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M/s. Bhadra Education Trust Versus Commissioner of Income Tax, Davangere

2016 (12) TMI 609 - ITAT BANGALORE

Revision u/s 263 - Held that:- In pursuance of S 263, when the CIT passed an order directing the AO to redo the assessment in accordance with law and before coming to any conclusion to afford a reasonable opportunity of being heard to the assessee etc, such an order could not have been contended as detrimental to the interest of the assessee, as it was always open to it to justify its claim as held in ase of CIT V Infosys Technologies [2012 (1) TMI 76 - KARNATAKA HIGH COURT] - Decided against as .....

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n its charitable activities in the field of education, filed its return for the assessment year 2010-2011 on 06/07/2010 declaring total income as NIL. The assessment was made under section 143(3) on 27/0/2013, by accepting the income as NIL as declared. 03. Subsequently, the Commissioner of Income Tax (CIT), Davangere, issued a notice u/s 263 dated 19/11/2013 stating, inter alia, as under : "On verification of the assessment records, it is noticed that you have given a lease advance of S .....

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f the interest at 12% per annum is required to be charges on the excess payment of advance of ₹ 9,00,000/- which works out to ₹ 1,08,000/- and brought to tax. The AO failed to examine this issue. Failure on the part of the AO to examine the above issue has rendered the assessment erroneous and prejudicial to the interest of the revenue". 04. After examining the material and hearing the assessee etc, the CIT, inter alia, held that in so far as the AO failed to examine this aspect .....

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nce, probabilities and the facts and circumstances in the Appellant's case. 2. The learned CIT has grossly erred in revising the order passed by the learned assessing officer without appreciating that there is no error, much less prejudicial to the interests of the Revenue to warrant a revision and therefore thte order passed by the learned CIT is ultra vires to the scope of Section 263 and requires to be cancelled under the facts and circumstances of the Appellant's case. 3. The learned .....

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5. The Commissioner of Income Tax is not justified in stating that the subsequent agreements cannot form basis for deciding issues for assessment year 2010-2011, when the premises is still in occupied by the trust under the facts and circumstances of the case. 6. The commissioner of Income Tax ought to have considered that fact that there is only one rental advance amounting to ₹ 10,00,000/- which is reflected in the balance sheet under the facts and circumstances of the case. 7. The Comm .....

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nces under facts and circumstances of the case. 9. The Commissioner of Income Tax is not justified in stating that the lease advance amount being ₹ 10,00,000/- is non refundable in nature, had it been the case then the same would have been debited to Income and Expenditure Account in the year of payment under the facts and circumstances of the case. 10. The Commissioner of Income Tax has erred by not appreciating the settled position of law that were there are two opinions possible on an i .....

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preciate that the learned assessing officer had passed the order after verifying the books, records and other documents produced and more specifically that rent agreement as is evident from the order sheet nothing dated 12-02-2013 and hence section 263 cannot be invoked under the facts and circumstances of the case. 13. Without prejudice to the above the learned CIT ought to have appreciated that the aforesaid issue on which the learned CIT had sought to revise the assessment order is a consciou .....

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ive appeared before the learned assessing officer and submitted documents, books, records and other information called for from time to time. The learned assessing officer after considering the detai ls produced by the appel lant s authorized representative viz., books, records and other documents passed the order under section 143(3) , on 27/0/2013, by accepting the income as NIL as declared by the appellant in the return. There was no lack of inquiry or inadequate inquiry by the learned assess .....

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roneous and prejudicial to the interests of revenue . The AR also relied on the decisions of CIT v Amit Corporation (2012) 21 taxmann.com 64 (Guj), CIT v Sun Beam Auto Ltd 322 ITR 167 Delhi, CIT v Gabriel India Ltd 203ITR 108 (Mumb) , CIT v Vikas Polymers 194 Taxman 57 Delhi , Malabar Industrial Co Ltd v CIT SC etc. On merits, the AR submitted that this is the first year of commencement of college of their Trust. Initially, they wished to run the pre-university and degree college in the outskirt .....

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sh, one of the authors of the trust. It had an intention to take the complete building having cellar, Ground, first and second floors for running and maintaining the college. Hence, lease advance of ₹ 10 Lakhs was paid. However, during the year the assessee had occupied the ground floor admeasuring 1785 sq ft and paid a monthly rent of ₹ 10,000/-only. In the subsequent year for acquiring and using the additional floors viz first and second floors , the assessee has paid a monthly ren .....

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dvance paid is that of prevailing practice for non-residential usage. The AR pleaded that by its letter dt 10.12.2013 it submitted the above facts to the CIT . In spite of it , the CIT rejected its plea and set aside the assessment order to be redone in accordance with law. Further, the AR pleaded that although the CIT proposed in the show cause notice to charge interest @ 12% p.a on the excess lease deposit of ₹ 9,00,000/, in the order passed u/s 263 he did not do it but simply set aside .....

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0 lakhs was non-refundable. When this was brought to the assessee s notice by the CIT , the assessee filed a letter dt 10.3.2014 from Shri S R Girish to the effect that by oversight there is non mention of refund of rent advance and Shri S R Girish has taken refundable advance of ₹ 10 lakhs only. Thereafter only , the assessee furnished copies of subsequent agreements . Therefore, the CIT rightly held that Subsequent agreement can not form basis for deciding issues for A Y 2010-11. The Ass .....

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Income Officer, Ward-1, Davangere is erroneous and prejudicial to the interests of revenue. Accordingly, the assessment is set aside to be redone in accordance with law. For doing the above, the AO shall afford reasonable opportunity of being hearing to the assessee before coming to any conclusion . 6.1 From the above facts, the DR submitted that it is clear that the AO has not examined the impugned issue as it should have been and hence his order was erroneous and prejudicial to the interests o .....

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er passed by the Authority under the Act is erroneous and prejudicial to the interest of the Revenue is the basic precondition for exercise of jurisdiction under Section 263 of the Act. Both are twin conditions that have to be conjointly present. Once such satisfaction is reached, jurisdiction to exercise the power would be available subject to observance of the principles of natural justice which is implicit in the requirement cast by the Section to give the assessee an opportunity of being hea .....

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ts the assessee s contention. The DR also invited our attention to para 24, 26 etc of the judgment of the Hon ble jurisdictional High Court in the case of CIT V Infosys Technologies Ltd 17 taxmann.com 203 (Kar), for brevity sake para 24, 26 alone are extracted as an under : 24. In the present situation, the Commissioner having only directed the assessing authority to compute it or re-compute it and make it explicit as to the entitlement of the assessee, an order of this nature, in fact, could no .....

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