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TMI Blog2013 (9) TMI 638X X X X Extracts X X X X X X X X Extracts X X X X ..... n the basis of which the Commissioner of Income-tax (Appeals) analysed the issue in depth and negated the stand of the Assessing Officer for the reasons recorded in his order - Thus, we are unable to agree with the Commissioner of Income-tax's perception that the Commissioner of Income-tax can revise u/s 263 on the question of eligibility of deduction under section 80-IB(10) since those were two different views by relying on the Delhi Tribunal's finding in the case of Modi Xerox Ltd. v. Deputy CIT [1998 (4) TMI 162 - ITAT DELHI-C ]. Following Commissioner of Income-Tax Versus Shri Arbuda Mills Ltd. [1996 (1) TMI 11 - SUPREME Court] - once the order of the Assessing Officer got merged with the appellate order of the Commissioner of Income-tax (Appeals) on a particular issue, the Commissioner of Income-tax cannot invoke the provisions of section 263 of the Act on the premise to verify the eligibility of deduction under section 80-IB since those were two different issues - The Assessing Officer had adopted one of the possible views in law, which has not been agreed upon by the Commissioner of Income-tax - the order passed by the Assessing Officer cannot be treated as erroneous order a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are of land shows the assessee's sister concern as the owner of the land and not the assessee. (ii) The development work in respect of such land was also not carried out by the assessee-company. (iii) The assessee is not the owner of the land but only builds apartments in the land belonging to the sister concerns. (iv) Instead of buying the land from the sister concerns, the assessee enters into an agreement with them for construction of building. The consideration is paid by way of advances to the sister concerns who own the land. (v) Sale of an apartment in a housing project typically consists of two elements, viz., income from sale of undivided share of land and the income from sale of the apartment. (vi) In the present case, the agreement to sell the undivided share of land is between the assessee's sister concerns and the ultimate buyers. The agreement for construction of apartments is between the assessee and the ultimate buyers. (vii) The assessee collects from the ultimate buyers, entire amount representing the cost of land as well as the apartment. The cost of land is adjusted against the money advanced by the assessee to its sister concerns. (viii) Based on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ituting error prejudicial to the interests of the Revenue was in fact examined in great detail by the Assessing Officer in the assessment proceedings and that the same was subject matter of a decision of the hon'ble Income-tax Appellate Tribunal and therefore, there was no justification for invoking the provisions of section 263 of the Act. The impugned order thus being unsustainable in law deserves to be cancelled. 3. Without prejudice to the above, the learned Commissioner of Income-tax is not justified in holding that the appellant was only a builder and not a developer and thereby not entitled to the deduction under section 80-IB of the Act under the facts and in the circumstances of the appellant's case. 3.1 The learned Commissioner of Income-tax failed to appreciate that the finding that the appellant was only a builder and not a developer is totally misconceived as there can be no doubt that the appellant has developed the various housing projects and the mere fact that the land on which the projects were developed by the appellant were initially acquired by certain group companies cannot be a ground to hold that the appellant has acted as a builder and not a developer i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... findings, the view taken by the Assessing Officer in the assessment order is that profit on sale of undivided interest in land pertaining to the sister concerns of the assessee requires to be excluded from the profit of the eligible project under section 80-IB(10) of the Act. In other words, there was a denial of deduction of a part of the profits claimed by the assessee from the housing project. The said finding of the learned Assessing Officer has been considered by the Income-tax Appellate Tribunal in the assessee's own case for the assessment year 2005-06 in paragraphs 19.1 to 19.4 of the Tribunal order in I.T.A. No. 965/Bang/09. It was further submitted that the Commissioner of Income-tax has also noticed the very same facts in the impugned order. According to the Commissioner of Income-tax, the Assessing Officer after noticing the aforesaid facts ought to have denied the entire deduction and therefore, the assessment order is prejudicial to the interests of the Revenue. It is relevant to mention here that there are no facts or evidence available or pointed out by the Commissioner of Income-tax which has not been considered by the Assessing Officer to invoke the jurisdiction u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Appellate Tribunal, Delhi Bench in the case of Modi Xerox Ltd. v. Deputy CIT [1998] 67 ITD 252 (Delhi), to hold that the eligibility to claim deduction is a different issue when compared to the quantum of deduction, the learned authorised representative for the assessee submitted that the