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2016 (1) TMI 890 - ITAT MUMBAI

2016 (1) TMI 890 - ITAT MUMBAI - [2016] 45 ITR (Trib) 278 - Rental income - treated under the head ‘House property’ or 'business income’ - revision u/s 263 - Held that:- We do not find any lack of enquiry on the part of the Officer for taxing the income under the head business income and not under the head income from house property. The AO has taken a view which may be different from the view of the Ld. Commissioner and assuming that the view taken by the AO is a loss to the Revenue but the Hon .....

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it cannot be treated as an order which is erroneous or prejudicial to the interest of Revenue unless the view taken by the Income Tax Officer is unsustainable in law. - Moreover, the view taken by the AO is now well supported by the decision of the Hon’ble Supreme Court taken in the case of Chennai Properties & Investment Ltd [2015 (5) TMI 46 - SUPREME COURT]. Thus, even if the revised return have been completely ignored by the AO that would only make the assessment order erroneous but by an .....

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2014 - Dated:- 4-11-2015 - SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER For The Appellant : Shri Firoz Andhyarujina For The Respondent : Shri A.K.Srivastava ORDER PER N.K. BILLAIYA, AM: These appeals by the assessee are preferred against two separate orders of the Ld. CIT(A)/CIT for assessment years 2008-09 & 2009-10. As both these appeals were heard together, they are disposed of by this consolidated order for the sake of convenience. ITA No. 6216/Mum/2013 - .....

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#8377; 23,49,497/- which as per Schedule J of the P&L account consists of rent received of ₹ 22,50,000/- and miscellaneous income of ₹ 99,497/-. The Assessing Officer further found that the rental income has been shown from letting out office space as per leave and license agreement. The AO also noted that interest free security deposit of ₹ 7.05 lakhs has also been taken and in respect of another property interest from security deposit of ₹ 60 lakhs has been taken. T .....

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is to acquire properties, develop the same and give them on rent. Strong reliance was placed on the main object clause of the Memorandum of Association. It was explained that because of this main object income earned by way of rent is under income from house property but business income. 3.2. The AO did not accept this contention of the assessee. Drawing support from various judicial decisions discussed by the AO at Para- 4.4. of his order, the income was treated under the head Income from Hous .....

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actor is not ownership of land or leases but nature of activity of assessee and nature of operations in relation to them. The Hon ble Supreme Court highlighted and stressed that objects of the company must also be kept in view to interpret the activities. The Ld. Counsel concluded that in that case letting of properties is infact is business of the assessee therefore the income was taxed under the head Income from business . The Ld. Counsel referred to the main object clause of the Memorandum of .....

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d force in the contention of the Ld. Counse. In the case relied upon by the Ld. Counsel (supra), we find that the Hon ble Supreme Court has laid emphasis of the objects of the company as the deciding factor. Considering the facts of the case in hand as identical to the facts of Chennai Properties (supra), we restore this issue to the file of the AO. The AO is directed to decide the issue afresh in the light of the decision of the Hon ble Supreme Court taken in the case of Chennai Properties & .....

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. 2009-10 10. Vide ground No. 1,2 & 3, the assessee has challenged the assumption of jurisdiction by the CIT-6, Mumbai u/s. 263 of the Act. 11. Briefly stated the facts of the case are that the assessment was made on 7.12.2011 u/s. 143(3) of the Act in which the total income of the assessee which was a loss of ₹ 30,11,340/- was converted into a profit of ₹ 11,59,696/- by disallowing the claim of expenditure amounting to ₹ 41,71,036/-. 11.1. Invoking the powers conferred upo .....

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to redo the same. 11.2. The assessee strongly objected to this show cause notice of the CIT. It was strongly contended that all the relevant details were furnished before the AO during the course of the assessment proceedings and on the basis of the details/documents, the AO has taken a view which is a possible view and accordingly taxed the income under the head business income . It was requested to drop revision proceedings u/s. 263 as the order passed by the AO was neither erroneous nor prej .....

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T. It is the say of the Ld. Counsel that vide notice u/s. 142(1) of the Act, the AO called for every related information which were duly complied by filing necessary documentary evidences and after examining the same, the AO made the assessment order u/s. 143(3) of the Act. 14. Per contra, the Ld. Departmental Representative strongly supported the order of the CIT. It is the say of the Ld. DR that the AO has completed the assessment by overlooking a very important fact that of filing of revised .....

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hing which has to be considered is whether the Learned Commissioner has rightly assumed the power under section 263 of the Act. The Hon ble Supreme Court in Malabar Industrial Co. Ltd. 243 ITR 83 has laid down the following ratio:- A bare reading of section 263 of the Income-tax Act, 1961, makes it clear that the prerequisite for the exercise of jurisdiction by the Commissioner suo motu under it, is that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the inter .....

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d every type of mistake or error committed by the Assessing Officer, it is only when an order is erroneous that the section will be attracted. An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous 16. Now, let us see in the light of the above ratio whether the assessment has been made on an incorrect assumption of facts or an incorrect application of law. The first objection is that the AO worked out the assessable income on .....

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t has been completed by treating rental income as Income from House property and not as business income. 16.1. Let us now examine these allegations in the light of the query raised vide notice issued u/s. 142(1) of the Act. By Q. No. 1, the assessee was asked to file copy of lease agreement and explain why the rental income should not be assessed as income under the head Income from House property . Q.4. Copy of purchase deed of immoveable properties purchased during the previous year relevant t .....

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ld not be assessed under the head Income from House property . Copies of lease agreement were filed. The purpose of transferring fixed assets as stock-in-trade was explained alongwith copies of purchase deed of immoveable properties. A certified copy of the Board Resolution was also filed by which the accounting error of treating the properties under the head fixed assets was rectified and the same was resolved and treated as under the head inventory and accordingly the claim of depreciation was .....

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