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2015 (11) TMI 588 - ITAT JAIPUR

2015 (11) TMI 588 - ITAT JAIPUR - TMI - Revision u/s 263 - whether the income from running the hostel is to be assessed as income from house property or business property? - Held that:- The detailed questionnaire had been issued by the Assessing Officer, which was replied by the assessee from time to time. He not only enhanced the hostel receipts but reduced the hostel expenses and assessed the income from house property. He also allowed 1/3rd deduction U/s 24(a) and interest on loan. Therefore, .....

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ase of the assessee. - Decided in favour of assessee. - ITA No. 446/JP/2013 - Dated:- 30-9-2015 - SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM For The Assessee : Shri Siddartha Ranka and Shri Mujjaffar Iqbal (Adv) For The Revenue : Shri M.S. Meena (CIT) ORDER PER T.R. MEENA, A.M. This is an appeal filed by the assessee against the order dated 07/03/2013 of the learned C.I.T., Kota for A.Y. 2008-09. The respective grounds of appeal are as under:- 1. For that the learned CIT, Kota has erred in s .....

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of ₹ 42,181/-. 4. For that the learned CIT, Kota has ignored the order passed by CIT Appeal Ajmer which was in the same case same year and same facts and appeal was decided in favour of assessee. 2. In this case, original assessment was completed by the Assessing Officer on 04/10/2010 U/s 143(3) of the Income Tax Act, 1961 (in short the Act). The ld Assessing Officer observed that during the course of assessment proceedings the AR of the assessee has furnished a list of students occupying .....

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s report no mess register is maintained as per enquiry it was gathered that the assessee has inflated mess expenses but without records. Hence, he had reason to believe that due to inflated mess expenses she could avoid tax. As per assessee in the hostel 27 to 29 girls always remained. He had deputed his Inspector to enquiry about running of mess in the hostel. This fact was also justified by one Shri Sanjay Bhargava, who was looking after this hostel. It was also admitted by him that no records .....

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al income is computed as under:- Income from salary (Chapter-IV A) 174177/- Income from House Property 243103/- Income from other sources 1563/- Gross total income 418843/- Less: Deductions (Chapter VI-A) U/s 80C LIC 50000 PPF 5000 G.P.F. 13242 State Insurance 4800 S.I. & ACC. Insu 200 73242/- Total Income 345601/- R/o 345600/- The ld CIT, Kota had received letter from the ITO, Ward 1(1), Kota on 03/10/2012, who had proposed action U/s 263 of the Act on the following points decided by the A. .....

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y, i.e. 124, Rajiv Gandhi Nagar, Kota belongs to the assessee (not jointly with Shri Ajay Bhargava). It was allotted to you vide allotment letter 323 dated 15/02/2003 by UIT, Kota. Therefore, entire income is to be taxed in the hands of the assessee instead of 50% only. The ld CIT gave show cause notice to the assessee vide letter dated 01/1/2013, which was availed by the assessee vide letter dated 16/01/2013. The ld CIT reproduced the assessee s reply on page No. 2 of the order. After consideri .....

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ator but also an investigator. He cannot remain passive in the face of a return, which apparently is in order but calls for further inquiry. It is his duty to ascertain truth of facts stated in the return which the circumstances of the case are such as to provoke an inquiry. The word erroneous in Section 263 includes the failure to make such an enquiry. He further relied on the decision of Hon ble Madras High Court in the case of K.A. Ramaswamy Chettiar and Anr. Vs. CIT 220 ITR 657. On inquiry w .....

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Tarajan Tea Co. Pvt. Ltd. Vs. CIT 205 ITR 45 (Gau) wherein the Hon'ble High Court has held that ITO has not made any proper inquiry that may be a good ground for setting aside the order made by the Assessing Officer U/s 263 of the Act. In the case of K. varma Vs. ITO 44 ITD 331, ITAT Ahmadabad Bench has held that if the Assessing Officer has not made proper enquiries, the CIT can direct the A.O. to hold further enquiries in the matter. The Hon'ble Supreme Court in the case of Rampyari D .....

