INTELLIGENT INFRASTRUCTURE LTD,KOLKATA vs. PCIT-1, KOLKATA

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ITA 184/KOL/2021Status: HeardITAT Kolkata24 March 2022AY 2016-1720 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the PCIT's order under Section 263 was not sustainable on the two issues raised in the first show-cause notice. Regarding the first issue, concerning the addition of interest on service tax to book profit for MAT computation, the Tribunal found that the AO had taken a plausible view, and there was no justification for the PCIT to interfere under Section 263. Similarly, on the second issue related to Section 50C and parking spaces, the Tribunal observed that Section 50C applies to land or building or both, and the assignment of parking spaces might not fall within its ambit as it's not an absolute transfer. The Tribunal noted that the AO's opinion on this matter was plausible, and therefore, action under Section 263 was not warranted. The Tribunal explicitly stated that it would not express any opinion on the other show-cause notices as the PCIT had not issued specific directions on those points, and it was unclear if the PCIT was satisfied with the assessee's explanation or if a Section 154 order was passed. The Tribunal quashed the PCIT's order to the extent of the two issues discussed, finding them not justifiable under Section 263. The appeal was allowed on these grounds.

What were the facts?

The assessee, Intelligent Infrastructure Ltd., filed an appeal against an order passed by the Principal Commissioner of Income Tax (PCIT), Kolkata, under Section 263 of the Income Tax Act, 1961, for Assessment Year 2016-17. The PCIT had initiated proceedings under Section 263, alleging that the assessment order passed by the Assessing Officer (AO) under Section 143(3) on December 28, 2018, was erroneous and prejudicial to the interest of the revenue. The AO had determined the assessee's taxable income at Rs. 10,62,30,364/-. The PCIT issued multiple show-cause notices, highlighting specific issues such as the provision for interest on service tax, the non-inclusion of parking space value in deemed consideration under Section 50C, disallowance of interest under Section 24(b), disallowance of gratuity payment, and disallowance of leave encashment.

What were the issues?

1. Whether the order passed by the PCIT under Section 263 of the Income Tax Act, 1961, is illegal, invalid, and not sustainable in law, considering the assessment order under Section 143(3) was neither erroneous nor prejudicial to the interest of the revenue? 2. Whether the PCIT erred in setting aside the assessment for computing book profit under Section 115JB of the Act by adding Rs. 2,28,88,803/- for interest on service tax disallowed in computing income under normal provisions? 3. Whether the PCIT was justified in setting aside the assessment on the issue of addition under Section 50C of the Act, concerning the difference between sale consideration and stamp duty value, especially when the assessee had applied for the Vivad Se Vishwas Scheme? 4. Whether the PCIT was justified in setting aside the assessment on the issue of disallowance of interest of Rs. 1,91,38,596/- under Section 24(b) of the Act? 5. Whether the PCIT was justified in setting aside the assessment on the issue of disallowance of gratuity payment of Rs. 4,19,329/- under Section 48(7) of the Act, particularly when the MAT liability was higher than the normal tax liability? 6. Whether the PCIT was justified in setting aside the assessment on the issue of disallowance of leave encashment of Rs. 11,293/- under Section 43B of the Act, particularly when the MAT liability was higher than the normal tax liability? Assessee's Contentions: The assessment order was neither erroneous nor prejudicial to the revenue. The AO had followed permissible courses of law. The PCIT erred in setting aside the assessment on various issues, including book profit computation, Section 50C, interest disallowance, gratuity, and leave encashment. The assessee also highlighted its application for the Vivad Se Vishwas Scheme regarding the Section 50C issue. Revenue's Contentions: The revenue contended that the assessment order was erroneous and prejudicial to the interest of the revenue, necessitating action under Section 263. Specific issues raised included the provision for interest on service tax not being added to book profit for MAT computation and the AO passing the assessment order without adequate enquiries.

Which sections of the Income-tax Act were involved?

