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TMI Blog2014 (9) TMI 196X X X X Extracts X X X X X X X X Extracts X X X X ..... s extent - the exercise of jurisdiction by the CIT u/s.263 of the Act was proper - CIT has concluded that the Assessee is only a “Builder” and not a “Developer and Builder” of housing project - such a finding is without any basis and without bringing on record material and contrary to the claim made by the Assessee – it cannot be sustained and is hereby vacated - the CIT has concluded that the assessee is a “builder” without rebutting any of the submissions and contentions put forth by the assessee with regard to the various activities carried out by the assessee in the reply to the show cause notice issued under section 263 of the Act – the findings of the CIT is vacated in this regard and the directions issued u/s 263 of the Act modified – decided partly in favour of assessee. Shortfall in remittance of TDS – Deduction u/s 40(a)(ia) – Held that:- CIT ought not to have straightaway held that there was a shortfall in remittance of TDS of and disallowance relating to the shortfall needs to be disallowed u/s 40(a)(ia) - the assessee has requested the CIT to inform as to how the shortfall was arrived at - the assessee has filed a reconciliation of TDS payable before the AO which sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said order of assessment for Assessment Year 2008-09 passed by the Assessing Officer to be erroneous and prejudicial to the interests of revenue on the following points : (i) Wrong claim and allowance of deduction u/s.80 IB(10). (ii) The short fall in the remittance of TDS byRs.10,13,572 which related to a gross receipt of ₹ 4,47,29,567 which requires disallowances u/s.40(a)(ia). (iii) To consider the short computation of fringe benefit value on gift awards to compliments to staffs included under miscellaneous expenses. The same needed to be classify under gift which attracts 50% FBT. Therefore there is a short computation of FBT value amounting toRs.20,65,161. In response to this show cause notice (supra) of the learned CIT, LTU, the assessee filed a detailed written submission vide letter dt.24.10.2011, contending that the aforesaid issues pointed out in the notice do not render the assessment order for Assessment Year 2008-09 dt.28.12.2010 to be erroneous and prejudicial to the interest of revenue. 2.3 Subsequently, it is seen that the CIT, LTU issued another show cause notice dt.20.12.2012 to the assessee for consideration of the following additional issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the learned CIT, LTU, directed the Assessing Officer to verify the provision created with evidence to be produced and set aside the matter for fresh consideration. vi) With regard to the issue relating to the deduction claimed under section 36(1)(iii) of ₹ 41.95 Crores the learned CIT, LTU, noted that the allowance of the said deduction was appropriate and no revision was required to be made in respect of the said issue. 3. Aggrieved by the order the learned CIT, LTU, Bangalore under section 263 of the Act dt.27.3.2013, the assessee has filed this appeal raising the following grounds :- 1. The order passed by the learned CIT u/s. 263 of the Act, in so far as it is against the appellant, is opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case. 2. The learned CIT failed to appreciate that there was no error much less an error prejudicial to the interest of the revenue in the order passed by the learned Assessing Officer allowing the deduction u/s. 80IB(10) of the Act, warranting revision u/s.263 of the Act and consequently, the finding of the learned CIT holding that the allowance of deduction u/s.80IB(10) of the Act by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of the institution fees as part of the costs. 4. From a perusal of the grounds of appeal raised (supra), it is seen that the assessee is only challenging three issues considered by the learned CIT, LTU in the proceedings under section 263 of the Act for Assessment Year 2008-09. Originally, the learned CIT, LTU, had raised six issues, which were set out earlier in this order (supra) and later dropped proceedings in respect of two issues, viz., fringe benefit tax and interest claimed under section 36(1)(iii) of the Act. The learned CIT, LTU has rendered his findings in respect of four issues and assessee has challenged only three of those issues in this appeal. We will now address these issues raised, ground wise. 5. The grounds raised at S.Nos.1 and 5 are general in nature and therefore no separate adjudication is required thereon, as they will get disposed off automatically with the disposal of other grounds. 