9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (11) TMI 540 - AT - Income TaxRevision u/s 263 - Deemed rent - ALV of the unsold stock (held as stock in trade) farming part of the inventory - PCIT has taken the view that since this project has been developed on ownership basis assessee company was owner of the property till it is sold and the annual letting value (ALV) of the unsold stock (held as stock in trade) farming part of the inventory should have been brought to tax as deemed rent under section 23(1)(a) whereas the assessee has neither offered deemed rent of unsold flats nor the AO brought the same to tax - HELD THAT - AO has duly conducted the investigation by examining the detail facts regarding the unsold flats which was held as stock in trade by not determining ALV by following the guidelines given in the CBDT circular No.2/2018 dated 15.02.2018. Moreover Hon'ble Supreme Court in case of Chennai Properties Investments Ltd. vs CIT 2015 (5) TMI 46 - SUPREME COURT held that unsold flats which are in stock in trade should be assessed under the head business income and there is no justification in estimating the rental value from those flats and notionally computing annual letting value under section 263 of the Act. Therefore invoking the jurisdiction u/s 263 by Ld. PCIT is not sustainable in the eyes of law, hence impugned order passed under section 263 is ordered to be set aside. Appeal filed by the assessee is allowed.
Issues Involved:
1. Jurisdiction under Section 263 of the Income Tax Act, 1961. 2. Principles of natural justice. 3. Taxation of the annual value of property forming part of closing stock under "Income from House Property". Summary: Jurisdiction under Section 263 of the Income Tax Act, 1961: The appellant, M/s. Coronate Constructions, challenged the order passed by the Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income Tax Act, 1961, which set aside the assessment order dated 22/12/2019. The PCIT invoked revisionary jurisdiction, finding the assessment order erroneous and prejudicial to the interest of the revenue. The Tribunal examined whether the Assessing Officer (AO) had failed to tax the annual value of the property forming part of the closing stock under "Income from House Property". The AO had accepted the self-assessed income of the assessee after examining the submissions and details provided. Principles of Natural Justice: The assessee argued that the PCIT violated the principles of natural justice by not considering the submissions filed by the assessee while passing the order under Section 263. The Tribunal noted that the AO had conducted a thorough investigation, calling for detailed submissions and explanations from the assessee, which were duly provided and considered. Taxation of Annual Value of Property Forming Part of Closing Stock: The PCIT held that the annual value of the property forming part of the closing stock should be taxed under "Income from House Property". However, the Tribunal found that the AO had followed the CBDT Circular No.02/2018, which provided that the annual value of property held as stock-in-trade shall be taken as nil for one year from the end of the financial year in which the completion certificate was obtained. The Tribunal also referenced the Supreme Court's decision in Chennai Properties & Investments Ltd. vs CIT, which held that unsold flats in stock-in-trade should be assessed under "business income" and not under "Income from House Property". Conclusion: The Tribunal concluded that the AO had examined all relevant details and followed the applicable legal guidelines. The order passed by the AO was neither erroneous nor prejudicial to the interest of the revenue. Therefore, the invocation of jurisdiction under Section 263 by the PCIT was not sustainable. The appeal filed by the assessee was allowed, and the impugned order under Section 263 was set aside. Order Pronounced: The appeal filed by the assessee was allowed, and the order was pronounced in the open court on 09.11.2023.
|
