9911796707
TMI Blog2015 (6) TMI 607X X X X Extracts X X X X X X X X Extracts X X X X ..... mpugned assessment year. Thus it is a case where the Assessing Officer has examined the issue by making enquiry on the basis of which the CIT invoked jurisdiction under section 263. It is not a case of lack of enquiry on the part of Assessing Officer the Assessing Officer after making enquiries allowed the claim of the assessee on that issue. It is not necessary that the Assessing Officer should discuss in detail the finding in his order, although the Assessing Officer has given clear-cut finding in this regard.If the Assessing Officer has not discussed the inquiry made by him in the case of assessee in respect of which, he issued show-cause to assessee, we cannot say that order is erroneous as the Assessing Officer has not made any inquiry into the matter. The assessee cannot dictate the Assessing Officer what should he incorporate in the assessment order and how he should draft the assessment order. - Decided in favour of assessee. Assessing Officer has wrongly allowed excess depreciation of 3,03,21,882/- considering the current assets as fixed assets - Held that:- The rent and the maintenance charges recovered from the short term lessees is also assessed as business income of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m record itself proves that the order passed on this issue by the Assessing Officer was erroneous as well as prejudicial to the interest of the revenue. Thus therefore, confirm the order of Principal CIT passed under section 263 on this issue and accordingly modify the order of CIT by holding that the assessment is set aside on the issue of allowing donation to the assessee and accordingly direct the Assessing Officer to examine the issue do novo. - Decided in favour of revenue for statistical purposes. X X X X Extracts X X X X X X X X Extracts X X X X ..... st of land to the assessee is ₹ 1,89,74,418/- x 61% = ₹ 1,15,74,390/-. The assessee is entitled to benefit of indexation. Even then the long term capital gain assessabl e would not be less than ₹ 225 crore, on which tax payable is at the rate of 20% plus surcharge / EC etc. But the assessee company has not disclosed any capital gain in the return. No capital gain was assessed either. In view of the above, there was reason to believe that income chargeable to tax for the AY 2007-08 has escaped assessment within the meaning of section 147". Assessment under sect ion 143(3) read with section 147 was completed vide order dated 30.03.2013 determining the book profit at ₹ 1,99,42,048/- under section 115JB of the Income Tax Act. In the said assessment, the Assessing Officer did not make any addition on account of the capital gain but took the view that no income has accrued or arisen to the assessee in the assessment year 2007-08 by observing as under:- "Considering and verifying all the submission filed by the assessee and information collected from Godrej Properties Limited and Nabadiganta Industrial Townships Authority, no capital gain accrues or arises to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e year in which such transactions are entered into even if the transfer of immovable property is not effective or complete under the general law. The year of chargeability is the year in which the contract is executed. Section 2(47(v) had been enacted and in such cases, even entering into such a contract could amount to transfer from the date of the agreement itself. Therefore, if on a bare reading of a contract in its entirety, an Assessing Officer comes to the conclusion that in the guise of agreement for sale, a Development Agreement is contemplated, under which the developer applies for permissions from various authorities, either under power of attorney or otherwise and in the name of the assessee, then the Assessing Officer is entitled to take the date of contract as the date of transfer in view of section 2(47) (v). Therefore, the decision taken by the Assessing officer on this issue is not as per the provisions of law. The Assessing officer has wrongly allowed excess depreciation of ₹ 3,03,21,882/considering the current assets as fixed assets. In view of the above facts, the order passed u/s 147/143(3) on 30.03.2013 for A.Y. 2007-08 appears to be erroneous in so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with M/s. Godrej Waterside Properties Pvt. Ltd. for development of company's leasehold property in terms of which said company was to provide 39% of the constructed area free of cost and the capital gains in respect of the said transaction was declared by the company in the assessment years 2011-12 and 2012-13. In view of the provisions of sect ion 2, sub-section 47(v) read with section 53A of the Transfer of Property Act, the 'transfer' of the "capital asset" took place in assessment year 2007-08 and, therefore, the capital gain on grant of development right was chargeable in assessment year 2007-08 whereas the Assessing Officer accepted the company's contention that it was chargeable in financial years 2010-11 and 2011-12. And; (2) The Assessing officer wrongly allowed excess depreciation of ₹ 3,03,21,882/- considering the current assets as fixed assets. 