9911796707
TMI Blog2022 (1) TMI 592X X X X Extracts X X X X X X X X Extracts X X X X ..... eration before 31.03.2015 and executed the agreement as on 31.03.2015. Only the registration was completed on 04.04.2015. We noticed that assessee has already paid substantial payments and the seller by written submission has already confirmed the passing of ownership to the assessee when the substantial payments were made When there is reasonable certainty, and the transferee has performed part performance and taken possession in part performance, has done some Act in furtherance of the contract then the mere registration process in next few days does not alter the legal rights of the parties involved. We observe that assessee added the property in the block of asset and claimed depreciation as well. However, Assessing Officer denied the depreciation considering the fact that assets were not put to use. As relying on M/S. INDOGEM VERSUS ITO-19 (1) (5) , MUMBAI [ 2016 (8) TMI 1095 - ITAT MUMBAI] when the entire sale consideration was paid, the terms of agreement reduced into to writing and purchaser proceeded to take over the building, the rights of both the parties are crystalized as on the date of allotment letter or taking over the possession of the property, for the legal forma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess promotions incurred by the assessee to the extent of .19,04,585/-. Even in this case Ld. Pr.CIT has directed the Assessing Officer to verify the genuineness of the expenses claimed by the assessee without really quantifying what is the loss to the revenue. Thus CIT has invoked provisions of section 263 of the Act in the present case where he has differed from the view which Assessing Officer has taken which is one of the possible view and further he has directed the Assessing Officer to verify the professional fee received by the assessee and business promotion expenses without really quantifying what is the loss to the revenue, it clearly indicates that he has invoked provisions of section 263 of the Act to redo the assessment or to implement his point of view in the assessment which is already completed. Therefore, we set aside the order passed u/s. 263 of the Act with the above observations. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... t. The Assessing Officer during the course of assessment proceedings failed to do so, which resulted underassessment to the tune of ₹ 13,70,62,310/- with tax effect of ₹ 4,65,87,479/- (including surcharge and education cess). (iii) The turnover of the assessee increased from ₹ 1,50,00,000/- as on 31.03.2014 to ₹ 13,22,81,250/- as on 31.03.2015 and net profit increased from 39.69% to 88.10%. The professional receipts credit were to the tune of ₹ 13,22,81,250/-, out of which ₹ 1,72,50,000/was received from M/s. Alok Industries Ltd., and the balance of ₹ 11,50,31,250/- from export. Thought the case was converted to complete scrutiny, no details of these receipts have been called for or examined by the Assessing Officer. (iv) No details in respect of business promotion expenses of ₹ 19,04,585/- has been called for or examined by the Assessing Officer in spite of the case being converted into complete scrutiny. (v) Supporting evidence in respect of loan of ₹ 12,00,00,000/- availed by the assessee from HDFC has been sought and placed on record by the Assessing Officer." 3. Ld. Pr.CIT observed that the above informations were ov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record, makes inquires, applies his mind to the facts and circumstances of the case, and determines the income by accepting such accounts and material on record. We further submit that the provisions of sec. 263 of the Act cannot be invoked when the AO after due consideration has taken one of the possible views, when on the same set of facts two views could be possible, and the Commissioner is of the other view. We therefore respectfully submit that the initiation of the proceedings u/s 263 of the Act is not valid in law as the AO has applied his mind and considered the material on record while making the assessment u/s 143(3) of the Act and hence the order sought to be revised is neither erroneous so as to be prejudicial to the interest of the Revenue. In support of the above submissions we strongly rely upon the following judgements (1) CIT Vs. Max India Ltd. [295 ITR 282RSC) ….. (2) CIT vs. Gabriel India Ltd. 1203 ITR 1081(Bom) …… (3) CIT Vs. Design and Automation Engineers (Bombay) P. Ltd. [323 ITR 6321 (Bombay): …… Similar view has also been taken by various courts/Tribunals in following judgments: (i) Malabar Industrial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that it has actually acquired and put to use the office premises on 27.03.2015 and merely because the registration of agreement took place on 04.04.2015 cannot be a basis to disallow the depreciation on block of Office premises. However, the AO did not accept the contention of the assessee and disallowed depreciation of ₹ 47,92,879/claimed on block of office premises. Now your honour has issued a show cause to initiate the proceeding u/s 263 of the Act on the ground that the new premises purchased cannot be held as acquired during the previous year ended 31.03.2015 and therefore the assessee ought to have declared the