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2018 (7) TMI 1810 - AT - Income TaxRevision u/s 263 - determination of the annual value of premises under section 23(1)(a) - assessee s assessment was reopened by issuing notice under section 148 - Held that - In the present case the CIT has exercised his jurisdiction under section 263 of the Act for the purposes of determination of the annual value of the said premises under section 23(1)(a) of the Act in view of the Tribunal s Order dated 30.12.2011 and the judgment of Full Bench of the Delhi High Court in Moni Kumar Subba 2011 (3) TMI 497 - DELHI HIGH COURT . The said issue was a subject matter of appeal before the CIT(A) against order dated 20.12.2012 passed by the AO giving effect to the Tribunal s order. CIT(A) has also considered the said issue in his appellate order. In this regard he has observed that the determination of annual value only based on the fair rent is incorrect without ascertaining the standard rent of the said premises. According to him standard rent as determined under the rent control legislation is the upper limit and annual value under section 23(1)(a) has to be lower of the standard rent or the fair rent. A bare perusal of this part of the CIT(A) s order shows that determination of annual value of the said premises as per the Tribunal s Order was a subject of matter of appeal before the CIT(A) which has been considered and decided by him. Therefore the CIT could not have assumed jurisdiction under section 263 of the Act in respect of the said issue. - decided in favour of assessee
Issues Involved:
1. Validity of the revision orders passed by the CIT under Section 263 of the Income Tax Act, 1961. 2. Determination of Annual Letting Value (ALV) under Section 23(1) of the Income Tax Act. 3. Jurisdiction of the CIT to invoke Section 263 when the issue is already a subject matter of appeal before CIT(A). Issue-wise Detailed Analysis: 1. Validity of the Revision Orders Passed by the CIT under Section 263: The primary issue in these appeals was whether the revision orders passed by the CIT under Section 263 were valid. The assessee contended that the assessment orders framed by the AO were neither erroneous nor prejudicial to the interest of the Revenue. The ITAT noted that the AO had already passed an order giving effect to the ITAT’s earlier order, where the ALV was determined after considering the directions of the ITAT and relevant judicial pronouncements. The ITAT concluded that the AO’s order dated 14.02.2012 was passed after full application of mind and was not erroneous or prejudicial to the interest of the Revenue. Therefore, the revision orders passed by the CIT under Section 263 were quashed as being without jurisdiction. 2. Determination of Annual Letting Value (ALV) under Section 23(1): The ITAT examined the methodology for determining the ALV under Section 23(1) of the Income Tax Act. It referred to the decision of the Full Bench of the Delhi High Court in the case of Moni Kumar Subba, which laid down that the municipal rateable value could be considered as a rational yardstick for determining the ALV unless the AO found that such value was not based on relevant material. The ITAT noted that the AO had considered the municipal rateable value and actual rent received by the assessee and determined the ALV accordingly. The ITAT also observed that the AO had taken into account the relevant factors and material while determining the ALV, and therefore, there was no error in the AO’s order. 3. Jurisdiction of the CIT to Invoke Section 263: The ITAT addressed the issue of whether the CIT could invoke Section 263 when the matter was already a subject of appeal before the CIT(A). The ITAT noted that the determination of ALV was a subject matter of appeal before the CIT(A) against the AO’s order dated 20.12.2012. The CIT(A) had considered and decided the issue of ALV in his appellate order. The ITAT held that as per clause (c) of Explanation 1 below Section 263(1), the CIT could not exercise jurisdiction under Section 263 on an issue that was already a subject matter of appeal before the CIT(A). Therefore, the ITAT concluded that the CIT’s revision order was without jurisdiction and quashed it. Conclusion: The ITAT allowed the appeals of the assessee, holding that the revision orders passed by the CIT under Section 263 were without jurisdiction. The ITAT emphasized that the AO had determined the ALV after considering relevant judicial pronouncements and material, and there was no error in the AO’s order. The ITAT also clarified that the CIT could not invoke Section 263 when the issue was already a subject matter of appeal before the CIT(A). Consequently, the appeals of the assessee for all the years were allowed.
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