Section 263,Section 143(3),Section 115JB,Section 50C,Section 24(b),Section 48(7),Section 43B,Section 143(2),Section 142(1),Section 154,Section 48

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, KOLKATA

Before: SHRI RAJPAL YADAV & SHRI GIRISH AGRAWAL

For Appellant: Shri N.S. Saini; A/R & Ms
For Respondent: Shri Praveen Kishore, CIT, D/R
Hearing: 15/03/2022Pronounced: 24/03/2022

PER RAJPAL YADAV, VICE PRESIDENT:

The present appeal is directed at the instance of the assessee against the order of the Learned Principal Commissioner of Income Tax, Kolkata (hereinafter the “Id. 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.

anreeny anftefter afre5201 INCOMETAX APPELLATE TRIBUNAL

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 section 115]B of the act by making the addition of Rs.2,28,88,803/- for interest on service tax disallowed in computing income under normal provisions of the act.

4.

That the Appellant having applied for Vivad Se Vishwas Scheme on the issue of addition under section 50C of the Act on the difference in sale consideration as per sale deed and the stamp duty value determined by the Addl. District Registrar and paid due tax thereon, which fact was brought to the notice of the Ld. Pr. CIT by filing evidence thereof, Ld. Pr. CIT thereafter was unjustified in setting aside the assessment on the issue and directing the AO to re-adjudicate the same issue after re-examination of the facts.

5.

That the Pr. CIT has neither referred to any document nor provided any working for the less value of Rs. 2,77,72,000/- from the FMV for stamp duty determined by the Addl. District Registrar for sale of property u/s 50C of the Income Tax Act,

therefore the Ld. Pr. CIT was not justified in setting aside the assessment on the issue back to the file of the Assessing Officer.

6.

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 on the issue of disallowance of interest of Rs.1,91,38,596/- u/s 24(b) of the Act and directing the AO to re-adjudicate the same issue after re-examination of the facts.

7.

That on the facts and in the circumstances of the case and law, the AO after due examination of the relevant facts the Ld. Pr. CIT was unjustified in setting aside the assessment on the issue of disallowance of payment of gratuity of Rs.4,19,329/- u/s 48(7) of the Act and directing the AO to re-adjudicate the same issue after re- examination of the facts as even after disallowance 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.

8.

That on the facts and in the circumstances of the case and law, the AO after due examination of the relevant facts, the Ld. Pr. CIT was unjustified in setting aside the assessment on the issue of disallowance of leave encashment of Rs. 11,293/- u/s 43B of the Act and directing the AO to re-adjudicate the same issue after re- examination of the facts as even after disallowance 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.”

auras anftefer aftres201 INCOMETAX APPELLATE TRIBUNAL

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 Id. 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 Id. 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 showcause notice is available at page nos. 23 & 24 of the paper book. The ld. Commissioner thereafter issue two more showcause notices u/s 263 of the Act. Copy of these showcause notices are available at page nos. 31- 32 & 41-42 of the paper book. For better appreciation of the facts and circumstances, we deem it proper to take note of these showcause notices which read as under:-

P.T.O.

PEL LUT

LT Act contentions/submissions. Considering the pandemic situations arising due to COVID-19. physical

attendance is not considered necessary and you are requested to make written submissions with necessary details through E-mail ID: kolkata.pcit1@incometax.gov.in and it will be treated as ompliance to this notice u/s. .

srrerepy sicitefter srftreszor INCOMETAX APPELLATE TRIBUNAL | emma GOVERNMENT OF INDIA

MINISTRY OF FINANCE 4 INCOME TAX DEPARTMENT . OFFICE OF THE PRINCIPAL COMMISSIONER OF INCOME TAX PCIT, Kolkata-1

a INTELLIGENT INFRASTRUCTURE LIMITED. 3/1 OR UN BRAHMACHARI STREET KOLKATA 700017,West Bengal

[india = a PAN. | Assessment Year | Dated: [DIN &LetterNo: ts AaBcPss97P_| 2016-17 _ _| 12/03/2021 | ITBA/GOMIF/17/2020-21/1031443672(1) _

