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2011 (9) TMI 1008 - AT - Income TaxRevision u/s 263 - computation of income under the head “income from house property” than "business income" disclosed by the assessee - Held that:- The assessee had received a notice u/s 154 of the Act in view of the audit objection on the issue of assessability of the income under the head “income from property/income from business”. The reply of the assessee was filed before issue of show cause notice u/s 263 of the Act. In the above said reply the assessee had explained the factual aspects of its case and also the aspect of having received subsidy from NABARD in the warehousing activities carried out. Admittedly, no subsidy is receivable where the assessee has rented out its premises and the income is assessable as income from property. Only in case as the assessee is engaged in the business activities, there is a question of liability of subsidy of carrying out such prescribed business activities. Further we find that warehousing charges received by the assessee were not constant but were variable depending upon the quantity of stock stored in its premises. Even the lease agreement referred to the rate of rent being linked to the quantity of stock and not fixed monthly rent. Further the assessee is to keep the godown in its perfect condition as the said premises are being used for storing perishable items, which require an extra care The Hon'ble Supreme Court in CIT VS. Ralson Industries Ltd. [2007 (1) TMI 184 - SUPREME Court] have laid down the proposition that the initiation by the CIT of proceedings for revision u/s 263 of the Act cannot be held to have become bad only because an order for rectification was passed by the Assessing Officer u/s 154 of the Act. The learned D.R. for the Revenue had placed reliance on the above said proposition laid down by the Apex Court. However, we find that the learned A.R. for the assessee had referred to the proceedings of rectification u/s 154 of the Act under which reply was given by the assessee which in turn becomes record for the purpose of explanation to section 263 of the Act. In view of explanation filed by the assessee in reply to the notice, we find merit in the alternate plea raised by the assessee that in view of the information being available on record, the CIT could not exercise the jurisdiction u/s 263 of the Act. We set aside the order of the CIT and allow the grounds of appeal raised by the assessee.
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