6. It was submitted that the order passed under section 147 read with sect ion 143(3) dated 30.03.2013 is not erroneous as well as prejudicial to the interest of the revenue. The jurisdiction under section 263 is in excess of the powers conferred by the Act and the powers are being exercised in order to substitute the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent year 2004-05 and onwards the depreciation claimed was allowed by the Assessing Officer after making thorough discussion with regard to the nature of the business conducted by the company. 7. It was further submitted that the assessee had obtained land parcel son lease from West Bengal Electronic Industrial Development Corporation. It includes a plot of land admeasuring 5.5978 acres situated at Block DP/5, Sector-5, Salt Lake, Kolkata. The assessee decided to develop the said leasehold land through a joint venture with Godrej Group who had expertise in development of IT Park and accordingly, the Company entered into a development agreement with Godrej Properties Limited granting the said company development rights in respect of the said land. For this our attention was drawn to page 92 to 119 of the paper book. In pursuance with the said development agreement, the assessee had received security deposit of ₹ 500 lacs. The receipt had duly been accounted for in the books of the assessee and shown in the audited balance-sheet for the year as on 31.03.2006 as well as 31.03.2007. The assessment under section 143(3) was completed for the impugned assessment year on 31.12.2009. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 011 in ITA No. 2221/Kol/2010 copy of which is available at page 86 to 90 of the paper book. Subsequently the Assessing Officer initiated the reassessment proceedings under section 147 by issuing notice under sect ion 148 of the Act for the reasons recorded. Our attention was drawn towards page 91 of the paper book, it was contended that from the reasons recorded, it is apparent that the assessing Officer initiated reassessment proceedings for the same reason for which the order under sect ion 147/ 143(3) is considered to be erroneous by the CIT. 9. The Assessing Officer in the recorded reasons referred to the development agreement with Godrej Waterside Properties Pvt. Ltd. in terms of which the developer was to provide 39% of the total saleable area to the assessee as a consideration. The Assessing officer in support of the reasons relied on the Note No. B/8 of Schedule P of the Annual Accounts for the year ended 31.03.2007 for which our attention is drawn to page 59, Note No. 5. This note provided the detail s of assessee's agreement with Godrej Waterside Properties Pvt. Ltd./ Godrej Properties Limited. The Assessing Officer referred to Schedule E of the audited accounts which re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration was delivered. It was contended that it is a fact that before passing the impugned order dated 30.03.2013, the assessing officer had thoroughly examined the issue of the taxability of the gains arising from the development of land in all its perspectives. The Assessing officer has duly considered all the legal provisions as well as the relevant documentary evidences which were gathered by him during the course of the re-assessment proceedings and then he took a conscious decision that no capital gain legally chargeable to tax in the impugned assessment year. Therefore, it was contended that once the Assessing officer had conducted enquiries as the circumstances demanded, had applied his mind and then came to a conscious decision by following one of the courses legally permissible then in proceedings under section 263 the CIT cannot hold the assessment order to be erroneous on the same issue by invoking the jurisdiction under section 263. Our attention towards the show-cause notice it was pointed out that the first instance considers the assessment order as erroneous for the reason that no capital gain was assessed though in terms of section 2(47) of the Act, the capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly because the Assessing Officer has not followed the view taken by the CIT. Our attention was drawn in the decision of the Hon'ble Supreme Court in the case of Malabar Industrial Company -vs.- CIT reported in 243 ITR 83). Reliance was also placed in this regard on the following decisions:- (i) CIT -vs.- Max India Limited [295 ITR 282](SC); (ii) Cit -vs.- Grasim Industries Limited (226 Taxman 165 (Bom. HC); (iii) CIT -vs.- Sunbeam Auto Ltd. (332 ITR 167) (Del. HC); (iv) CIT -vs.- J.L. Morrision (I) Ltd. (366 ITR 593 (Cal. HC). 12. Our attention was also drawn towards the following decisions in support of the proposition of law that where the Assessing Officer has examined the relevant issue in the assessment proceedings by gathering relevant material, by making necessary inquiries and after applying his mind then the CIT cannot exercise revisionary powers under sect ion 263 merely because in CIT's opinion another view is permissible:- (i) CIT-vs.- Gabriel India Limited [332 ITR 167 (Bom. HC)]; (ii) CIT -vs.- J.L. Morrision (I) Ltd. (359 ITR 573 (Cal. HC); (iii) CIT -vs.- Sunbeam Auto Ltd. (332 ITR 167)(Del. HC); (iv) Hari Corporation Trading Co.