TaxTMI 
TaxTMI 
2024 (9) TMI 1859
X X X X Extracts X X X X
X X X X Extracts X X X X
....by Assessing Officer u/s. 143(3) as erroneous and prejudicial to the interest of revenue without appreciating facts of the case or application of mind. (ii) That in the absence of any finding that order passed by the AO u/s. 143(3) is erroneous and prejudicial to the interest of revenue, it is not open to set-aside the same for re-verification and as such direction of PCIT, Delhi-1 are highly arbitrary and contrary to purpose, object and scope of sec. 263 of the Act. 2(1) That various issues regarding principles of revenue recognition raised by the PCIT, Delhi-1 in the notice u/s. 263 have already been examined by the Assessing Officer during assessment proceedings u/s. 143(3) and during appellate proceedings by CIT(A)/NFAC and as such there is no case for treating the assessment order as erroneous and prejudicial to the interest of revenue. (ii) That when appeal of the assessee against the assessment order u/s 143(3) has been decided by CIT(A)/NFAC vide order dated 18.12.2023, there is merger of the assessment order with the appellate order qua the issues considered and decided in the appellate authority and hence, the CIT is not competent to issue direc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssue was duly examined by the Assessing Officer during assessment proceedings, hence the issue being of general nature, there is no valid reason to treat the order of the Assessing Officer as erroneous and prejudicial to the interest of the revenue. 7. That order was passed by the Assessing Officer after necessary verification of issues under consideration and assessment order is neither erroneous nor prejudicial to the interest of the revenue. 8. That order passed by the PCIT, Delhi-1 is not justified on facts and same is bad in law. 9. That the appellant craves leave to add, alter, amend or forgo any of the grounds of appeal at the time of hearing." 3. We have heard the rival submissions and perused the material available on record. The return of income for assessment year 2019-20 was filed by the assessee company on 31.10.2019 declaring loss of Rs.3405,92,31,501/-. This return was later revised on 31.10.2019 declaring total loss of Rs.5533,78,55,356/-. The assessee filed another revised return on 30.09.2020 declaring loss of Rs.5533,78,55,356/-. The assessee is a real estate developer engaged in the execution of residential and commercial projects f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....assessee has followed CCM in succeeding assessment years i.e. 2020-21 and 2021-22, for recognition of revenues and it was also accepted by the ld AO while completing the assessment for those two years. The ld CIT(A) found that the AO had indeed accepted the shift in method of accounting from POCM to CCM by the assessee in assessment years 2020-21 and 2021-22 and observed that the AO was not justified in rejecting the same in assessment year 2019- 20. Ld NFAC also took cognizance of the fact that POCM is one of the approved methods and the assessee was indeed entitled to follow the same for recognition of income. Reliance was also placed by the assessee on the decision of the Hon'ble Supreme Court in the case of CIT Vs. Bilahari Investments Pvt Ltd reported in 299 ITR 1 (SC) and the decision of the Hon'ble Jurisdictional High Court in the case of CIT Vs. Manish Buildwell Private Limited reported in 16 taxmann.com 27 (Del HC) ; decision of Hon'ble Karnataka High Court in the case of CIT v. Prestige Estate Projects Pvt Ltd reported in 440 ITR 343 (Kar.) ; and decision of Hon'ble Jurisdictional High Court in the case of Paras Buildtech India Pvt. Ltd reported in 382 ITR 630 (Del). ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... order u/s 263 of the Act by giving direction to the ld AO to determine the income by following POCM method. First of all, we find that the exercise is revenue neutral and recognition of revenue is only an effect of timing difference. The Hon'ble Supreme Court in the case of CIT Vs. Excel Industries Ltd reported in 358 ITR 295 had held that no addition need to be made by the revenue if the issue is revenue neutral as there is no loss of tax to the exchequer. Hence, the assessment order framed by the ld AO cannot be held to be prejudicial to the interest of revenue. It is trite law that ld PCIT in order to invoke his revision jurisdiction should cumulatively satisfy the twin conditions i.e. (i) that is the order of the AO must be erroneous and (ii) order of the AO must be prejudicial to the interest of revenue. Even if one condition is absent, revision proceedings u/s 263 of the Act cannot be invoked by the ld PCIT. Reliance in this regard is placed on the decision of the Hon'ble Supreme Court in the case of Malabar Industrial Company Ltd reported in 243 ITR 83 (SC). Further, we find that the basis of shift in the method of recognition of revenue from POCM to CCM has already....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ciation was per se claimed by the assessee. Even without doing preliminary verification he has directed the ld AO to examine the claim of depreciation. We find that nowhere in the order of PCIT u/s 263 of the Act there is any discussion regarding this issue and the ld PCIT had not even bothered to state as to how the order of the ld AO is erroneous on this issue. Hence, the issue of claim of depreciation for which direction has been given by ld PCIT to AO by invoking revision jurisdiction u/s 263 of the Act richly deserves to be quashed and is hereby quashed. 