Sir/ Madam/ M/s,

Subject: Communication with - Government departments and authorities

far / Sub. Show Cause notice u/s 263(1) of the | T Act, 1961 in respect of assessment order for A.Y. 2016-17 — Matter Regarding

Whereas the undersigned had called for and examined the record of your case and it \s considered that the impugned assessment order passed u/s 143(3) of the | T Act, 1961 on 28.12.2018 for A.Y. 2016-17 1s, prima facie, erroneous in so far as it is prejudicial to the interests

‘of the revenue for the following reasons

In the instant case, the assessment was completed at a total income of Rs. 10,62,30.364/-. The provision for interest on service tax of Rs.2,28.88,803/ deserves to be added to book profit while computing MAT and the same has not been done by the AO this resulted in under assessment of income.

AO has passed the impugned assessment order without conducting any enquiries oF verifications which should have been made in this case

% Having regard to the facts and circumstances of the case and in law and in accordance with the provisions of Sec. 263(1) of | T Act. 1961 you are hereby given an opportunity of being heard to show cause as to why the impugned assessment order passed u/s 143(3) on 28 12.2018 for A.Y. 2016-17 should not be held as erroneous in so far as it 1s prejudicial to the interests of the revenue. You may accordingly furnish your written submissions u/s 263(1) of 1961 by 16.03.2021 in this regard, elaborating and/or evidencing your

Fy

SAMAR BHADRA PCIT Kolkata-1

In case the document is aigitally signed please refer Digital Signature at the bottom of the page)

ON INCOME TAX APPELLATE TRIBUNAL LT.A. No. 184/Ko//2021 ssessment Year: 2016-17 rere ante fe 201 INCOMETAX APPELLATE TRIBUNAL rere ante fe 201 INCOMETAX APPELLATE TRIBUNAL

IT.A. No. 184/Ko//2021 Assessment Year: 2016-17 rere ante fe 201 INCOMETAX APPELLATE TRIBUNAL

LT.A. No. 184/Ko//2021 Assessment Year: 2016-17 auras anftefer aftres201 INCOMETAX APPELLATE TRIBUNAL

5.

Though the Id. Commissioner had issued three showcause notices but ultimately in the concluding paragraph of the impugned order he has relegated the issues for further investigation to the assessing officer only for the points raised in the first showcause notice. The finding recorded by him in the concluding paragraph reads as under:-

“13. In the result, the assessment order u/s 143(3) dated 28.12.2018 for A.Y. 2016-17 is set aside to the file of the Assessing Officer with a direction to pass a fresh assessment order after considering the issues discussed in para 2 above, the aforesaid observations, as per law and after giving an opportunity of being heard to the assessee.”

6.

This appeal was listed before the Tribunal on earlier dates. During the course of hearing this discrepancy came to the notice of the bench and according to the ld. Counsel for the assessee, the bench sought for a clarification to this effect from the Id. Commissioner. The hearing was adjourned. However, instead of providing any clarification the Id. Commissioner has passed a rectification order u/s 154 r.w.s. 263 of the Act dt. 7" March, 2022. He modified paragraph no. 13 of his order (original paragraph extracted supra).

The Id. Counsel for the assessee has placed on record copy of the affidavit filed by Ms. Priyanka Salarpuria, exhibiting the facts narrated above. He submitted that the ld. Commissioner ought not to have rectified his order and the bench has not called for such an act at the end of the Id. Commissioner.

7.