-vs.-CIT(263 ITR 437) (P&H H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Tribunal also noted that the CIT(Appeal s)'s finding that the space sold was part of depreciable asset was not contested in appeal by the Revenue. Thus it is quite evident that the nature of the building block as fixed and depreciable asset was considered and decided by the appellate authorities and thus there being merger of the assessment order with the order of the CIT(Appeals) as well as that of the ITAT and, therefore, in terms of clause (c) of proviso to section 263, the CIT did not have jurisdiction to revise the assessment on that issue. 16. It was further submitted that the same building has been used by the assessee for the purposes of earning business income in the earlier years. Even during the year under consideration the income derived from the use of the building as also from operation and maintenance of IT Park has been assessed as business income. But for the use of IT Park building the assessee could not have earned the business income. The assessee was the owner of the building. As such all conditions specified in sect ion 32 were fulfilled. In view of the fifth proviso to section 32, depreciation is a mandatory allowance. In the accounts of the assessee f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... low. We have also gone through the cases cited before us. In this case, we noted that the CIT passed the order under section 263 dated 26.03.2015. By passing the said order the CIT set aside the assessment order passed by the Assessing Officer on 30.03.2013 under section 143(3) read with section 147 as jurisdiction under sect ion 263 has been invoked by the CIT in respect of the said order. The CIT vide his order under section 263 dated 26.03.2015 set aside the assessment on limited issues for which the so cause notice was given to the assessee and directed the Assessing Officer to pass the order with regard to these two issues namely; - (1) assessment of the capital gain in relation to the assessee's development rights in respect of its leasehold property being Plot no. 5, Block DP, Sector-V, Salt Lake City, Kolkata-700 091; and (2) depreciation claimed in respect of the Information Technology Park known as ' Infinity Think Tank' situated at Plot A/3, Block GP, Salt Lake Electronic Complex, Sector-V, Salt Lake City, Kolkata-700 091 The undisputed facts placed before us are that the assessee is a Company engaged in the business of developing, operating and maintaining civil infrast ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... admitted rate of cost of construction of area sold in FY 2007-08 is ₹ 3,390/- per sq.ft. vide assessment records of the assessee company for the AY 2007-08. On the same basis, the sale consideration for 61% of the land of assessee (39% of proportionate land in retained by assessee along with constructed area) is 7,23,781 sft. X ₹ 3,390/-/sft. = ₹ 245,36,17,590/-. The proportionate cost of land to the assessee is ₹ 1,89,74,418/- x 61% = ₹ 1,15,74,390/-. The assessee is entitled to benefit of indexation. Even then the long term capital gain assessable would not be less than ₹ 225 crore, on which tax payable is at the rate of 20% plus surcharge / EC etc. But the assessee company has not disclosed any capital gain in the return. No capital gain was assessed either. In view of the above, there was reason to believe that income chargeable to tax for the AY 2007-08 has escaped assessment within the meaning of section 147". The reasons recorded were based on the information disclosed in Note B/8 of Schedule P of the Annual Accounts for the year ended 31s t March, 2007, which is available at page 59 of the paper book. This note, in our opinion, info ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our corners of power as is envisaged on him under the Income Tax Act, 1961. Before deciding the issue whether the order passed by the CIT lays down under section 263, it is necessary to discuss the provision of sect ion 263 which empowers the CIT to revise the assessment order under section 263, which reads as under:- "263. (1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous insofar as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. Explanation.-For the removal of doubts, it is hereby declared that, for the purposes of this sub-section, - (a) an order passed on or before or after the 1st day of June, 1988 by the Assessing Officer shall include - (i) an order of assessment made by the Assistant Commissioner or Deputy Director or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al to the interest of the Revenue. This consideration having regard to the language of section 263 apparently is a consideration which he exercises by calling for and examining the record available at this stage. There is no question of the assessee to appear and make submission. Thirdly, if after calling for and examining the records the Commissioner considers that the order of the Assessing Officer is erroneous in so far it is prejudicial to the interest of the Revenue, he is bound to give an opportunity to the assessee of being heard and after making or causing to be made such enquiry as he may deem fit, pass such order thereon as the circumstances of the case may justify including an order enhancing or modifying the assessment or cancelling assessment and directing a fresh assessment. This empowers the C.I.T. to cause or make such enquiries as he deems necessary. Fourthly the C.I.T. u/s 263 can enhance or modify the assessment. 