, before the order under Section 263 is passed. In such cases, the order of the Assessing Officer will be erroneous because the order passed is not sustainable in law and the said finding must be recorded. CIT cannot remand the matter to the Assessing Officer to decide whether the findings recorded are erroneous. In cases where there is inadequate enquiry but ....
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....er has been done and thus, the ratio laid down in the order passed by the Hon'ble jurisdictional High Court is found to be squarely applicable in the case in hand. 21. The Ld. PCIT has not ascertained the jurisdictional fact of claim of depreciation of Rs. 60.39 crores to be made by the assessee in the event the treatment made by the assessee is directed to be recategorize as 'business income' from 'income from house property' the same would ultimately lead to loss of tax and actually prejudicial to the interest of Revenue. As no concrete finding is forthcoming from the order impugned issued by the Ld. PCIT in the absence of proper inquiry conducted by him, the ratio laid down by the Hon'ble High Court in the case of ITO Vs. D.G. Housing Projects Ltd. (supra) is found to be squarely applicable. In this particular case, the order of Ld. AO cannot be said to be erroneous or the same is not sustainable in the eyes of law in the absence of concrete finding recorded by the Ld. PCIT to that effect on merit and thus, the order remanding the issue to the file of the Ld. AO to decide the same afresh is beyond jurisdiction exercised under Section 263 of the Act by the Ld. PCIT. 22. Thu....
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.... Lettable Value Receivable Bent Higher of Above Annual Rental Value u/s 23 1951084909 Tax Paid 1953084909 House 25951120 25951120 1927133789 Deduction w/'s 24(a) 578140137 Interest on Borrowed fund House Property 524306921 1102447058 824686731 Gross Total Income Gross Total income as -Ve figure is not allowed in return -193219678 form Total income 0 Round Off u/s 288A Calculation of MAT 170030004 170920004 Profit as per part il af Schedule It 236989913 236989913 Income Tax si/'s 40(a )(ai) 36477064 36477064 Total 273466977 273466977 Deferred Tax Assets 102546973 102545973 102546973 102546973 170920004 170920004 Tax Calculated @ 18.5% on Book Profit is more hence tas is calculated u/s 115JB Tax Due u/s 11518 31620201 31620201 Surcharge @12% 3794424 1794424 35414625 35414625 Health & Education Cess (HEC)@3% 1062439 1062439 36477064 36477064 T.D.S/T.C.S 130496340 130496340 94019276 94019276 Refundable (Round Off u/s 2888) 94019280 94019280 Bent Higher of Above Annual Rental Value u/s 23 Document 3 AMBIENCE DEVELOPERS & INFRASTRUCTURE PRIVATE LIMITED Je ....
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.... ये जिला। रà¥à¤¡à¤‚गायां का. मालिक व. कà¥à¤·à¤¾ चिप बरूवे इनà¥à¤¸à¤‚काल नमà¥à¤¬à¤° 997 तारीख 23.2.8% का हूठ। पो. हर तरहढ़े पार से पाठहै । पानि रठन, वय, पटटे, पर नहीं हैं । न शà¥à¤µà¤µà¤¾à¤¯à¤° के नोटिस आये है। में दिकà¥à¤·à¥€ अदालत में संवेदमा विचाराधीन है । इंपो जमीन की किमत बहà¥à¤¤ अà¤....
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.... तेरह पांडे काम में ले उजर नहीं होगा । हà¥à¤²à¤ƒ जर थà¥à¤¯ सà¥à¤¤à¤¾à¤ªà¤¤à¥€à¤² में से बलà¥à¤¯à¥‡ "रशींद तारीख, 18.11.91 दà¥à¤œà¤°à¤¿à¤¯à¥‡ डाफà¥à¤Ÿ सà¥à¤¬à¤²à¤¿à¤— ।, 10, 000/रà¥à¤ªà¤¯à¥‡ । à¤à¤• लाख दस हजार रूपयें । सà¥à¤¯à¤¾à¤‚स पà¥à¤¤à¥à¤°à¤‚त पा चà¥à¤•à¤¾ हूं, । य रोगह जनाब सब रजिसà¥à¤Ÿà¥à¤°à¤¾à¤° साहब़ बजरिये हापट नमà¥à¤¬à¤° 1243 10 • तारीख 18-2- 19....
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....¤° पानीनः वà¥à¤¯à¤‚बà¥à¤¦à¤¾ पर आज तक कई बार साबित होगा उसंका में जिमà¥à¤®à¥‡à¤µà¤¾à¤° हूंगा. । आप के बाद खरीदार खà¥à¤¦ जिमà¥à¤®à¥‡à¤µà¤¾à¤° होगी । मैं और मेरे यारखान इस तहरीर के हर तरह से पाबनà¥à¤¦ रहेगे । अगर जमीन वà¥à¤¯à¤·à¥à¤ दा नितळीयत के सवात, पर या दà¥à¤—à¥à¤§ छांजूनी प कबà¥à¤œà¤¾ खरà....