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TMI Blog2025 (2) TMI 1082X X X X Extracts X X X X X X X X Extracts X X X X ..... the ALV as per the market rate prevalent in and around the same locality and decide the issue afresh after affording a reasonable and adequate opportunity of being heard to the assessee. Accordingly, appeal of the assessee is partly allowed. Whether addition made as per the provision of Section 56(2)(viib) is beyond the jurisdiction of the AO when the ld. Pr. CIT has cancelled the original assessment order with a direction to decide the case afresh? - We have carefully perused the order of the ld. Pr. CIT framed u/s 263 of the Act and find that no such addition was proposed by the ld. Pr. CIT. Only issue which prompted the ld. Pr. CIT to assume jurisdiction u/s 263 of the Act was applicability of the provisions of Section 22 of the Act in respect of finished unsold inventory of the assessee and deciding this issue the ld. Pr. CIT cancelled the assessment order and restored the matter to the AO for fresh examination of the issue. As decided in Royal Western India Turf Club Ltd [2019 (2) TMI 241 - BOMBAY HIGH COURT] Assessing Officer on his own examined said issue. The Commissioner, undoubtedly, has powers under Section 263 of the Act to annul the entire assessment and required pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said unsold finished inventory. The assessee was asked to furnish details in this respect and was also asked to explain as to how the provision of Section 22 of the Act should not be applied on the unsold finished inventory. 7.1. In its reply, the assessee stated that its main objection is to sell the commercial units which is the only and the single activity which the assessee is carrying on. It was pointed out to the AO that the impugned amendment in Section 23(5) of the Act has been brought into the statute from AY 2018-19 and prior to AY 2018-19, there is no provision provided under the Act to tax the deemed rental income on unsold property lying as stock-in-trade under the head "income from house property". It was further explained that the provision of Section 23(4) of the Act which meant only for properties that are held as investments and not as stock-in-trade and the charging provisions of Section 22 of the Act specifically gives exemption from determination of actual value of the property which is used for the purpose of any business or profession carried on by the assessee. Reliance was placed on various decisions discussed in the assessment order. But the claim of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lopment Trust's case (supra) Sultan Bros's case (supra) and Karan Pura Development Co. Ltd.'s case (supra) the levy of income tax in the case of one holding house property is premised not on whether the assessee carries on business, as landlord, but on the ownership. The incidence of charge is because of the fact of ownership. Undoubtedly, the decision in Vikram Cotton Mills Ltd.' case (supra) indicates that in every case, the Court has to discern the intention of the assessee; in this case the intention of the assessee was to hold the properties till they were sold. The capacity of being an owner was not diminished one whit, because the assessee carried on business of developing, building and selling flats in housing estates. The argument that income tax is levied not on the actual receipt (which never arose in this case) but on a notional basis, i.e. ALV and that it is therefore not sanctioned by law, in the opinion of the Court is meritless ALV: a method to arrive at a figure on the basis of which the impost is to be effectuated. The existence of an artificial method itself would not mean that levy is impermissible. Parliament has resorted to several other pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... beyond the jurisdiction of the AO when the ld. Pr. CIT has cancelled the original assessment order with a direction to decide the case afresh. 12. We have carefully perused the order of the ld. Pr. CIT framed u/s 263 of the Act and find that no such addition was proposed by the ld. Pr. CIT amounting to Rs. 1,77,90,14,000/-. In fact, the only issue which prompted the ld. Pr. CIT to assume jurisdiction u/s 263 of the Act was applicability of the provisions of Section 22 of the Act in respect of finished unsold inventory of the assessee and deciding this issue the ld. Pr. CIT cancelled the assessment order dated 29/12/2017 and restored the matter to the AO for fresh examination of the issue. The Hon'ble High Court of Bombay in the case of PCIT vs. Royal Western India Turf Club Ltd. [2019] 103 taxmann.com 13 (Bombay) had the occasion to consider the following substantial question of law:- "(i). Whether on the facts and in the circumstances of the case and in law, the Tribunal is justified in holding that the addition towards entrance fees and annual subscription made by the Assessing Officer in the proceedings under Section 143(3) read with Section 263 is beyond the jurisdiction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, these and other such provisions which empower different authorities to exercise jurisdiction at different point of time in distinct settings would be rendered otiose and that can never be the legislative intent. It is almost akin to providing separate keys for separate locked doors and the person wanting to open a particular door is required to apply the correct key which matches the concerned lock. Therefore, in proceedings, to give effect to order under Section 263 of the Act, the assessing officer cannot be permitted to undertake an exercise not warranted by the legislative 7. We may record that along the same line, the Assessing Officer had made disallowance to annual subscription fee which was also not part of the revisional order of the Commissioner. For the reasons recorded above, the said action of the Assessing Officer was not correct." 13. We find that the ld. CIT(A) has followed the aforementioned binding decision of the Hon'ble Jurisdictional High Court. Therefore, no interference is called for. Accordingly, effective grounds raised by the revenue are dismissed. 14. In the result, appeal of the assessee is partly allowed and that of the revenue is dismissed. Ord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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