decision of the Income-tax Appellate Tribunal, Delhi Bench would not be applicable to the facts of the assessee's case. He submitted that in the instant case, the Assessing Officer has taken the view and denied deduction in respect of the profit attributable to the sale of undivided interest in land after noticing certain facts. On the same facts, the Commissioner of Income-tax holds under section 263 of the Act that the Assessing Officer ought to have denied the deduction entirely. However, in the meanwhile, the Commissioner of Income-tax (Appeals) has held that the assessee is entitled to deduction in respect of the profits attributable to the sale of undivided interest in land having regard to the decision of the Income-tax Appellate Tribunal, for the assessment year 2005-06 in the assessee's own case. In other words, on the same set of facts in which the Assessing Officer proceeded to deny ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pugned order for the assessment year 200506 (I. T. A. No. 965/Bang/09). The Tribunal has also considered the matter and reference was invited to paragraphs 19.1 to 19.4 of the order. He submitted that the other aspect of the matter relating to the development charges incurred by the erstwhile owners of the land is to be considered. The Commissioner of Income-tax holds that since the development expenses on land were incurred by the earlier owners, the assessee could not be regarded to have carried out development and according to the Commissioner of Income-tax the assessee would only be a builder, as he has not developed the land and had acquired developed land for construction of the apartment. This view is fallacious and opposed to the plain meaning of the provisions of section 80-IB(10) of the Act, which reads "the amount of deduction in the case of the undertaking, developing and building housing projects". The learned authorised representative further submitted that from the aforesaid provisions, it is seen that the deduction is given to an undertaking that is engaged in developing and building housing project. The development contemplated under the provision is of the entire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he subsection and passed by the Assessing Officer had been the subjectmatter of any appeal (filed on or before or after the 1st day of June, 1988), the powers of the Commissioner under the sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. The consequence of the amendment made with retrospective effect is that the powers under section 263 of the Commissioner shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in an appeal. Accordingly, in respect of the aforesaid three items, the powers of the Commissioner under section 263 shall extend and shall be deemed always to have extended to them because the same had not been considered and decided in the appeal filed by the assessee …." In the present case, deduction claimed by the assessee has been restricted by the Assessing Officer to the extent that deduction in respect of a part of profits relating to the income from sale of undivided interest of land. On appeal, this issue had been decided by the Commissioner of Income-tax (Appeals). Inasmuch as the issue relating to deduction u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 80-IB(10) since those were two different views by relying on the Delhi Tribunal's finding in the case of Modi Xerox Ltd. v. Deputy CIT reported in [1998] 67 ITD 252 (Delhi). With due respect to the findings of the Delhi Tribunal cited supra, we are of the view that the ruling of the hon'ble Supreme Court in the case of Shri Arbuda Mills Ltd. [1998] 231 ITR 50 (SC) is directly applicable to the issue under consideration. Thus, we are of the view that once the order of the Assessing Officer got merged with the appellate order of the Commissioner of Income-tax (Appeals) on a particular issue, the Commissioner of Income-tax cannot invoke the provisions of section 263 of the Act on the premise to verify the eligibility of deduction under section 80-IB since those were two different issues. With regard to the two views on same issue, it is observed from the order of the Assessing Officer that she had, in fact, discussed the issue threadbare and also in conformity with the earlier stand in the assessee's own case for the immediately previous assessment year, viz., 2005-06 took a stand that profit on sale of undivided interest in land pertaining to its sister concerns requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meaning it is of wide import and is not confined to loss of tax. The scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the Revenue. If due to an erroneous order of the Income-tax Officer, the Revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interests of the Revenue. The phrase 'prejudicial to the interests of the Revenue' has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the Revenue, for example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue ; or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner of Income-tax does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the Income-tax Officer is unsustainable in law." In the instant case, when the Assessing Officer had adopted one of the possible views in law, which has not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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