capital gain of ₹ 13,70,62,310/- [i.e. Sale consideration of ₹ 14,00,00,000 - Op. WDV of ₹ 29,37,690] u/s 50 of the IT Act on sale of office premises at Pinnacle Corporate Park, as the full value of consideration of officer premises sold exceeds the WDV of block of assets at the beginning of the year. In this connection, the assessee once again submits that it has purchased office premises at Dev Plaza, Andheri (West) vide Agreement for Sale dated 31.03.2015 and possession of same was obtained on 27.03.2015 although the letter of posses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see" the expression as occurring in section 32(1) of the IT Act means the person who having acquired possession over the building in his own right uses the same for purposes; of the business or profession though a legal title has not been conveyed to him consistently with the requirements of laws such as the Transfer of Property Act and the Registration Act etc, but nevertheless is entitled to hold the property to the exclusion of all others. in this regard the assessee rely upon the following judicial pronouncements: (1) CIT Vs. Poddar Cement Pvt. Ltd. 1226 ITR 6251 (Supreme Court): "26. We are conscious of the settled position that under the common law 'owner' means a person who has got valid title legally conveyed to him after complying with the requirements of law such as Transfer of Property Act, Registration Act, etc. But in the context of s. 22 of the IT Act having regard to the ground realities and further having regard to the object of the IT Act, namely, 'to tax the income', we are of the view, 'owner' is a person who is entitled to receive income from the property in his own right. " (2) Mysore Minerals Pvt. Ltd Vs. CIT [239 ITR 7751(Supreme Court) "10. In our op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o-none situation could have been intended by the legislature. The finding of fact arrived at in the case at hand Is that though a document of title was not executed by Housing Board in favour of the assessee, but the houses were allotted to the assessee by the Housing Board, part payment received and possession delivered so as to confer dominion over the property on the assessee where after the assessee had in its own right allotted the quarters to the staff and they were being actually used by the staff of the assessee. It is common knowledge, under the various schemes floated by bodies like housing boards, houses are constructed on large scale and allotted on part-payment to those who have booked. Possession is also delivered to the allottee so as to enable enjoyment of the property. Execution of document transferring title necessarily follows if the schedule of payment is observed by allottee. If only the allottee may default the property may revert back to the Board. That is a matter only between the Housing Board and the allottee. No third person intervenes. The part-payments made by allottee are with the intention of acquiring title. The delivery of possession by Housing Boar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s shown in Profit & Loss A/c. The assessee vide its Authorised Representative's letter dated 224 August, 2017 filed reconciliation of TDS as appearing in Form 26AS and income as show in Profit & Loss A/c. The TDS appearing in Form 26AS is reconciled with the Professional Fees Received (Local) and shown in Profit & Loss Alc. Now your honour has issued a show cause to initiate the proceeding u/s 263 of the Act by observing that the professional receipt credited were to the tune of ₹ 13,22,81,250/out of which ₹ 1,72,50,000/was received from M/s Alolc Industries Ltd and the balance of Rs.! 1,50,31,250/from Export. Your honour further observed that though the case was converted to complete scrutiny no details of these receipts have been called for or examined by the AO specifically to identity whether TDS has been properly deducted/not deducted on such receipts. In this regard, the assessee submit that it has duly filed the reconciliation of TDS Deducted as appearing in Form 26AS with income appearing in its Profit & Loss A/G Vide its Authorised Representatives letter dt. 22nd August, 2017. The entire Professional Fees Received (Local) of ₹ 1,72,50,000/- offered in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owability of depreciation which interalia mentions about the sanction of loan of ₹ 12,00,00,000/by the HDFC Bank Ltd. The assessee submits that it has duly filed the copy of loan sanction and disbursement letters along-with the above letter. In view of the above, the assessee respectfully submit that it has duly filed the details of business promotion expenses of ₹ 19,04,585/and loan sanction and disbursement letter from HDFC Bank Ltd before the AO during the assessment proceeding and same has duly been considered by the AO and hence the order passed by the AO cannot be termed as erroneous in s far as it is prejudicial to the interest of the revenue so as to attract provisions of section 263 of the Act. In view of above, it is respectfully submitted that all the details concerning the above issues were before the AO and the AO after due verification, deliberation and discussion has arrived at a finding that no addition/disallowance are required with regards to the above issues. Since the AO