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TMI Blog2015 (3) TMI 752X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as business income will fall under the category of difference of opinion. If A.O. has taken one of the opinion available out of the two, the Ld. CIT cannot invoke jurisdiction under section 263. Provisions of section 263 does not permit substituting one opinion by another opinion. Therefore, the order of Ld. CIT cannot be sustained on the principles of ‘erroneous’ nature of A.O. order, as it is not erroneous. - Decided in favour of assessee. Claim of interest - Held that:- As can be seen from the facts and materials on record, in course of revision proceeding, assessee has submitted detailed working relating to apportionment of interest to house property income as well as business income. As it appears, ld. CIT has not at all applied his mind to the working submitted by assessee. However, on perusal of the working submitted by assessee in course of revision proceeding, clearly demonstrate that actually there is no such excess claim as alleged by ld. CIT in the show cause notice. Ld. CIT while issuing the show cause notice u/s 263 has specifically alleged of excess claim of interest to the tune of 557.23 lakhs, but, ultimately he has not at all given any specific finding with reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s finance cost to be allowed to the extent of ₹ 469.12 lakhs only. As the assessee claimed interest to the extent of ₹ 1026.35 lakhs against the actual amount of ₹ 469.12 lakhs, the excess claim of finance cost of ₹ 557.23 needs to be disallowed." Accordingly, he issued a notice to assessee to show cause as to why assessment order shall not be revised. In reply to the said show cause notice, assessee submitted its reply in writing as well as through oral submissions in course of the revision proceeding. 3. As far as the first issue is concerned, it was submitted by assessee that the company has been incorporated with the main object to carry on the business of developers of land, building, immovable properties and real estates by constructing, reconstructing, altering, improving, decorating, furnishing and maintaining industrial parks, growth centres, offices, flats, houses, factories, warehouses, buildings with a view to establish and provide office space, infrastructure and other facilities for information technology and information technology enabled entities and other business, trade, manufacture or process. It was submitted, to the extent of the activ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing working: Building No. Interest attr ibutable Treatment in books Treatment for income-tax Capitalized Expensed Capitalized expensed #1 415.28 130.63 284.65 - 415.28 #2 448.85 400.73 48.12 - 448.85 #3 1,040.85 1,040.85 - 1,040.85 - General 136.36 - 136.36 - 136.36 Total 2,041.34 1,572.22 469.12 1,040.85 1,000.49 It was submitted by assessee that assessment order cannot be considered to be erroneous on either issues so as to assume jurisdiction u/s 263 of the Act. So far as other condition i.e. prejudicial to the interests of revenue, it was submitted by assessee, even that condition is also not satisfied considering the fact that while assessee has claimed 30% deduction towards repairs and maintenance from the house property income, but, if it is to be considered as business income, then, assessee will be entitled to claim depreciation @ 10% on the total cost of assets of ₹ 300 crores which will be much more than 30% deduction claimed towards repair and maintenance. Moreover, any such computation of depreciation needs to be done from A.Y. 2007-08. Thus, there would no prejudice to the revenue, if the income is assessed as income from house property. 5. Ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent, none would take the premises on lease as the units need strong infrastructural support without which the concept of industrial park would itself be meaningless. Ld. CIT observed, AP Govt. had allotted land to M/s K. Raheja IT Park Ltd. , sister concern of assessee, with a clear stipulation that certain amount of jobs have to be created and in fact incentives were also to be granted for the employment generation, hence, the whole activity is nothing but business activity. According to ld. CIT, as AO did not examine any of these facts and accepted assessee's claim of house property income without any enquiry or verification, the view taken by him not being a judicious view cannot be held to be one of the possible views. 6. As far as assessee's contention that there is no prejudice cause to the revenue even if it is assessed as house property income because assessee otherwise would have been eligible to claim depreciation in case it is treated as business income, ld. CIT observed that the claim of additional depreciation would not be available to assessee as it is not producing any article or thing nor engaged in generation or distribution of power. Besides, the prime assets of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ought to have been allowed depreciation in respect of its assets, including the buildings and fittings and machinery therein. Ground 4: Depreciation in respect of finance cost 4.1 The ld. CIT erred in coming to conclusion that the appellant did not furnish specific details in respect of the claim for deduction of the interest cost although appropriate submissions were made by the appellant in respect of the same. The appellant prays, for the following relief: a) The Hon'ble Tribunal be pleased to hold that the assessment order dated December 27, 2011 is not erroneous and prejudicial to the interests of revenue and hence the CIT was not justified in exercising the jurisdiction u/s 63 of the Act. b) The Hon'ble Tribunal be pleased to hold that rental receipts are assessable as 'income from house property and not as business income. c) The Hon'ble Triunal be pleased to allow the deduction in respect of the finance cost." 8. At the outset, ld. AR submitted that as far as ground Nos. 1, 2 &3 are concerned, they are covered by the decision of ITAT, Hyderabad Bench in case of assessee's sister concern M/s K. Raheja IT Park (Hyderabad) P. Ltd. in ITA Nos. 1038, 1039 & 1040 vide ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eja IT Park (supra). As far as second issue in Ground No. 4 is concerned, ld. DR submitted that ld. CIT has only directed AO to examine the issue with reference to the books of account and no prejudice is caused to assessee as a result of such direction. 