Before embarking an enquiry upon the issues disputed in the impugned order, we would like to deal with the facts and the plea raised by the ld. Counsel for the assessee. It is pertinent to observe that any order passed u/s 154 of the Act would give rise to an independent appellate proceeding. In the present case this rectification order has been passed by the ld. Commissioner. This order is in itself is an appealable order. The issues incorporated in the impugned order by way of rectification 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 auras anftefer aftres201 INCOMETAX APPELLATE TRIBUNAL 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 Id. Counsel for the assessee while impugning the order of the Id. 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. Commissioner was of the view that it is a contingent liability and, therefore, it should form part of the book profit. The Id. Assessing officer has rightly not included it in the book profit because the Commissioner Service Tax, Kolkata, had adjudicated this controversy and confirmed the demand as well as the interest payable by the assessee. For buttressing this aspect, he drew our attention to the order of the Commissioner Service Tax, Kolkata, which is available at page number 215 of the paper book. In the concluding paragraph of this order,

the Id. Commissioner Service Tax, Kolkata, has confirmed the following aspects:-

“4.0 ORDER

4.1.

I confirm the demand of 21,05,72,946/- under Section 73(2) of the said Act.

4.

2 L order to pay Interest on the amount confirmed under Section 75 of the said Act.

4.

3 impose Penalty of Rs.10572946/- under section 78 of the said Act. If the demand confirmed, the interest payable and 25% penalty thereon are paid by the notice within thirty days of the date of communication of this order, the amount of penalty under Sec 78 shall be 25% of the confirmed amount.

4.

4, limpose Penalty of Rs. 10000/- under section 77 of the said Act.”

auras anftefer aftres201 INCOMETAX APPELLATE TRIBUNAL

9.

On the strength of this order the assessee has worked out the interest liability and such details have been tabulated in a chart available at page no. 230 of the paper book. According to the ld. Counsel for the assessee, this is an ascertained liability and not a contingent one. Therefore, this cannot be added in the book profit u/s 115JB of the Act. For buttressing this proposition he drew our attention

towards the explanation appended to Section 115JB of the Act.

10.

With regard to the second ground, he submitted that the ld. Commissioner was of the view that the sum of Rs.2,77,72,000/- ought to have been included in the deemed full sale consideration for the purpose of Section 50C of the Act. It was submitted before us that the assessee has sold certain office spaces wherein it has assigned specific car parking spaces to the vendee. According to the ld. Commissioner the value of such parking spaces ought to be included in the full sale consideration for the purpose of computing capital gains u/s 48 of the Act. The Id. Counsel for the assessee submitted that it has not sold the car parking spaces. It has just assigned the right to use the parking spaces. He drew our attention towards the clause available at page number 68 of the paper book, which reads as under:-

Part-I [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 Id. 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

auras anftefer aftres201 INCOMETAX APPELLATE TRIBUNAL spaces to the vendee and, therefore, Section 50C is not applicable on these facts. For this purpose, he relied on the decision of the ITAT in the case of Ritz Suppliers Put. Ltd. vs. ITO in ITA No. 1945/Kol/2019, order dt. 17/01/2020. He further contended that on both these issues the Id. Assessing officer has taken a considered opinion after calling for all the details. This opinion may not match with the thought process of the ld. Commissioner but that would not brand the assessment order as erroneous. And, therefore, the ld.

Commissioner is not justified in taking action u/s 263 of the Act.

12.

On the other hand, the ld. CIT D/R, relied upon the impugned order of the Commissioner. He submitted that the assessing officer failed to conduct proper enquiry on both the issues and the Commissioner has rightly taken action u/s 263 of the Act. He has merely remitted these issues to the file of the assessing officer for fresh enquiry and no prejudice is caused to the assessee, if these issues are being examined afresh.

13.

We have considered rival contentions and gone through the record carefully. Section 263 of the Income Tax Act has direct bearing on the controversy, therefore, it is pertinent to take note of this section. It reads as under:

"263(1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment.

[Explanation.- For the removal 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 include-

14.

auras anftefer aftres201 INCOMETAX APPELLATE TRIBUNAL (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 always to have extended to such matters as had not been considered and decided in such appeal.

(2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed.

(3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, National Tax Tribunal, the High Court or the Supreme Court.

Explanation.- In computing the period of limitation for the purposes of sub- section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded."