has arrived at a finding after considering all the all the facts and circumstances of the case and application of mind to the material available on record it cannot be said that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n excess of and/or in want of jurisdiction and otherwise void. 2. The CIT erred in holding that the assessment order passed s.143(3) is erroneous so as to be prejudicial to the interest of the revenue within the meaning of Section 263 of the Act and has directed the AO to make a fresh assessment after considering the issues raised in notice u/s 263 of the Act. The Appellant submits that all the details and evidences were on record and the AO has applied his mind and considered all the material on record while passing the assessment u/s 143(3) of the I.T Act and hence the order sought to be revised cannot be termed as erroneous and prejudicial to the interest of the revenue. 3. The CIT erred in holding that the AO ought to have taxed short term capital gain of ₹ 13,70,62,310/- u/s 50 of the Act on sale of office premises at Pinnacle Corporate Park, Mumbai as the new office premises purchased at Dev Plaza, Andheri(West), Mumbai cannot be held as acquired during the previous year ended 31.03.2015. The Appellant submits that it has acquired the office premises at Dev Plaza on 27.03.2015 and hence neither the block of asset ceased to exist nor the full value of considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and applicability of section 50 and further claim of depreciation u/s 32 w.r.t. this block was thoroughly examined and the AO accepted the non-applicability of section 50 but disallowed the claim of depreciation u/s 32 primarily on the ground of failure to satisfy the test of the asset having been used. 4.2. The relevant pages of the paper book, to demonstrate that the issue was raised by the AO, replied by the assessee and after detailed inquiry and verification the assessment order was passed disallowing the depreciation but accepting the contention of the assessee on non-applicability of section 50, are pgs 15, 17, 18, 20, 22, 23, 24, 27, 29, 31, 33, 40, 43, 45, 84, 85, 88, 90, 91, 93, 97, 110, 113, 114, 115 and 118. 4.3. It is submitted that in view of above inquiry and verification, it cannot be said that there has been no inquiry or inadequate inquiry on the issue of acquisition of property. 4.4. The acceptance of the AO on non-applicability of section 50 is supported by the following decisions which hold the view that the registration date relates back to the date of execution of the agreement. In the instant case, the execution of the agreement is dated 31st March ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e it is not a case of no inquiry or inadequate inquiry. 4.7. The assessee did not contest the disallowance of section 32 because of the binding decision of the Mumbai Tribunal in the case of Indogem reported in 72 taxmann.com 315, which is reported hereinabove. In any case, the allowability of depreciation was only a timing difference and therefore the assessee thought fit not to contest the disallowance of depreciation. 4.8. The assessee submits that the AO has examined the issue in-depth and as a prudent person and has taken a view in accordance with binding decisions of the Supreme Court and the Tribunal. It is submitted that in such a scenario the provisions of Explanation 2 to section 263 cannot be relied upon to justify assumption of jurisdiction. Reliance is placed on the decisions in the case of Sir Ratan Tata Trust v. DCIT reported in 188 ITD 151 (Mum), Rallis India Ltd. ITA 3564/M/2016 (Mum) and Nalco Co. v. CIT reported in 210 TTJ 369 (Pune). 4.9. In view of above, it is respectfully submitted that provisions of section 263 have been wrongly invoked and therefore the impugned order is without jurisdiction. 5. Income on which no TDS is deducted: 5.1. The assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis cannot satisfy the jurisdictional condition of section 263 of the Act. Reliance is placed on Milestone Real Estate Fund 172 ITD 370 (Mum), Sarvana Developers 387 ITR 239 (Kar), Vikas Polymers 341 ITR 537 (Delhi) 6.4. The legal submissions made on the scope of section 263 in para 4 above would equally apply for this issue also. 7. To conclude, the impugned order u/s 263 is without jurisdiction and therefore ought to be quashed." 7. On the other hand, Ld. DR submitted that Ld. Pr.CIT during the verification of the assessment records found that Assessing Officer has not carried out any verification in the main issue. She submitted that assessee has claimed that it has purchased the property whereas the document clearly shows that assessee has not settled entire consideration during this year. Further, she submitted that Ld. AR brought to our notice three clauses of the agreement at Page No. 37, 41 and 42 of the Paper Book. She brought to our notice clause 10 and 11 at Page No. 46 of the Paper Book to draw our attention to clause (11) wherein the clause (11) clearly indicates that the vendor only upon receipt of the entire amount out of the said total sale consideration fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll payment of consideration. It is submitted that none of these clauses state that right, title, interest in the property Will not be