23. It is a settled law that for invoking the provisions of section 263 the CIT must satisfy both the conditions that the order passed by the Assessing Officer is erroneous and also that it is prejudicial to the interest of the revenue. If one of the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue after examining the record. Thus enquiry precedes the record and the material collected during the course of the enquiry cannot be the part of the record of the proceedings when the CIT forms an opinion that the order passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. 25. From the show-cause notice as pointed out by us earlier, it is apparent that the CIT has invoked his jurisdiction under section 263 with regard to the following two issues- (i ) assessment of capital gains in relation to assessee's development rights in respect of its leasehold property being Plot No. 5, Block DP, Sector-V, Salt Lake City, Kolkata; and (2) depreciation claimed in respect of Information Technology Park Building known as "Infinity Thinktank" situated at Plot A-3, Block GP, Sector-V, Salt Lake City, Kolkata. 26. From the fact s as narrated by us in the preceding paragraph as regard to the fi rst issue, we noted that the Assessing Officer has duly considered this issue while framing the assessment under section 147 read with section 143(3) in respect of which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r- II of the project was delivered by the developer in A.Ys. 2011-12 & 2012-13 respectively. The assessee further submitted that the income by way of capital gains accrued from the said development agreements were offered to tax in the Assessment years 2011-12 and AY 2012-13 taking full value of consideration at ₹ 34.96 crore and ₹ 63.60 crore respectively. The assessee alternatively claimed that in case the assessment is done in AY 2007-08, it should have been done on the basis of fair market value of the leasehold right in the leasehold land. If the said fair market value, as per Gazette Notification of Govt. of west Bengal for leasehold transfer of right in leasehold land, is considered then consideration of 61% transfer of leasehold right will come to ₹ 6.15 crore only. Considering and verifying all the submission filed by the assessee and information collected from Godrej Properties Limited and Nabadiganta Industrial Townships Authority, no capital gain accrues or arises to the asses see in the AY 2007- 08". 27. Even we noted in this regard that the Assessing Officer made a detailed note why the capital gains in relation to the assessee's development righ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court. In tits order dated 01.10.2012 in WP No. 537 of 2012, the Hon'ble High Court permitted the AO to proceed with the reassessment u/s 147 on the condition that final order should not be passed without the leave of the court. By another order dated 03.01.2013, the interim order earlier passed on 01.10.2012 was ordered to remain in force till 01.04.2013. 3. In terms of the leave granted by the High Court, reassessment proceedings were continued and the assessee was asked to furnish its explanation and documents in support of its plea that capital gains chargeable to tax did not accrue or arise in AY 2007-08. The case was listed for hearing from time to time and the same was discussed with the representatives of the assessee on various dates. In order to verify the basic jurisdictional bets, letters were sent la Godrej Properties Ltd and Godrej Waterside Properties Pvt. Ltd with whom the assessee entered into Agreements on 21,07,2005 and 07,02,2007 respectively, The said two companies furnished their detailed replies and also furnished the information as was requisitioned by my predecessor. Similar letters were also addressed to Navadiganta Industrial Township Authority enq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uilding plan for the IT Project. Clause 8 of the Agreement required the assessee to sing and execute throughout nthe course of development all papers and documents necessary for obtaining approval and permission for undertaking development of IT Project. The assessee therefore claimed that it was not a case that the property belonging to the assessee was under complete and full control and management of the developer and the assessee ceased to have any control over its leaseuhold land at Salt Lake. The assessee continued to be involved in the management and control of the IT Project jointly with the developer. It was the assessee's case that for determination of income by way of capital gains, existence of consideration and its quantification in monetary terms was an essential prerequisite. In this case the consideration for transfer of 61% of assessee's interest in leasehold and was cost of 39% of the constructed space. The facts on record however showed that in 2005 or 2007 