On a bare perusal of the sub section-1 would reveal that powers of revision granted by section 263 to the learned Commissioner have four

compartments. In the first place, the learned Commissioner may call for and examine the records of any proceedings under this Act. For calling of the record and examination, the learned Commissioner was not required to show

auras anftefer aftres201 INCOMETAX APPELLATE TRIBUNAL any reason. It is a part of his administrative control to call for the records and examine them. The second feature would come when he will judge an order passed by an Assessing Officer on culmination of any proceedings or during the pendency of those proceedings. On an analysis of the record and of the order passed by the Assessing Officer, he formed an opinion that such an order is erroneous in so far as it is prejudicial to the interests of the Revenue. By this stage the learned Commissioner was not required the assistance of the assessee. Thereafter the third stage would come. The learned Commissioner would issue a show cause notice pointing out the reasons for the formation of his belief that action u/s 263 is required on a particular order of the Assessing Officer. At this stage the opportunity to the assessee would be given. The learned Commissioner has to conduct an inquiry as he may deem fit. After hearing the assessee, he will pass the order. This is the 4th compartment of this section. The learned Commissioner may annul the order of the Assessing Officer. He may enhance the assessed income by modifying the order. At this stage, before considering the multi-fold contentions of the Id. 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 TT] 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.

auras anftefer aftres201 INCOMETAX APPELLATE TRIBUNAL (iv) If the order is passed without application of mind, such order will fall under the category of erroneous order.

(v) Every loss of revenue cannot be treated as prejudicial to the interests of the Revenue and if the AO has adopted one of the courses permissible under law or where two views are possible and the AO has taken one view with which the CIT does not agree. If cannot be treated as an erroneous order, unless the view taken by the AO is unsustainable under law

(vi) If while making the assessment, the AO examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determine the income, the CIT, while exercising his power under s 263 is not permitted to substitute his estimate of income in place of the income estimated by the AO.

(vii) The AO exercises quasi-judicial power vested in his and if he exercises such power in accordance with law and arrive at a conclusion, such conclusion cannot be termed to be erroneous simply because the CIT does not fee stratified with the conclusion.

(viii) The CIT, before exercising his jurisdiction under s. 263 must have material on record to arrive at a satisfaction.

(ix) If the AO has made enquiries during the course of assessment proceedings on the relevant issues and the assessee has given detailed explanation by a letter in writing and the AO allows the claim on being satisfied with the explanation of the assessee, the decision of the AO cannot be held to be erroneous simply because in his order he does not make an elaborate discussion in that regard.

15.

In the light of above, let us examine the facts of the present case. The first point on which the assessment order has been treated as erroneous which has caused prejudice to the interest of the revenue is, whether interest liability towards service tax is a contingent liability or not? Whether it is to be included

in the book profit computed u/s 115JB of the Act.

16.

In order to appreciate this issue we would like to take note of the relevant part of explanation (1) appended to Section 115JB of the Act, which reads as under:-

Explanation. — For the purposes of this section, "book profit" means the net profit as shown in the profit and loss account for the relevant previous year prepared under sub- section (2), as increased by —

auras anftefer aftres201 INCOMETAX APPELLATE TRIBUNAL (q) PPP RR RPER bbbEbbIEHI —sbbbEbb EEE (p) “PPP RRP ARE ebb HbbHHEIE sbbbiHbbimE

(c) the amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities; or (7) ecnuainaiiiiaaaiaaaiieaal

(¢) “sotesHHEEEEE sbbEEEEBE ROO si

SEE

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 liability. The only reasoning available at the end of the revenue is that the assessee has challenged the order in higher appellate forum. But that would not absolve the assessee from making the payments on the basis of this order during pendency of any appellate 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 Assessing Officer. 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 auras anftefer aftres201 INCOMETAX APPELLATE TRIBUNAL 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.

17.