transferred to the assessee unless full payment is made. Possession per se does not confer any ownership right under the Transfer of Property Act. It is submitted that on the contrary clause 6.7 at pg 43 and clauses 7 and 9 at pg 45 clearly show that the seller agreed to transfer the right, title, interest in the property from and on the date of execution of the agreement. Therefore, it is respectfully submitted that the clauses relied upon by the Learned DR are not relevant. Furthermore, the CIT has not given this reasoning for invoking section 263 and therefore the Department today cannot justify the jurisdiction on a totally new point which did not form part of the show cause notice u/s 263 of the Act. 2. The Learned DR relied on a letter at pg 88 which is a letter issued by the seller to the assessee and handed over personally for fit-out purpose. The case of the DR is that genuineness of this letter was not examined by the AO during the course of the assessment proceedings. It is submitted that at pg 116, the AO in his letter to the assessee r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sought on more than one occasion, replies were filed on section 50 and section 32 by the assessee, the AO after receiving the reply investigated the case by issuing 133(6) notice and by issuing a show cause notice to disallow depreciation and ultimately in the assessment order gave a detailed reasoning to deny the depreciation. Therefore, on these facts it cannot be said that the Officer has merely collected the details and not applied his mind. The Hon'ble Bombay High Court in the case of Nirav Modi (supra) has reiterated that once a query is raised and replied and it does not find its place in the assessment order then it cannot be said that for the purpose of section 263 of the Act, the officer has not applied his mind or examined the issue. The case of the assessee/Appellant is on a stronger footing as stated above. 7. In view of above and in view of the Written Submissions filed on 04.11-2021, it is respectfully submitted that the CIT was not justified in invoking the provisions of section 263 of the Act." 11. Considered the rival submissions and material placed on record, we observed from the record that Ld. Pr.CIT set aside the Assessment Order by invoking three issues ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that 2[***] where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract: Provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof.]" 13. From the above definition, when there is reasonable certainty, and the transferee has performed part performance and taken possession in part performance, has done some Act in furtherance of the contract then the mere registration process in next few days does not alter the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "use" as contemplated u/s 32 of the Act whereas it cannot be equated to the concept of possession to understand the completion of the process of acquisition in terms of Sec. 53A of the Transfer of Property Act. Here, in this matter, assessee did all that he has to do under the contract, and his further act of taking over the property in furtherance of his animus of owning the property thereby excluding every other from dealing with or interfering with the property, is suffice to hold that the assessee acquired the property during the financial year for the purposes of Sec. 50(1)(iii) of the Act. 15. For these reasons, we are unable to accept the contentions of the Revenue that there was no property in existence before the end of the relevant financial year, that there was no agreement between the parties and there is no acquisition that took place during the relevant financial year. We hold that the assessee by his acts of parting with full sale consideration and gaining the ability to have every other person excluded from dealing with the property and by proceeding with the work of fit-outs has demonstrated that it acquired the property for the purposes of Sec. 50(1)(iii) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aspects in the Assessment Order. It is presumed that Assessing Officer has considered those aspects on which he has called the information and it is fact on record that he has taken one of the possible views. In our considered view, Assessing Officer has examined the issues of addition to the block of asset as well as deletion / depreciation and taken one of the possible view in accordance with binding provisions and decisions submitted before him. In such case provisions of section 263 cannot be invoked. Moreover Ld. Pr.CIT has invoked the provision of Explanation 2 to section 263 of the Act, in our considered view and in various decisions of the various courts held that it can be invoked only when no verification or enquiry conducted by the Assessing Officer. In the given case that is not the case and Assessing Officer has verified and applied his mind therefore, the provisions of section 263 of the Act cannot be invoked in this aspect. 17. Coming to the second issues on applicability of TDS provision on professional fee received by the assessee, we observed from the record that assessee has received professional fee which consists of ₹.1.72 crores from domestic payer/cus ..... 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