when the Agreements were entered into by the assessee, the consideration in kind did not even exist, The developer had not even incurred any significant cost for development of the IT Park. Based on mere p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the basis of information which became available in April 2011, i. e. more than 4 years from the end of the relevant previous year. As such based on the events which occurred much after the close of the previous year, it was not correct to hold that income had escaped assessment in the earlier year. 6. As regards delivery of possession of land to the developer the assessee contended that it had only given license to enter upon the leasehold land to carry out the development obligations under agreement. In the letters addressed to Godrej Waterside Properties Pvt. Ltd, the developer was specifically asked to furnish the date/s on which the possession ofhe land was delivered, In response, the assessee filed reply. 7. From this reply, it appeared that even the developer in its reply admitted that legal possession of the property was never received by Godrej Waterside Properties Pvt. Lid but it was only allowed to carry on construction in terms of the development agreement. The categorical confirmation in this regard by the developer therefore showed that the assessee never parted with legal possession of its land, till 39% of the constructed space in the completed building was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pressed and based on such value the capital gains cannot be assessed. In view of the above discussion, I am of the opinion that on the facts and circumstances of the present case, it would be most appropriate that the capital gains be assessed in years in which the consideration for transfer of development rights was actually delivered by the developer. If the capital gain is assessed in the years or receipt of the consideration then the quantification of capital gain can be done with most certainty because till then it will be possible to assess the correct amount of capital gains with reference to cost of construction actually incurred by the developer. The facts on record shows that the cost or construction was incurred by the developer much later than FY 2006-07 and major portion or the construction cost was incurred during FYs 2009-10 & 2010-11. In the circumstances if one has to resort to estimation of the consideration then I will have to allow discounting or the construction cost to arrive at the present value of the consideration. This will result in substantial reduction in the capital gain tax and this will be to the prejudice to the Revenue. On the contrary if the capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07.11.2000 and completed on 02.06.2004. Assessee's share in the constructed space was delivered on completed in 2004. In the same year the assessee sold part of the constructed space out of the owner's allocation share and the capital gains was returned in AY 2005-06. The AO assessed the capital gain as short term whereas the assesese claimed the same to be long term in nature. The Tribunal held the gain to be long term in nature. However, what is material to note from the facts discussed in this decision is that it was never the case of the department nor the Tribunal held that capital gains should was assessable in AY 2001-02 although the development agreement was executed on 31.10.2000 and the construction began on 07.11.2000. The fact discussed in the decision of the Tribunal, therefore, shows the capital gain was held assessable only in the year in which the consideration was actually received by the assessee. In the assessee's case also it disclosed capital gain in AYs 2011-12 & 2012-13 being years in which the consideration was actually received. For these reasons, total income as shown by the assessee in its return for AY 2007-08 is accepted. However, AYs 2011-12 & 2012-13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15 crores will only reduce the company's overall tax liability. 12. Considering discussion as in foregoing para 1 to 11, capital gain as shown by the assessee in AYs 2011-12 & 2012-13 in respect of alleged transfer of development rights on leasehold land is accepted. Order for the AY 2007-08 is completed on income as assessed earlier. 13. Since W.P. is dismissed by the Hon'ble Kolkata High Court and no further stay had been granted (ref. Letter of A.P. Gomes Adv. Dated 02.04.2013), assessment order has been issued to the assessee and served upon it on 03.04.2013. 14. While passing the order for the AY 2007-08, discussion with ld. JCIT, Range-2, Kolkata had been made time to time". 28. From this we noted that so far as the issue no.1 is concerned, the Assessing officer has after examining the submissions of the assessee as well as making the enquiry on this issue taken a conscious decision. From the finding of the assessment order it is apparently clear that the Assessing Officer had duly examined the issue relating to assessment of capital gains in relation to assessee' s development rights in respect of its leasehold property being Plot No. 5, Block DP, Sector-V, Salt Lake ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in the case of CIT -vs.