9911796707
TMI Blog2019 (5) TMI 1675X X X X Extracts X X X X X X X X Extracts X X X X ..... efore ld. Commissioner (Appeals). In our view the ld. Pr Commissioner is wrong in his approach and the taxability of lease income as was very much before ld. Commissioner (Appeals). Explanation (c) to section 263 places an embargo on the Commissioner in case of subject-matter of any appeal which had been considered and decided in such appeal. Before the ld. Commissioner exercises his jurisdiction under section 263, he is required to ascertain whether the order referred to in subsection (1) of section 263 had been the subject-matter of any appeal, and if yes, the revisional powers should be available only with respect to subject-matter that had not been considered and decided in such appeal. Thus, in the present case, Commissioner was wrong in revising the assessment order on the taxability of rental income as income from house property. Therefore, the order passed by him is not valid. - Decided in favour of assessee - ITA No. 2499/Mum/2017 - - - Dated:- 8-5-2019 - SHRI G.S. PANNU, VICE-PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER For the Appellant : Shri Vijay Mehta with Anuj Kushandwala CA s (AR) For the Respondent : Shri R.P. Meena CIT-DR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed is not prejudicial to the interest of revenue, since, if the lease income is assessed as income from house property it would be beneficial to the assessee. The reply of assessee was not accepted by the learned Pr. Commissioner and hence, he set aside the assessment order directing the assessing order to pass the order afresh. The learned Pr. Commissioner while setting aside the assessment order concluded, since the learned Commissioner (Appeals) has upheld the stand of assessee on the issue of the income from lease rental, the same cannot be subjected to revision is not acceptable because the issue of taxability of lease rental as income from house property has never been subject matter before learned Commissioner (Appeals). The Commissioner (Appeals) has decided the issue of lease rental being taxed by assessing officer under the head income from other sources as against business income declared by the assessee. The argument of assessee company on the issue of lease rental to be taxed as business income is not acceptable as the assessee owns the units in industrial park, and the lease income from such property, being building and the land appurtenant thereto is chargea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of assessing officer on point of taxability of lease rental income has already merged with the order of ld. Commissioner (Appeals). It was submitted that in order of ld. Pr. Commissioner is liable to quashed and set aside only on the doctrine of merger alone. The learned AR for the assessee in support of his of the submission relied upon the following decision: (i) CIT Vs K.S Sera Productions Ltd. ( 374 ITR 503 Bom) (ii) CIT Vs Nirma Chemicals Works P Ltd [309 ITR 67 (Guj)] (iii) Sonal Garments Vs JCIT ( 95 ITD 363 Mum) (iv) Marico Industries Vs ACIT (313 ITR(AT) 259 (Mum) 5. In second alternative submission the learned AR of the assessee submits the lease rental income earned by the assessee has been assessed as income from other sources by the assessing officer. The view taken by assessing officer is one of the possible views. It was submitted that the proceeding under section 263 initiated cannot be initiated by the learned Pr. Commissioner if the assessing officer has taken a possible view. In support of his submission the learned AR of the assessee relied upon the following decision (i) Malabar Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come from other sources. However, on appeal before ld. Commissioner (Appeals) the appeal of the assessee was allowed and the said income was allowed as business income. The ld. Commissioner (Appeals) before treating the said income as business income observed that the assessee is consistently claiming the lease rental income as business income and the same has been accepted by department in assessment year 2010-11 and 2011-12 in assessment order passed under section 143(3). It was also noted by the ld. Commissioner (Appeals) that the assessee has no other income except the rental income from the units held by the assessee in the industrial park. No further appeal was filed by the revenue/ assessing officer. In our view the ld. Commissioner (Appeals) examined the taxability of the rental income after deep analysis of the facts. Factually, the appraisal shows that the issue regarding the nature of lease income was the subject matter of assessment by the Assessing Officer and also the adjudication by the ld. CIT(A) thereafter. The ld. Pr Commissioner issued show cause notice under section 263 dated 03.03.2015 for proposed revision of the assessment order on the ground that the lease i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment order insofar as the order is erroneous and prejudicial to the interest of the revenue, however, Explanation (c) places an embargo on the Commissioner of Income-tax in case of subject-matter of any appeal which has been considered and decided in such appeal. In other words, before the Commissioner of Income-tax exercises the jurisdiction under section 263 of the Act, the Commissioner of Income-tax is required to ascertain whether the order referred to in sub-section (1) of section 263 of the Act had been the subject-matter of any appeal, and if yes, the revisional powers shall be available only if such subject-matter had not been considered and decided in such appeal 11. The Hon ble Bombay High Court in CIT Vs K Sera Sera Productions Ltd (supra) held where issues of income of assessee from production of film and deduction of cost of production there against had been considered and decided in appeal by first appellate authority, said issues could not be made subject matter of revision under section 263. The relevant part of the order is extracted below: 10. We find that despite this position emerging from the record and being undisputed, the order u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e revised and revisited. Firstly, if the income of the Assessee from the film is ₹ 11,25,00,000/-, then, whether the explanation of the Assessee that it is not so deserves to be considered or not by the Assessing Officer is grievance No. 1/ground No. 1 before the first appellate authority. Secondly, if that is taken to be the income of the Assessee and without admitting it to be so the cost of production of the film needs to be deducted by applying Rule 9A of the Income Tax Rules. Thus, that is ground No. 2 in the memo of Appeal before the first appellate authority and in his order dated 12th October, 2011. Both these matters are very much part of the revisional authority's order dated 29th March, 2012. The attempt to reopen them cannot be saved as clause (c) of Explanation below sub-section (1) of section 263 of the Income Tax Act, 1961 had no application. 12. The Hon ble Gujarat High Court in CIT Vs Nirma Chemicals works P. Ltd (supra) held that the Commissioner is entitled to revise an assessment order insofar as the order is erroneous and prejudicial to the interest of the revenue, but the Explanation (c) to section 263 places an embargo on the Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther sources . The assessee filed appeal before ld. Commissioner (Appeals). The ld. Commissioner (Appeals) allowed the appeal of the assessee by accepting the lease rental income as business income . Therefore, before the ld Commissioner (Appeals) there was issue of taxability of rental income, which was duly considered and decided by him. The ld Commissioner (Appeals) decided the issue after examining the memorandum of association of the assessee, nature of the income and facts that similar income was accepted as a business income. In our view the order of assessing officer on point of taxability of lease rental income is merged with the order of ld. Commissioner (Appeals). The revenue/ assessing officer accepted the finding of ld. Commissioner (Appeals) as no further appeal was filed before Tribunal. This fact was brought in the notice of ld. Pr Commissioner in the reply furnished by the assessee. The ld. Pr Commissioner took the view that the taxability of rental income as House Property Income was not the subject matter before ld. Commissioner (Appeals). In our view the ld. Pr Commissioner is wrong in his approach and the taxability of lease income as was very much before ld ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
