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TMI Blog2022 (3) TMI 1440X X X X Extracts X X X X X X X X Extracts X X X X ..... te proceedings. The revenue has nowhere demonstrated that execution of this order has been stayed and, therefore, the liability should be deemed as contingent. It is also pertinent to observe that this aspect has been accepted by the AO. It is quite debatable to construe that if an order passed by the competent authority crystallising the amount payable by the assessee, if challenged in an appeal would lose its executability unless stayed by the Appellate Authority. Therefore, to our mind regarding the first aspect the assessment order is not an erroneous one and the ld. Commissioner ought not to have exercised jurisdiction u/s 263 of the Act, on the first point. Commissioner was of the view that the sum ought to have been included in the deemed full sale consideration for the purpose of Section 50C - Section 50C is not applicable as it is common parking space in an office premise. It is to be appreciated that parking space has to be assigned and not to be sold. Though there is a very narrow distinction between the both because if it is to be sold by the vendor, the vendee may erect a structure after obtaining the absolute right of such space. Parking spaces are not subject to sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Learned Principal Commissioner of Income Tax, Kolkata (hereinafter the "ld. Commissioner") passed u/s 263 of the Income Tax Act, 1961 ("the Act'), for Assessment Year 2016-17. 2. The assessee has taken ten grounds of appeal in Form No. 36. However, thereafter it has filed statement of facts and reiterated its challenge in summarized grounds of appeal. These grounds read as under:- "1. That on the facts and in the circumstances of the case and law, the order made by the d. Pr. CIT under section 263 of the Income tax Act, 1961 (IT Act') is illegal, invalid and not sustainable in law. 2. That on the facts and in the circumstances of the case and law, the Ld. Pr. CIT grossly erred in passing the order under section 263 even though the assessment order under section 143(3) dated 28th December 2018 passed by the Assessing Officer (AO) was neither erroneous nor prejudicial to the interest of the Revenue. 3. That on the facts and in the circumstances of the case and law, the AO after due examination of the relevant facts having already followed one of the courses permissible in law, the Ld. Pr. CIT was unjustified in setting aside the assessment for computing book profit under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of the same the MAT Liability is higher than normal tax liability already paid, so order u/s 143(3) is not prejudicial to the interest of revenue. 9. For that on the facts and in the circumstances of the case, the order of the CIT passed u/s 263 be cancelled since the assessment order u/s 143(3) dated 28.12.2018 was neither erroneous nor prejudicial to the interest of the revenue." 3. The brief facts of the case are that the assessee company has filed its return of income electronically on 30/09/2016 declaring total income at Rs.8,07,33,801/-. The case of the assessee was selected for scrutiny assessment and notice u/s 143(2) & 142(1) of the Act, were issued and served upon the assessee. The ld. Assessing Officer has passed the assessment order u/s 143(3) of the Act on 28/12/2018 and determined the taxable income of the assessee at Rs.10,62,30,364/-. 4. The ld. Commissioner perused the assessment record and formed an opinion that action u/s 263 of the Act is required to be taken because the assessment order is erroneous one, which has cause prejudice to the interest of the revenue. Therefore, he issued a showcause notice u/s 263 of the Act on 12/03/2021. Copy of the showcaus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation are not the subject matter of the present appeal. Therefore, remedy of the assessee lies somewhere else and it is at liberty to take all such opportunity if so advised but in the present proceedings no such issue can be raised by way of filing an affidavit. For challenging the order passed u/s 154 of the Act, the assessee has to file a fresh appeal as contemplated in the Income Tax Act as well as the Income Tax Rules. 8. Reverting back to the issues raised in the impugned order, we find that the assessee has raised certain grounds of appeal which do not arise from the impugned order. The ld. Commissioner has remitted the issues discussed in paragraph no. 2 of the impugned order and in this paragraph the issues are only qua the first notice issued u/s 263 of the Act. The ld. Counsel for the assessee while impugning the order of the ld. Commissioner contended that the first issue raised by the ld. Commissioner is that the assessee had made a provision for interest on service tax amounting to Rs.2,28,88,803/-. This provision ought to have been added back to the book profit while computing such book profit for the purpose of Section 115JB. He submitted that the ld. Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se available at page number 68 of the paper book, which reads as under:- 11. With regard to this issue, the ld. Counsel for the assessee has raised two submissions. That Section 50C contemplates that when a house property including land or building or both are being sold then full sale consideration would be deemed equivalent to the amount on which the stamp duty has been paid. In other words, whatever may be the sale consideration received by the vendor such sale consideration for the purpose of computation of capital gain u/s 48 would be deemed equivalent to the amount calculated by the Stamp Valuation Authority for the purpose of charging the stamp duty. He submitted that the assessee has not sold land or building. It has only assigned parking Part-II [Parking space] Right to park in 26 (twenty six) spaces for parking of medium sized car in or about the Building having cemented floor 11. With regard to this issue, the ld. Counsel for the assessee has raised two submissions. That Section 50C contemplates that when a house property including land or building or both are being sold then full sale consideration would be deemed equivalent to the amount on which the stamp duty ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... moval 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 includeI. (i) an order of assessment made by the Assistant Commissioner or Deputy Commissioner or the Income-tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A; (ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Chief Commissioner or Director General or Commissioner authorized by the Board in this behalf under section 120; (b) "record shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Commissioner under this sub-section shall extend and shall be deemed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce the assessed income by modifying the order. At this stage, before considering the multi-fold contentions of the ld. Representatives, we deem it pertinent to take note of the fundamental tests propounded in various judgments relevant for judging the action of the CIT taken u/s 263. The ITAT in the case of Mrs. Khatiza S. Oomerbhoy Vs. ITO, Mumbai, 101 TTJ 1095, analyzed in detail various authoritative pronouncements including the decision of Hon'ble Supreme Court in the case of Malabar Industries 243 ITR 83 and has propounded the following broader principle to judge the action of CIT taken under section 263. (i) The CIT must record satisfaction that the order of the AO is erroneous and prejudicial to the interest of the Revenue. Both the conditions must be fulfilled. (ii) Sec. 263 cannot be invoked to correct each and every type of mistake or error committed by the AO and it was only when an order is erroneous that the section will be attracted. (iii) An incorrect assumption of facts or an incorrect application of law will suffice the requirement of order being erroneous. (iv) If the order is passed without application of mind, such order will fall under the category ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , other than ascertained liabilities; or (d) ************ *************** ************ (e) ************ ************** ************ ******* A perusal of the above clause would reveal that if certain amount or amounts have been set aside to a provision, in other words, if assessee has made a provision and if that provision is not unascertained liability then book profit computed by the assessee as shown in the statement of profit and loss account would be increased by such unascertained liability for which a provision has been made. Thus, if the interest liability for which a provision has been made by the assessee is to be treated as a contingent liability then the assessment order would be suffering from an apparent error. The question before us is whether, it is a contingent liability or not. A competent authority under the Service Tax has adjudicated the proceedings and quantified the demands required to be made. In other words the Commissioner Service Tax, Kolkata, has passed an executable order on the basis of which a demand can be recovered from the assessee. If that be so, how the interest liability for which a provision has been made can be construed as a contingent li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spaces has not been included in the deemed consideration calculated u/s 50C. The case of the assessee, on the other hand, is that Section 50C is applicable in case of an capital asset, being a land or building or both. The assigning of parking spaces may be a capital asset but it is not absolute transfer of land or building or both. Therefore, Section 50C is not applicable as it is common parking space in an office premise. It is to be appreciated that parking space has to be assigned and not to be sold. Though there is a very narrow distinction between the both because if it is to be sold by the vendor, the vendee may erect a structure after obtaining the absolute right of such space. Therefore, parking spaces are not subject to sale and a rather assigned. If some structure is erected it could create problem for the co-users of the parking space. If this aspect has to be viewed with the above angle the, it will show that ld. Assessing Officer has taken a plausible opinion. There might be a debate on such opinion but there should not be any action u/s 263 of the Act. Therefore, on the second point also the order of the ld. Commissioner, is not sustainable. 19. As far as the other ..... X X X X Extracts X X X X X X X X Extracts X X X X
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