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Income Tax Appellate Tribunal, DELHI BENCHES: ‘C’ : NEW DELHI
Before: SHRI R.S. SYAL & SHRI N.K. CHOUDHARY
Date of Hearing : 23.07.2018 Date of Pronouncement : 24 .07.2018 ORDER This appeal by the assessee arises out of the order dated 30.03.2017 passed by the Pr. CIT under Section 263 of the Income- tax Act, 1961 (hereinafter also called `the Act’) in relation to the assessment year 2012-13. did not furnish return of income within the time allowed under Section 139(1) of the Act. Notice was issued under Section 142(1), requiring the assessee to file return. Thereafter, the assessee furnished return on 10.11.2014 declaring business income of Rs.20,64,84,209/-, which was claimed as exempt income under Section 10(20) of the Act. The Assessing Officer held that the assessee was not entitled to exemption under Section 10 of the Act. During the course of assessment proceedings, it was noticed that the assessee claimed deduction on account of reserve for future development; reserve for special projects; reserve for greens; and reserve for urban renewal and upgradation funds, totalling in all to a sum of Rs.796.07 crore. The Assessing Officer found that the actual expenditure incurred against such reserves was Rs.1198.83 crore. He held the assessee to be entitled to actual expenditure and not the amount of reserves. Thus, as against the gross income of Rs.20.64 crore declared in the return before exemption, the Assessing Officer allowed further deduction of Rs.402.73 crore, being the excess of actual expenditure over the amount of reserves created. However, total income was determined at against the income of the later years on the premise that the loss return filed by the assessee was not within the time prescribed under Section 139(1) of the Act.
2.2. The learned CIT held the assessment order to be erroneous and prejudicial to the interest of Revenue on certain counts, including that the loss worked out by the Assessing Officer at Rs.402.073 crore should have been reduced by the surplus income before exemption at Rs.20.64 crore and the net loss of Rs.382.08 crore ought to have been calculated. Apart from that, the learned CIT held the assessment order to be not in consonance with certain provisions. This is how, he set aside the assessment order and remitted the matter to the file of the Assessing Officer with a direction to make fresh verification on the points given in the impugned order. The assessee is in appeal before the Tribunal against the revisionary order.
We have heard the rival submission and perused the relevant record. Section 263 of the Act empowers the CIT to revise an assessment order which is erroneous and prejudicial to the interest of order, being, erroneous and prejudicial to the interest of the Revenue, must co-exist so as to clothe CIT with the revisionary power. It is the trite law that if only one of the conditions is fulfilled in a particular case, it goes out of the purview of the revision.
It is an admitted position that the claim of the assessee for its entitlement to exemption u/s 10(20) of the Act has been eventually jettisoned. It is seen that the assessee filed belated return of income outside the time prescribed u/s 139(1) of the Act. As such, no loss determined in assessment can be carried forward for set off against positive income for later years. That is raison d’etre for the Assessing Officer computing Nil income and not allowing any carry forward of loss. The ld. AR candidly admitted that the factum of assessee, not being entitled to carry forward the loss, has attained finality as the same has been accepted and not challenged in any further proceedings.
We have noted above that in the original assessment, the AO determined total income at Nil and did not allow carry forward of loss the revisionary order, the Assessing Officer again took up the assessment under Section 143(3)/147 read with section 263 of the Act and passed a fresh assessment order on 27.12.2017 determining the total income at Rs. Nil and did not allow carry forward of loss of Rs.455.99 crore. This shows that the income originally determined by the Assessing Officer at Nil remained the same even after giving effect to the order passed in revision. Thus, we are confronted with a situation in which the original assessment as well as the assessment giving effect to the impugned order, remain at Nil income, and in both the situations, there is no carry forward of loss. In other words, the shortcomings noticed by the ld. CIT in assessment order, which in his opinion made the order erroneous, are tax neutral. In the circumstances as are instantly obtaining, variation in the amount of loss, without allowing any carry forward to subsequent year(s) for set off, is in no way prejudicial to the interest of the Revenue. Since the original assessment order in the instant case satisfies, at the most, the first condition under Section 263 of the Act, being erroneous from the stand point of the ld. CIT, it fails to satisfy the second condition of circumstances, the exercise of revisionary power gets vitiated because of cumulative non-fulfilment of the statutory conditions stipulated in the provision. Ergo, we set aside the impugned order.
In the result, the appeal of the assessee is allowed.
The order pronounced in the open court on 24.07.2018.