11. We have considered the submissions of the parties and perused the orders of revenue authorities as well as other materials on record. The first issue is exercise of jurisdiction u/s 263 whether is valid or not. As can be seen, assessee in its accounts as well as return filed for the impugned AY, has shown the income earned from industrial park in two categories, i.e., lease rentals from letting out of the industrial park to entities was shown as income from house property and management and facilities fee have been shown as business income. AO while completing assessment u/s 143(3) has accepted such claim of assessee. However, ld. CIT has held the assessment order to be erroneous and prejudicial to the interests of revenue on the ground that lease rental should have been assessed as business income and not as income from house property. 12. The issue whether a particular income is to be assessed as house property income or bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest of Revenue. 17. Ld. CIT erred in relying only on the ITAT order in the case of Global Tech Park P. Ltd., ACIT (supra) wherein the Coordinate Bench relied on the judgment of Hon'ble Karnataka High Court in the case of Balaji Enterprises vs. CIT 225 ITR 471. As seen from the judgment of Hon'ble Karnataka High Court the facts in the said case were that assessee firm even though constituted to carry on business of dealing in real estate and setting up, development and exploitation of commercial complex in market, they have not owned the property but were developing the properties obtained on lease hold or on free hold basis and further leasing the properties after development to the lessees. In those facts of the case, the incomes are correctly held as assessable under the head "Business". Further, in the said case of Global Tech Park P. Ltd., (supra), the incomes received were composite incomes for both leasing as well as maintenance and A.O. has not bifurcated them at all. In that case construction and maintenance of industrial park was indeed held as 'business activity'. However, in order to arrive whether a particular income is to be assessed under "House Property or Busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccupied by the same occupants and the remaining stalls were occupied by a shifting class of occupants. The primary source of income from the stalls was the occupation of the stalls, and it was a matter of little moment that the occupation which was the source of the income was temporary. Income-tax is undoubtedly levied on the total taxable income of the taxpayer and the tax levied is a single tax on the aggregate taxable receipts from all the sources; it is not a collection of taxes separately levied on distinct heads of income. But the distinct heads specified in s. 6 indicating the sources are mutually exclusive and income derived from different sources falling under specific heads has to be computed for the purpose of taxation in the manner provided by the appropriate section. If the income from a source falls within a specific head set out in s. 6, the fact that it may indirectly be covered by another head will not make the income taxable under the latter head". 18.2. Thereafter, the Hon'ble Supreme Court has another occasion to re-visit the issue in the case of Karnani Properties Ltd., vs. CIT, West Bengal 82 ITR 547 wherein the Hon'ble Supreme Court considered the facts an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et purpose and with a view to earn profits; those activities were business activities and the income arising therefrom was assessable under section 10. When the question to the High Court speaks of "on the facts and in the circumstances of the case:, it means on the facts and circumstances found by the Tribunal and not facts and circumstances that may be found by the High Court on a reappraisal of the evidence. In the absence of a question whether the findings were vitiated for any reason being before the High Court, the High Court has no jurisdiction to go behind or question the statement of fact made by the Tribunal." 18.3. Thus the issue decided by the Hon'ble Supreme Court in the above case was that services income was assessable as income from business, but there is no dispute with reference to 'Rent' being assessed under the head " Income from House property". The Hon'ble Supreme Court in the case of S.G. Mercantile Corporation Pvt. Ltd., vs. CIT 83 ITR 700 (SC) on the following facts held as under : "The assessee company was incorporated in January, 1955. One of the objects specified in its memorandum of association was to take on lease or otherwise acquire and to hold, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peration only after the preceding heads are excluded." 18.4. Thereafter, the Hon'ble Supreme Court in the case of Sambhu Investments Pvt. Ltd., vs. CIT 263 ITR 143 also held that the prime object of the assessee shall to let out portion of the said property to various occupants by giving them additional right for using furnitures and fixtures and other common facilities and hence, income derived from the said property was an income taxable under the head 'Income from property'. The principles laid down in various decisions of Hon'ble Supreme Court were followed in various other decisions. Hon'ble Madras High Court in the case of CIT vs. Chennai Properties and Investments Ltd., 274 ITR 117, Hon'ble Bombay High Court in the case of Mangala Homes P. Ltd., vs. ITO 325 ITR 281 reiterated the same principles. Even the jurisdictional High Court in the case of PVG Raju Vs CIT 66 ITR 122 following the judgment of Apex Court in the case of East India Housing and Land Development Trust Ltd., (supra), held that a mere fact that the building or shops built with the specific object of forming, developing or setting-up a market did not change the character of income derived as owner of the prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aimed financial charges in excess. The Hon'ble Bombay High Court in case of CIT Vs. Gabriel India Ltd. (supra) held as under: "9. From a reading of sub-s. (1) of s. 263 it is clear that the power of suo motu revision can be exercised by the Commissioner only if, on examination of the records of any proceedings under this Act, he considers that any order passed therein by the ITO is "erroneous in so far as it is prejudicial to the interest of the Revenue". It is not an arbitrary or unchartered power. It can be exercised only on fulfilment of the requirement laid down in sub-s. (1). The consideration of the Commissioner as to whether an order is erroneous in so far as it is prejudicial to the interests of the Revenue, must be based on materials on record of the proceedings called for by him. If there are no materials on record on the basis of which it can be said that the Commissioner acting in a reasonable manner could have come to such a conclusion, the very initiation of proceedings by him will be illegal and without jurisdiction. The Commissioner cannot initiate proceedings with a view to starting fishing and roving enquiries in matters or orders which are already conc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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