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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SHRI PRASHANT MAHARISHI & SHRI SANDEEP SINGH KARHAIL
The present appeal has been filed by the Revenue challenging the impugned order dated 26/04/2023, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [“learned CIT(A)”], which in turn arose from the order passed under section 143(3) read with section 263 of the Act, for the assessment year 2013-14.
In this appeal, the Revenue has raised the following grounds:-
3NN Corporation ITA no.2302/Mum./2023 “1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was correct in deleting the order passed u/s. 143(3) r.w.s. 263 of the Act on the basis of decision of Hon'ble ITAT which quashed the order u/s.263 of the Act when the order of Hon'ble ITAT was subject matter of the appeal before Hon'ble High Court.
2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was correct in deleting the order passed u/s.143(3) r.w.s. 263 of the Act on the basis of decision of Hon'ble ITAT which quashed the order u/s.263 of the Act, relying upon the decision of Hon'ble Gujarat High Court in the case of Neha Builders P. Ltd. [2008] 354 ITR 180 (Delhi)] discounting the decision of the Hon'ble Delhi High Court in the case of Ansal Housing Financing & Leasing Co. Ltd. [2013 354 ITR 180 (Delhi)] wherein SLP has been pending before the Hon'ble Supreme Court.
3. The appellant craves leave to add, alter, amend, modify or delete any of the ground.”
The brief facts of the case are that the assessee filed its return of income on 31/07/2013, declaring a total income of Rs.29,86,370. The return filed by the assessee was selected for scrutiny and vide order dated 21/03/2016, the assessment was concluded under section 143(3) of the Act and the total income of the assessee was assessed at Rs.31,11,370. Subsequently, vide order dated 27/03/2018, passed under section 263 of the Act, the learned Principal Commissioner of Income Tax (“learned PCIT”) held the assessment order passed under section 143(3) of the Act to be erroneous insofar as it is prejudicial to the interest of the Revenue and directed the Assessing Officer (“AO”) to compute the annual letting value of flats/shops lying unsold and assess the same as income from house property in light of the decision of the Hon’ble Delhi High Court in CIT v/s Ansal Housing Finance & Leasing Co Ltd. Pursuant to the aforesaid directions of the learned PCIT, the AO computed the gross annual value of the unsold flats at Rs.56,97,872, and after statutory deduction @30%, the net annual value taxable under the head income from house property was computed at Rs.39,88,511. As the project was completed Page | 2
3NN Corporation ITA no.2302/Mum./2023 on 25/10/2012, the notional rent for the 5 months was worked out to Rs.16,61,880 and added to the total income of the assessee.
In the meanwhile, in the appeal filed by the assessee against the aforesaid order passed by the learned PCIT under section 263 of the Act, the coordinate bench of the Tribunal vide order dated 10/04/2019, passed in ITA No.2637/Mum./2018, held the revision proceedings completed under section 263 of the Act to be bad in law and accordingly quashed the same. Vide impugned order, the learned CIT(A) allowed the appeal filed by the assessee as the revision proceedings under section 263 of the Act were set aside. The relevant findings of the learned CIT(A), vide impugned order, are reproduced as under:-
“4.1 The present appeal has been filed by the appellant against the order under Section 143(3) r.w.s 263 of the Act dated 26.11.2018 passed by ACIT, Circle- 27(3), Mumbai, the Assessing Officer (AO) in this case. It has been submitted by the appellant that the appellant had filed an appeal before Hon'ble ITAT against the revision order dated 27.03.2018 passed by PCIT-27 Mumbai under section 263 of the Act revising the original assessment framed under section 143(3) of the Act dated 21.03.2016, and the appellant has further submitted that the order passed u/s 263 of the Act has been quashed by the Hon'ble ITAT. The relevant portion of the order of Hon'ble ITAT dated 10.04.2019 is as under:– “7. We have heard rival contentions and gone through the facts and circumstances of the case. We find from the facts of the case that first of all, the contention of the assessee is that the relevant year involved is AY 2013-14 for the year ending 31.03.2013. We find that there are two High Court decisions, one of Delhi High Court in the case of Ansal Housing Financing & Leasing Co. Ltd. (supra), wherein it is held that the flats lying unsold as closing stock as ALV under section 23(1)(a) of the Act can be taken and assessed as income from house property, another decision of Hon'ble Gujarat High Court in the case of Neha Builders (P.) Ltd. (supra) has taken a contrary view, wherein it is held that the ALV of flats built by assessee which is engaged in the construction business lying unsold has not assessable as income from house property and the notional value cannot be assessed as ALV of unsold stock because the unsold stock is to be assessed as business income. According to us, there are two views are possible and in view of the decision of Hon'ble Supreme Court in the case of CIT v. Vegetable Products Ltd. (1973) 88 ITR 192 (SC), Court are having contrary view on a there are two views possible and two High Court when it is held that in case particular issue, the view which is beneficial to the assessee is to be adopted. Accordingly, in the present case the two views on the issue of Page | 3
3NN Corporation ITA no.2302/Mum./2023 assessment of income from house property on account of ALV of unsold flats wherein assessee is engaged in the business of construction and builders is possible. Hence, we are taking a view which is beneficial to the assessee that the ALV of flats built by assessee which is engaged in the construction business lying unsold has not assessable as income from house property and the notional value cannot be assessed as ALV of unsold stock because the unsold stock is to be assessed as business income. Hence, the revision proceeding completed by PCIT under section 263 of the Act for revision of assessment framed under section 143(3) of the Act, is bad in law and hence quashed." 4.2 Thus, it is seen that the Hon'ble ITAT has held that the revision proceeding completed by PCIT-27 under section 263 of the Act for revision of assessment framed under section 143(3) of the Act, was bad in law and has quashed the same. Hence, the order u/s 143(3) passed consequent to the order u/s 263 also does not stand. Further, the issues raised in the grounds of appeal filed by the appellant in the present appeal have been covered by the order passed by the Hon'ble ITAT in for the AY 2013-14 dated 10.04.2019 (quoted supra) in the case of the appellant for the AY 2013-14. Hence in effect the appeal is allowed.”
5. We have considered the submissions of both sides and perused the material available on record. In the present case, it cannot be disputed that the order under section 143(3) read with section 263 of the Act computing the income from house property of Rs.16,61,880, was passed consequent to the directions of the learned PCIT under section 263 of the Act. As the revision proceedings completed by the learned PCIT under section 263 of the Act were quashed by the coordinate bench of the Tribunal, in assessee’s appeal, vide order dated 10/04/2019, there is no basis in sustaining the addition made by the AO. Accordingly, we find no infirmity in the impugned order passed by the learned CIT(A). As a result, the grounds raised by the Revenue are dismissed.
In the result, the appeal by the Revenue is dismissed. Order pronounced in the open Court on 27/09/2023