- Goyal Private Family Specific Trust, 171 ITR 698 (Alld.) has held under para no. 12 as under:- "As held by this Court in the case of Goyal Private Family Specific Trust (supra), we are of the considered opinion that merely because the ITO had not written lengthy order, it would not establish that the assessment order passed under section 143(3)/148 of the Act is erroneous and prejudicial to the interest of the Revenue without bringing on record specific instances, which in the present case, the CIT has failed to do". No contrary decision was brought to our knowledge by either of the sides. 31. We noted that Hon'ble Delhi High Court in the case of CIT -vs.- Leisure wear Exports Ltd., 341 ITR 166 (Del.) has clearly held as under:- "The power of revision is not meant to be exercised for the purpose of direction the AO to hold another investigation without describing as to how the order of the AO is erroneous. From this it also follows that where the assessment order has been passed by the AO after taking into account the assessee's submissions and documents furnished by him and no material whatsoever has been brought on record by the CIT which showed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely, (i) the order of the assessing officer sought to be revised is erroneous; and (ii) is prejudicial to the interests of the revenue. If one of them is absent- if the order of the Assessing office is erroneous but is not prejudicial to the revenue - recourse cannot be had to section 263(1). There can be no doubt that the provision cannot be invoked to correct each and every type of mistake or error committed by the assessing officer, it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. The phrase 'prejudicial to the interest 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 the order of the assessing officer cannot be treated as prejudicial to the interests of the revenue. for example, if the assessing officer has adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two labourers and examined them and their statements were recorded under s. 131. Since all necessary details were furnished by the assessee, there was no reason for the CIT to invoke the revisional jurisdiction under s. 263. The CIT has not stopped merely by issuance of notice under s. 263. Once compliance is made, he went on issuing notice after notice and certain adverse inference were drawn by him from the details collected by him during the revisional proceedings. Those details were thoroughly checked and examined by the Tribunal and it arrived at a factual finding that there was no illegality committed by the assessee in entrusting the work to sub-contractors nor there was any illegality in making all due payments to them. The Tribunal has also given specific finding to the effect that there was no evidence on record that these contractors were related to the assessee or were associates or sister concerns of the assessee. The Tribunal has also given finding that the Revenue has not discharged the onus that the payments to sub-contractors were not genuine. Thus the Tribunal has come to the conclusion that no disallowances can be made merely on the basis of suspicion, howsoever ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Jewellers, 259 ITR 502 (Guj), Hon'ble Gujrat High Court has held as under:- "It is the finding of fact given by the Tribunal that the assessee has produced relevant material and offered explanation in pursuance of the notices issued under s. 142(1) as well as s. 143(2) and after considering those materials and explanation, the ITO has come to a definite conclusion. The CIT did not agree with the conclusion reached by the ITO. Sec. 263 does not empower him to take action on these facts to arrive at the conclusion that the order passed by the ITO is erroneous and prejudicial to the interest of the Revenue. Since the material was there on record and the said material was considered by the ITO and a particular view was taken, the mere fact that different view can be taken, should not be the basis for an action under s.263 and it cannot be held to be justified. Having regard to the facts and circumstances of the case, the Tribunal was justified in setting aside the order passed by the CIT under s. 263. - Malabar Industrial Co. Ltd. vs. CIT (2000) 159 CTR (SC) 1: (2000) 243 ITR 83 (SC) followed. 38. In the case of Income-tax Officer v. DG Housing Projects Ltd. 343 ITR 329 (Del), De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uiry that such a course of action would be open. An order cannot be termed erroneous unless it is not in accordance with law. If an Income-tax Officer acting in accordance with law makes a certain assessment, it cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately. Section 263 does not visualise a case of substitution of the judgment of the Commissioner for that of the Income-tax Officer who passed the order unless the decision is held to be erroneous. Where the Income-tax Officer has exercised the quasi-judicial power vested in him in accordance with law and arrived at a conclusion such a conclusion cannot be found to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. There must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed. The assessee was a manufacturer of car parts. Its return for the assessment year 2001-02 was taken up for scrutiny and assessment was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the expenditure as revenue expenditure was plausible and thus there was no material before the Commissioner to vary that opinion and ask for fresh inquiry". 