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Calcutta High Court in the case of Dawjee Dadabhoy & Co. Vs. S.P. Jain (1957) 31 ITR 872, Hon ble Karnataka High Court decision in the case of CIT Vs. T. Narayana Pai (1975) 98 ITR 422, Hon ble Bombay High Court decision in the case of CIT Vs. Gabriel India Ltd. (1993) 203 ITR 108 and Hon ble Gujarat High Court decision in the case of CIT Vs. Smt. Minalben S. Parikh (1995) 215 ITR 81 wherein the Hon'ble High Court treated loss of tax as prejudicial to the interests of the revenue. He fur .....

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ly so in this case, essential facts related to various claims made in the return as mentioned, have not been verified/analysed by the Assessing Officer while passing the assessment order dated 4/10/2010. He further observed as under:- The jurisdiction U/s 263 of the IT Act, 1961 has been conferred to the Commissioner of Income Tax to revise the order of Assessing Officer which he finds to be erroneous and prejudicial to the interest of revenue, only because there is no appeal filed by the Depart .....

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an investigator as he cannot remain passive in the face of a return which is apparently in order but calls for further inquiry. I, therefore, in the facts and circumstances as discussed above and respectfully following the above referred judgments, consider it fit to set aside the assessment with a direction to the Assessing Officer to frame it denovo after making proper enquiry and verification of books of accounts and other records/documents and after following the directions given above. 3. .....

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e from students/tenants and disallowance of expenses. The ld CIT(A), Ajmer had decided the assessee s appeal on 11/1/2013 while the ld CIT, Kota had issued the show cause notice on same issue pending before the ld CIT(A) on 01/1/2013. The ld Assessing Officer s order has been merged with the order of the CIT(A), Ajmer. During the appellate proceedings, the CIT, Kota have no power to consider the same issue which was pending before the ld CIT(A) U/s 263 of the Act. Therefore, he prayed to set asi .....

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by UIT. The cost was ₹ 9,76,275/-. However, the construction was supervised by Shri Ajay Bhargava with the help of loans taken in the joint name of assessee and assessee s husband Shri Ajay Bhargava. The total investment was out of joint loan as well as savings of both the persons. Therefore, they equally divided the receipts of the property. The ld Assessing Officer also examined the number of rooms in the hostel with number of students in hostel. The amount charged from the student per .....

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has applied his mind, made detail inquiry against the assessee and thereafter he accepted the assessee s income under head income from house property. The ld CIT, Kota had given direction to the Assessing Officer for making proper inquiry and verification of books of account and other record/documents, what level, the ld CIT wanted to inquire the matter is a different opinion on same facts and circumstances of the case. The perception of the inquiry may be differ from persons to person, therefor .....

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. 60/2012 order dated 24/11/2012 wherein the Hon'ble High Court has considered the issue of merger of assessment with ld CIT(A) and held that once the order of Assessing Officer stood merged with higher appellate authority, the parallel authority on the administrative side namely Commissioner even cannot revive later on the order passed by the Assessing Officer which stood merged with the order of the appellate authority. He has further drawn our attention on Coordinate Bench decision dated .....

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outset, the ld CIT DR vehemently supported the order of the ld CIT, Kota and argued that the assessee has business income from running the hostel, which required to be assessed under the head business and profession. Therefore, the ld CIT was right to pass order U/s 263 of the Act as the order of the Assessing Officer was erroneous and prejudicial to the interests of the revenue. 5. We have heard the rival contentions of both the parties and perused the material available on the record. In this .....

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and also made detailed inquiry on this issue. It is also a fact that the addition made by the Assessing Officer was challenged before the ld CIT(A), Ajmer at the same issue i.e. income from house property. Therefore, assessment of assessee got merged with the CIT(A) order, which was passed on 11/1/2013. Therefore, Hon'ble Rajasthan High Court decision in the case of CIT Vs. Jain Construction Company (supra) is squarely application in the case of the assessee. The Coordinate Bench in the case .....

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