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2023 (12) TMI 202 - AT - Income TaxRevision u/s 263 - as per CIT there is another possible view of the matter - as per CIT AO ought to have taxed deemed annual letting value @5% of the value of closing stock of unsold flats u/s 23(1)(a) of the Act - HELD THAT - As decided in AMITABH BACHCHAN 2016 (5) TMI 493 - SUPREME COURT , M/S. FUTURE CORPORATE RESOURCES LTD. 2021 (10) TMI 175 - BOMBAY HIGH COURT and MEPCO INDUSTRIES LIMITED. 2006 (11) TMI 164 - MADRAS HIGH COURT when two views are legally possible and Assessing Officer adopts one view the Assessment Order cannot be said to be erroneous for the Ld.CIT to invoke jurisdiction u/s. 263 of the Act. In the case under consideration the AO has adopted one of the legally possible views qua Unsold Flats shown as closing stock. Therefore, the Assessment Order is not erroneous qua unsold flats shown as Stock. Accordingly, the Ground Number 3 of the assessee is allowed. TDS on payment made to Silk Route Communications - It is observed that the assessee during the assessment proceedings had filed details of TDS deducted on the payments made to Silk Route Communications. We have verified the fact that the assessee had deducted the TDS and the details were filed before the AO during the assessment proceedings. In the facts and circumstances, the assessment order is not erroneous qua TDS on payment made to Silk Route Communications. Therefore, the order u/s. 263 qua the issue of TDS on payment made to Silk Route Communications is set aside. Therefore, the Ground of the assessee is allowed. Interest on TDS - AO had not carried out any inquiry. The AO had not called for any details on this issue. Thus, we agree with the Ld.CIT that the AO failed to carry out necessary inquiry. Hence, the assessment order is erroneous and prejudicial to the interest of revenue qua the issue of Interest on TDS. Accordingly, the order u/s 263 is upheld qua the issue of interest on TDS. Accordingly, the Ground of the assessee is dismissed. Assessee appeal is partly allowed.
Issues involved:
The issues in this case involve the correctness of the order passed under section 263 of the Income Tax Act for the assessment year 2017-18. The specific issues raised by the assessee include the jurisdiction of the Principal Commissioner of Income Tax, the taxability of deemed annual letting value, the deduction of TDS on advertisement expenses, and the treatment of interest on TDS. Jurisdiction of Principal Commissioner of Income Tax: The assessee contended that the order passed by the Principal Commissioner of Income Tax (PCIT) under section 263 was erroneous and beyond jurisdiction. The assessee argued that the Assessing Officer (AO) had considered all relevant details during the assessment proceedings, citing the decision in the case of Malabar Industrial Company Ltd. v. CIT. The Tribunal noted that when there are two legally possible views and the AO adopts one of them, the assessment order cannot be deemed erroneous solely on this ground. Taxability of Deemed Annual Letting Value: The Tribunal referred to the case of Kumar Properties and Real Estate (P.) Ltd. v. CIT and highlighted the conflicting views on the taxability of unsold flats held as stock-in-trade. It noted that the Finance Act, 2017 introduced provisions regarding the treatment of such properties, but these provisions were not applicable for the assessment year in question. Citing precedents from the Hon'ble Supreme Court and various High Courts, the Tribunal emphasized that when two legally possible views exist and the AO adopts one, the assessment order cannot be considered erroneous. Deduction of TDS on Advertisement Expenses: Regarding the deduction of TDS on advertisement expenses paid to Silk Route Communications, the Tribunal found that the assessee had indeed deducted the TDS and provided details to the AO during the assessment proceedings. As the assessment order was not erroneous in this regard, the order under section 263 concerning TDS on payment to Silk Route Communications was set aside. Treatment of Interest on TDS: The Tribunal observed that the AO had not conducted any inquiry or sought details regarding the interest on TDS. Consequently, it agreed with the PCIT that the AO had failed to carry out necessary inquiries, rendering the assessment order erroneous and prejudicial to the interest of revenue. Therefore, the order under section 263 regarding interest on TDS was upheld. Conclusion: The Tribunal dismissed the general issues raised in Ground Numbers 1 and 2, as each specific issue had been adjudicated on merit. The appeal of the assessee was partly allowed, with the Tribunal issuing its order on 27th June 2023.
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