8. In the similar way, the ld PCIT had merely directed to AO to verify the examine the current liabilities as shown in the balance sheet for their genuineness and correctness. As stated earlier, the ld PCIT had not even taken basic efforts to find out how the order of the ld AO is erroneous on the aspect of examination of current liabilities shown in the balance sheet. In our considered opinion, the direction of ld PCIT is only to make fishing and roving enquiries which is not permissible by invoking revision jurisdiction u/s 263 of the Act. Further, we find that the assessee had indeed furnished detailed reply with regard ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eduction u/s 801AB and the Assessing Officer having accepted the claim of deduction in respect of income under head house property for the year under appeal, is in conformity with the decision of Hon'ble ITAT in appellant's own case for the Assessment Year(s) 2012-13 to 2015-16 and therefore, the direction in the impugned order is vague and without application of mind or verification of basic facts. (iv) That the Learned AO appreciating the facts of the case and following the binding principal of the order(s) of the Higher Authorities, has accepted the claim of the appellant and thus, the order of the AO on this issue cannot be held to be prejudicial to the interest of the revenue. (v) That the income of Rs. 34.36 crore (IndAS adjustment) has been rightly reduced under the head "Business Income", being notional in nature and as such the direction of the PCIT treating the order passed by Assessing Officer as erroneous and prejudicial to the interest of revenue is misconceived and contrary to facts of the case. (vi) That the claim of various expenses to the extent of Rs. 54,53,14,157/- having duly been considered by the Assessing Officer during asse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s and prejudicial to the interest of revenue. 3. That order was passed by the Assessing Officer after necessary verification of issues under consideration and assessment order is neither erroneous nor prejudicial to the interest of the revenue. 4. That order passed by the PCIT, Delhi-1 is not justified on facts and same is bad in law. 5. That the appellant craves leave to add, alter, amend or forgo any of the grounds of appeal at the time of hearing." 13. We have heard the rival submissions and perused the material available on record. The assessee is engaged in the business of leasing of commercial properties under SEZs and operation and maintenance of commercial properties under SEZs. The return of income for the AY 2018- 19 was filed by the assessee on 31.10.2018 declaring total income of Rs. 120,95,41,520/- which was later revised on 29.03.2019 reporting the same income. The main reason for selecting the case for complete scrutiny was to examine the claim of deduction u/s 80IAB of the Act, among others. Specific queries were raised by the ld AO vide notice u/s 142(1) of the Act dated 13.08.2021 to justify the claim of deduction u/s 80IAB of the Act....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the decision of the Hon'ble Supreme Court in the case of Malabar Industrial Company Ltd reported in 243 ITR 83 (SC). 14. The next issue on which the ld PCIT has invoked revision jurisdiction u/s 263 is by way of giving direction to ld AO to consider a sum of Rs. 34.36 crores under house property income. The ld AO gave direction to verify the same and disallow any claim of expenditure in relation to such rental income by the ld PCIT. Further, the ld AO has been issued direction to verify whether the assessee is the owner of the property in the light of the co developer agreement and SEZ Act. At the outset, we find that the very same issue was subjected to detailed examination by the ld AO during the course of assessment proceedings vide notice u/s 142(1) of the Act dated 13.08.2021. The assessee in response to the notice filed detailed submission dated 09.09.2021 in respect of claim of deduction of Rs. 54.53 crores under the head "any other amount allowable as deduction" by the assessee in the computation of income. This sum of Rs 54.43 crores included a sum of Rs 34.36 crores also and also was submitted that the said adjustment was carried out in accordance with Ind AS. T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rection given by the ld PCIT in the earlier issue discussed above. We find that the assessee had given detailed explanation vide submission dated 09.09.2021 before the ld AO giving item wise explanation for various items totaling to Rs. 54.53 crores and the AO was duly convinced with the same and accordingly accepted the claim of the assessee. No error could be attributed in the said order of the ld AO. Hence, revision proceedings u/s 263 of the Act on this issue fails for lack of jurisdiction. 16. Another issue where the ld PCIT had invoked revision jurisdiction is by way of giving direction to the ld AO to inquire into the correctness of increase in assets and taxability of corresponding income of those assets. We find that the said direction of the ld PCIT is very vague and only trying to make fishing and roving enquiries which is impermissible u/s 263 of the Act. Further, the issue of purchase of capital assets during the year was duly examined of the ld AO by raising a specific query in the notice u/s 142(1) of the Act on 13.08.2021 which was duly replied by the assessee on 15.09.2021 by furnishing the complete details of assets purchased during the year on which depreciati....