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2009 (10) TMI 601 - AT - Income TaxRevision u/s 263 - Property at Adyar, Reconciliation of Profits - This property was let out by the assessee on a monthly rental of Rs. 3,500 and hence the sum of Rs. 42,000 was offered for tax - It is also trite that the valuation fixed by Municipal authorities is quite relevant for the determination of the ALV. In the present case, it is not in dispute that the Municipal authorities have fixed the valuation at a higher figure than the rent receivable - ALV of this property has been fixed by the Municipal Corporation is Rs 2,04,968, whereas the assessee has declared this at Rs. 42,000 only - The minimum ALV that could be adopted for this property is Rs. 2,04,968 which is equivalent to the ALV fixed by Corporation of Chennai - it is held that order of ld. CIT under section 263 on this point is perfectly justified and calls for no interference, as such the same is confirmed Regarding reconciliation of profit - The assessee explained that there was increase in the operating profit by Rs. 1.08 crores and also there was considerable reduction of Rs. 1.01 crores in the expenditure for self-consumption - Considering the fact that in respect of the issues mentioned by him as well as other crucial issues, since no information was given by the assessee, the Assessing Officer had no opportunity to look into them and examine - Similarly, the schedule showing cost of goods sold as well as the cost of services gives a fair view about the expenses incurred by the assessee - If the Assessing Officer is able to locate such leakages, but then fails to make further enquiry, then it would be an error on his part which may render the order passed by him to be erroneous and prejudicial to the interests of revenue - while dealing with the aspect of profits, the CIT has not been able to show a single error in the order of the Assessing Officer - Appeal is partly allowed
Issues Involved:
1. Vacancy Allowance 2. Property at Adyar 3. Agricultural Income 4. Expenditure on Leasehold Property 5. Relief under Sections 80HHC and 80-IB 6. Reconciliation of Profits Detailed Analysis: 1. Vacancy Allowance: The CIT directed the Assessing Officer (AO) to re-compute the income from house property by considering the legal provisions and case law from the Bombay High Court. The CIT's direction was found to be in consonance with legal provisions and case law, hence no infirmity was found in the CIT's order. 2. Property at Adyar: The CIT noted that the Adyar property was let out at a lower rent to a group concern, and the municipal ALV was much higher. The CIT directed the AO to re-examine the issue. The Tribunal found that the AO's acceptance of the rental value from earlier years was not erroneous as there was no change in facts or law. However, the Judicial Member disagreed, citing the need to adopt municipal valuation. The Third Member agreed with the Judicial Member, stating that the municipal valuation should be adopted, making the CIT's order on this issue sustainable. 3. Agricultural Income: The CIT noted discrepancies in the agricultural income, including sale of land and trees, and directed the AO to examine these issues in detail. The Tribunal upheld the CIT's direction, noting that the CIT's final direction to examine the issues in detail was proper. 4. Expenditure on Leasehold Property: The CIT found that the expenditure on furniture and fittings was capital in nature and directed the AO to re-examine and allow proper depreciation. The Tribunal upheld the CIT's direction, noting that the AO had not correctly examined the issue. 5. Relief under Sections 80HHC and 80-IB: The CIT found that the deductions were claimed incorrectly and directed the AO to re-examine the issues. The Tribunal agreed with the CIT's direction for de novo consideration but noted that the issue was debatable and had been decided in favor of the assessee by the Jurisdictional High Court. Thus, the Revision Order under section 263 was not sustainable on this aspect. 6. Reconciliation of Profits: The CIT noted that despite additional income, the total income had decreased and directed the AO to re-examine the accounts in detail. The Tribunal found that the CIT's direction for a roving enquiry without pointing out specific errors was not permissible. The Third Member agreed with the Tribunal, noting that the CIT had not shown any specific error in the AO's order, making the CIT's direction unsustainable. Conclusion: The appeal by the assessee was partly allowed. The Tribunal upheld the CIT's order on issues related to Vacancy Allowance, Agricultural Income, Expenditure on Leasehold Property, and Relief under Sections 80HHC and 80-IB. However, the Tribunal set aside the CIT's order on the issues of Property at Adyar and Reconciliation of Profits.
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