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TMI Blog2019 (1) TMI 340X X X X Extracts X X X X X X X X Extracts X X X X ..... ding the other individuals in the instant case, AO has not conducted absolutely any enquiry pertaining to the advances received which gives rise to situation where the assessment was done without any enquiry. There is no such activity conducted by the Assessing Officer in the instant case. This proposition has been held by the Hon’ble High Court of Karnataka in the case of CIT Vs. Infosys Technologies Ltd.[2012 (1) TMI 76 - KARNATAKA HIGH COURT]. Similarly in the case of Malabar Industrial Co. Ltd. [2000 (2) TMI 10 - SUPREME COURT] held that an incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the instant case the Assessing Officer has presumed without any basic enquiry that the details filed or in order, to that extent the order of AO can be treated as erroneous and the action of the Ld. PCIT referring the matter for re-examination can be well accepted. Non enquiry of validity of transactions of advances for land/ bianas / land pooling - Held that:- The argument that the assessee has not claimed this expenditure cannot be treated as valid as the assessment does not restrict itself to the claims in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Since prima facie the facts have been examined and the amounts have not been claimed in P&L Account, hence 40(a)(ia) provisions attract to the items of expenditure claimed in P&L Account, we don’t find any merit in the order of the Ld. Pr. CIT on this issue. Applicability of wealth tax - Held that:- We are not in agreement with the explanation of the Ld.AR that the motor cars be treated as stock in trade and hence to be exempted from the definition of the “asset”. The cars cannot be treated as stock in trade of the assessee in this case and neither the assessee claimed them as part of stock in trade. In fact they have been duly made an integral part of the fixed assets. However, this issue of Wealth Tax cannot be a subject matter of proceedings under section 263 of Income Tax Act,1961 which otherwise could well be taken care by the Section 25(2) of the Wealth Tax Act which the Ld. Pr. CIT failed to invoke. Hence, the revision proposed by the Ld. Pr. CIT on this ground is hereby held to be invalid. - ITA NO. 736/Chd/2017 - - - Dated:- 16-11-2018 - Smt. Diva Singh, JM And Dr. B.R.R. Kumar, AM For the Assessee : Shri. Parikshit Aggarwal For the Revenue : Shri. Jagjiva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant is not the shareholder in the advancing company. f. In the absence of any claim of expense as debit to P L A/c, the question of invocation of s. 40(a)(ia) could not have been examined by the Ld. AO and even the CIT, in proceedings and order u/s 263, has erred in passing directions in this regard on a non-existent issue. g. The question of examination of Wealth Tax liability of the appellant was beyond the purview of AO during Income Tax proceedings u/s 143(3) and also outside the powers of CIT u/s 263 of the Act. 3. That on law, facts and circumstances of the case, the Worthy Pr. CIT was not justified in cancelling the order of the Ld. AC) on account of above issues by assuming powers u/s 263 even when the order of Ld. AO passed u/s 143(3) was not erroneous and prejudicial to the interest of revenue. 3. The first issue in order under section 263 pertains to current liabilities as on 31/03/2012. 4. The brief facts relating to this issue are that amount out of total amount of Sundry Creditors ₹ 1,37,20,42,484/- have not been properly examined by the Assessing Officer. The Ld. Pr. CIT held that no documentary evidence to prove the genuineness of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /1999 and The Akash Co-Operative House Builidng Society Limited Mohali Registration No. 2668 dated 11/3/1999 have huge chunk of land acquired by these societies to colonize and allot the same to its members at cost to cost basis, hence both the members of societies offered their respective ownership of land to include the same for the development and accordingly passed a resolution (internally i.e. Within the societies) to hand over the land to the company and transfer the required funds for the further acquisition of land for the development of the same in residential plots and later on to allot the same to the members of the society subject to list provided by the society for the respective names to whom plots are to be allotted. This is further submitted that the company has got the land registered (already registered in the name of societies) for the development and shall transfer the plotted area to the members of the societies on the completion of the project. Assessee holding land or building as trader (stock in trade) and on sale of that assessed for the same under the head Income from business . The major amount out of total amount of Sundry Creditors (Current L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Advances from Customers) is Transferred to the Revenue account under Sale Consideration, as per the Guidance Note on Revenue Recognition for Real Estate Transactions issued by ICAI. In a transaction involving the sale of goods, performance should be regarded as being achieved when the seller of goods has transferred the buyer the property in the goods for a price or all significant risks and rewards of the ownership have been transferred to the buyer and the seller retains no effective control of the goods transferred to a degree usually associated with the ownership and no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of the goods. In case of real estate sales the point of time at which all significant risks and rewards of ownership can be considered as transferred is when the legal title of the property is got transferred to the buyer or giving possession of real estate to the buyer under an agreement for sale, Once the seller has transferred all the significant risks and rewards of ownership to the buyer then there should be recognition of revenue. 9. We have heard Ld. Representatives of both the parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ady taken by the Assessing Officer and where a particular view taken by the Assessing Officer has been nullified by the PCIT by taking a different view possible on the similar set of facts. The Assessing Officer performs the quasi judicial function and the reason for his conclusion and findings should be forthcoming in the order. 10.4 There is no such activity conducted by the Assessing Officer in the instant case. This proposition has been held by the Hon ble High Court of Karnataka in the case of CIT Vs. Infosys Technologies Ltd. 341 ITR 293. Similarly in the case of Malabar Industrial Co. Ltd. 243 ITR 83 the Hon ble Supreme Court held that an incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the instant case the Assessing Officer has presumed without any basic enquiry that the details filed or in order, to that extent the order of the Assessing Officer can be treated as erroneous and the action of the Ld. PCIT referring the matter for re-examination can be well accepted. 11. The second issue relates to non enquiry of validity of transactions of advances for land/ bianas / land pooling at ₹ 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Industrial Company Ltd. Vs. CIT have been duly examined and found that they cannot be applied to the facts of the case before us. In the case of Swaroop Vegetable Products Industries Ltd. 187 ITR 412 it was held that it is beyond dispute that under section 263 of the Income Tax Act,1961 the Commissioner does have the power to set aside assessment order and send the matter for a fresh assessment if he satisfied that further enquiry is necessary and that the order of the Assessing Officer is prejudicial to the interest of the Revenue wherein the Assessing Officer has accepted the contention of the assessee without proper enquiries. In the case of GEEVEE Enterprises Hon ble Delhi High Court held that the Commissioner can regard an order as erroneous in case the Assessing Officer failed in his duty to investigate the facts. In the instant case also the Assessing Officer has accepted the bianas received of ₹ 48.53 crores without conducting any enquiry or investigation and hence the Ld. PCIT has rightly invoked the provisions of Section 263. 15. The third ground relates to Income Tax paid in dispute of ₹ 77,78,920/-. We find that this amount has been shown in the balan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erence to the provisions of Section 2(22)(e). 21. Before us, the Ld. AR submitted that the assessee has no money invested in the shares of AB Apartments Pvt Ltd. We also find that the matter stands examined by the Assessing Officer with reference to the reply submitted by the assessee vide their letter dt. 10/06/2014. Further it is apparent from the records that the amount has been received by the assessee on 16/03/2010 hence cannot be a subject matter of proceedings under section 263 for the A.Y. 2012-13. Assessee gets relief on this ground. Applicability of Section 40(a)(ia) 22. The Ld. Pr. CIT held that the Assessing Officer has not looked into or made necessary enquiries regarding the applicability of 40(a)(ia)pertaining to project expenses. 23. The Ld. AR submitted that the applicability of TDS has been examined by the Assessing Officer vide the questionnaire issued on 28/02/2014. Further he submitted that the assessee has not claimed any deduction for the amount paid in the P L Account. Since prima facie the facts have been examined and the amounts have not been claimed in P L Account, hence 40(a)(ia) provisions attract to the items of expenditure claimed in P ..... X X X X Extracts X X X X X X X X Extracts X X X X
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