6. In respect to the Ground raised at S.No.4, the same was not pressed before us by the learned Authorised Representative of the assessee, since the learned CIT, LTU had directed the Assessing Officer to examine the said issue and decide the allowability of the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion under section 263 of the Act. In the said order, the Tribunal found that the issue considered by the Assessing Officer in assessment proceedings and decided by the appellate authorities relating to deduction under section 80 IB(10) of the Act was the same as the issue being considered by the learned CIT under section 263 of the Act and therefore the learned CIT, LTU, could not exercise jurisdiction under section 263 of the Act. In this view of the matter, the order passed under section 263 of the Act was cancelled. However, in the present case before us, the learned CIT, LTU, initiated proceedings under section 263 of the Act during the pendency of the first appeal before the learned CIT (Appeals). Therefore, there was no question of any merger of the order and the conclusions of the co-ordinate bench of the Tribunal in ITA No.339/Bang/2011 (supra) cannot have any application to the present case. 7.3.2 In the order of the co-ordinate bench of this Tribunal in ITA No.1395/Bang/2012 dt.30.4.2014 in the assessee's own case for Assessment Year 2007-08, the Tribunal has considered in detail the issue relating to the finding of the learned CIT, LTU that the assessee is only a b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en the reply of the assessee to the show cause notice u/s.263 of the Act. Without rebutting those submissions and calling for information the CIT in the impugned order has concluded that the Assessee is only a Builder and not a Developer and Builder of housing project. In our view such a finding is without any basis and without bringing on record material and contrary to the claim made by the Assessee. The same cannot be sustained and is hereby vacated. 33. Since the aspect raised by the CIT in the impugned order u/s.263 of the Act has not been examined by the AO either in the original proceedings or in the impugned order, the CIT s direction remanding the issue to the AO for fresh examination has to be upheld. However the issue as to whether the Assessee is only a Builder or Developer and Builder has also to be examined by the AO as the findings by the CIT in this regard has already been vacated by us in the earlier para of this order. In the set aside proceedings pursuant to the order of the CIT u/s.263 of the Act, the AO has to call for all details of copies of the agreement for purchase of the land by the assessee from the sister concern and, as to how the several as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09 is similar to the issue considered and decided by the Tribunal for Assessment Year 2007-08. The observations extracted from the order of the co-ordinate benches (supra), are, in our view, squarely applicable to the case on hand since the learned CIT, LTU, has concluded that the assessee is a builder without rebutting any of the submissions and contentions put forth by the assessee with regard to the various activities carried out by the assessee in the reply to the show cause notice issued under section 263 of the Act. We, therefore, vacate the findings of the learned CIT, LTU, in this regard and modify the directions issued under section 263 of the Act, while remanding the issue to the Assessing Officer to consider the plea of the assessee in the light of the decision of the Hon'ble Gujarat High Court in the case of Radhe Developers (supra). Accordingly, Grounds at S.Nos.2, 2.1, 2.2 and 2.3 are partly allowed. 8.1 In respect of Ground at S.No.3, the learned Authorised Representative submitted that the learned CIT, LTU, at page 6 of his order has observed as under :- However, on a perusal of the assessment record, for the Assessment Year 2008-09 and 3CD report produced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecord. On an appreciation of the submissions made and the material before us, we are of the view that the learned CIT, LTU ought not to have straightaway held that there was a shortfall in remittance of TDS ofRs.10,13,572 and consequently disallowance ofRs.4,47,29,567 relating to the above shortfall needs to be disallowed under section 40(a)(ia) of the Act. It is seen from the impugned order under section 263 of the Act that the assessee has requested the learned CIT, LTU to inform as to how the shortfall of ₹ 10,13,572 was arrived at. It was always the plea of the assessee before the learned CIT, LTU that there was no shortfall. As explained by the learned Authorised Representative, if the amount of TDS during the relevant year was erroneously reported in the 3CD Report by the Chartered Accountant, on account of the TDS deductible in the earlier previous year, such a mistake should not be held against the assessee. It is submitted that the assessee has filed a reconciliation of TDS payable before the Assessing Officer vide letter dt.13.7.2013 (a copy of which has been placed on record) which should be examined and verified before any disallowance can be contemplated or made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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