As far as the second point is concerned, it is pertinent to note that a perusal of Section 48 of the Act would contemplate that income chargeable under the head capital gains shall be computed by deducting from the full value of consideration received or accruing as a result of the transfer of the capital asset the following amounts:-

(a) | expenditure incurred wholly and exclusively in connection with such transfers.

(b) the cost of acquisition of the asset and the cost of any improvement in thereto.

The expression “the full value of consideration” used in section 48 of the Act has to be construed by keeping in view the deeming proposition provided in Section 50C of the Act. Section 50C further contemplates that this full value of consideration would be deemed equivalent to the value on which stamp duty has been paid. In other words, the amount on which stamp duty has been paid would replace the full value of consideration otherwise received or accrued to an assessee as noted in Section 48 of the Act. For example an assessee has received Rs.100/- as full sale value of a capital asset but for the purpose of payment of stamp duty its value was determined at Rs.120/-, then for the purpose of computing capital gains u/s 48, the amount of Rs.120/-

would be deemed as the full value.

18.

The case of the Id. Commissioner is that the assessee has assigned certain parking spaces on sale of office spaces. The value of such parking 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

auras anftefer aftres201 INCOMETAX APPELLATE TRIBUNAL 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 show cause notices issued by the ld. Commissioner and discussed in the impugned order are concerned, on these show cause notices, he has not issued any specific directions for the assessing officer. One way to appreciate this situation would be that he might be satisfied with the explanation offered by the assessee and did not give any direction. The other way to appreciate the situation would be that he has passed an order u/s 154 of the Act. Therefore, in the present case it is neither advisable nor desirable on our end to express any opinion on those points. The scope of Section 154 is very limited. The rectification order has to be judged in an independent appeal within the parameter of such scope. Therefore, we resist ourselves from making any observation on the points contained in the other two show cause

notices. The observations made by us for explaining the issues u/s 154 of the Act or on the other two show cause notices will not impair or injure the case of the revenue nor it will cause any prejudice to the defence/explanation of the assessee.

20.

It is also pertinent to note that if the impugned order is quashed on account of some jurisdictional error then probably there could not be any auras anftefer aftres201 INCOMETAX APPELLATE TRIBUNAL rectification u/s 154. For example if the impugned order is time-barred and it is quashed then there will not be any consequential proceedings.

21.

Weare confining ourselves to a limited point that two issues have been raised under the first showcause notice. On these two issues no action u/s 263 of the Act is justifiable and, therefore, we quash the order of the ld. Commissioner to this extent. Other issues are not the subject matter of appeal

before us and, therefore, we do not, make any observations on these issues.

22.

Inthe result, appeal of the assessee is allowed.

Order pronounced in the Court on 24" March, 2022 at Kolkata. (GIRISH AGRAWAL) (RAJPAL YADAV) ACCOUNTANT MEMBER VICE-PRESIDENT Kolkata, Dated 24/03/2022

SC GLe

areer $r afafeta srfta/Copy of the Order forwarded to:

arfreraif_/ The Appellant

yest / The Respondent

daft set SFT / Concerned Pr. CIT

HAR HAA (31Get)/ The CIT(A)-

fasratrr vfaferey, siftraxor aie arate. , HleHTAT/DR,ITAT, Kolkata, ams We /Guard file.

aa PF PNP

3MgeePAR/ BY ORDER,Assistant Registrar sree aritetra arftrencor ITAT, Kolkata

NN

PNATP w

anreeny anftefter afre5201 INCOMETAX APPELLATE TRIBUNAL Date of dictation- 22/03/2022 Date on which the typed draft is placed before the Dictating Member 23/03/2022

Other member 24/03/2022

Date on which the approved draft comes to the Sr.P.S./P.S. - 24/03/2022

Date on which the fair order is placed before the Dictating Member for Pronouncement 24/03/2022 Date on which the file goes to the Bench Clerk 24/03/2022

Date on which the file goes to the OS. . The date on which the file goes to the Assistant Registrar for signature on the order.............00:00 Date of Despatch of the Order

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