40. Now coming to the second issue, which relates to depreciation claimed by the assessee in respect of Information Technology park Building known as "Infinity Thinktank" situated at Plot No. A-3, Block GP, Sector-V, Salt lake City, Kolkata, on which jurisdiction under sect ion 263 has been invoked. The assessee's first venture in the field of development of IT Park was construction of Information Technology Park building now known as "Infinity Thinktank" situated at Plot A/3, Block GP, Sector-V, Salt Lake City, Kolkata. The assessee's registered and administrative Office is also situated in the said building. The development and construction of the said IT Park building was completed in two phases and the construction work was completed in financial year 2005-06 relevant to assessment year 2006-07. The said IT Park building is operated and maintained by the assessee as and by way of Information Technology Park. The said IT Park has been approved as an Industrial Park by the CBDT under Section 80IA(4) and the relevant no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer, however, held that the assessee should have offered the gain realized on granting long term lease of office space after deducting proportionate WDV included in the opening WDV relatable to transfer area. The Assessing Officer, therefore, considered ₹ 3,27,69,200/- [Rs.2,40,95,000/- plus ₹ 86,74,200/-] as sale proceeds received on transfer of 6972 sq. ft. Area and accordingly determined the WDV of the building block attributable to such area at ₹ 1,77,42,577/-. The Assessing officer thus assessed ₹ 1,50,26,623/- as short-term capital gain. 41. The assessee went in appeal before the CIT(Appeals), who deleted the addition made by the Assessing Officer. CIT(Appeal s) held that refundable deposit of ₹ 86,74,200/- was assessee's liability and could not be taken into account in determining income. As regards assessment of capital gains instead of deducting the gross lump sum premium for granting long term lease from the WDV block, the CIT(Appeals) accepted the assessee's plea that provisions of section 50 are applicable since the capital assets transferred was integral part of the depreciable asset. The relevant findings of the CIT(Appeals) are reprod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in that view of the matter decided the question of determination of income assessed in the AO's order under the head "short-term capital gains". The ITAT's order was passed on 08.09.2011, while the CIT(Appeals) passed his order on 20.08.2010. Show cause notice has been issued vide letter dated 19.02.2015 i.e. much after the order passed by the CIT(Appeals) as well as ITAT. We noted that this issue was duly considered by the CIT as well as ITAT. Clause (c) of proviso 2 to section 263 mandates that CIT does not have jurisdiction to revise the assessment on the issue which has been considered and decided by the CIT(Appeal s). The CIT by exercise his jurisdiction under sect ion 263 in respect of the issue of depreciation, in our opinion, exceeded his jurisdiction which has no leg to stand. Even otherwise also, the issue relating to depreciation claimed in respect of the Information Technology Park Building known as "Infinity Thinktank" situated at Plot A/3, Block GP, Sector-5, Salt Lake City, Kolkata was duly discussed in the order passed under section 143(3). The said order got merged with the order of the CIT(A), CIT does not have any jurisdiction to initiate the proceeding u/s 263 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. 46. ITA No. 414/Kol/2015 (Assessment Year : 2010-2011) In this case al so, the assessee has taken as many as eight grounds of appeal challenging the order of Principal Commissioner of Income Tax-I, Kolkata passed under section 263 of the Income Tax Act dated 20.03.2015 both on legal as well as merit. 47. In this case, we noted that the Principal CIT has issued show-cause notice to the assessee under section 263 in respect of the two issues, one issue relates to the allowing of donation amounting to ₹ 97,57,650/- under the head "general expenses" amounting to ₹ 16,49,04,595/-, while in the opinion of the Principal CIT only a sum of ₹ 5,00,000/- was admissible under section 35AC. The second issue in respect of which the re-opening was proposed relates to the same issue relating to the claim of depreciation allowing the excess depreciation considering the current asset s as fixed asset s. 48. After hearing both the parties and going through the submissions of the assessee, we noted that ultimately the Principal CIT set aside the assessment order on both these issues and directed the Assessing Officer to complete the assessment de novo. So far as the issue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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