TMI Blog2018 (9) TMI 346X X X X Extracts X X X X X X X X Extracts X X X X ..... explanation of assessee-company at all and passed the order without giving any reasons for decision for the same. Thus, no enquiry have been conducted by the CIT to come to the conclusion that original assessment orders were erroneous and prejudicial to the interests of the Revenue. A.O. has correctly accepted the rental income as business income in the facts and circumstances of the case. The Orders of the Ld. CIT, thus, cannot be sustained in Law. We, accordingly, set aside the impugned Orders of the Ld. CIT passed under section 263 of the I.T. Act and restore the original assessment orders. - Decided in favour of assessee. - ITA. Nos. 2392 & 2393/Del/2018 - - - Dated:- 4-9-2018 - Shri Bhavnesh Saini, Judicial Member And Shri Prashant Maharishi, Accountant Member Assessee by : Shri Hiren Mehta, C.A. Revenue by : Shri Sanjeet Singh, CIT-D.R. ORDER Per Bhavnesh Saini, JM Both the appeals by Assessee are directed against different Orders of the Ld. CIT (Central)-II, New Delhi, Dated 30.03.2018, for the A.Ys. 2013-2014 and 2014-2015 under section 263 of the I.T. Act, 1961. 2. A search and seizure operation under section 132 of the Income Tax Act, 1961 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case Chennai Properties Investments Ltd. vs CIT (supra). The assessee has declared rental income and claimed depreciation against the income. The approach of the A.O. is not correct because the same should be taxed as income from house property. The assessment orders were, therefore, held to be erroneous in so far as prejudicial to the interests of the Revenue. Both the assessment orders were accordingly set aside and restored back to the file of the A.O. on the aforesaid issue only. A.O. was directed to pass fresh assessment orders, after giving opportunity of being heard to the assessee. 4. Learned Counsel for the Assessee reiterated the submissions made before the authorities below and submitted that assessee has main objects of carrying on business on construction and renting out properties. Copy of the Memorandum of Association of Assessee is filed at page-24 of the paper book and main objects 1 to 3 to be pursued by the Assessee-Company on its incorporation are as under : 1. To carry on the business of construction of any type of projects such as residential houses, commercial buildings, flats and factory s sheds and buildings in or out side of India and to act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. He has relied upon following decisions : (i) Judgment of Hon ble Supreme Court in the case of Chennai Properties and Investments Ltd. vs. CIT (2015) 373 ITR 673 (SC); (ii) Judgment of Hon ble Supreme Court in the case of Rayala Corporation (P.) Ltd. Vs. ACIT (2016) 386 ITR 500 (SC); (iii) Judgment of Hon ble Delhi High Court in the case of Pr. CIT vs. Delhi Airport Metro Express Pvt. Ltd., ITA.No.705 of 2017 Dated 05.09.2017; (iv) Order of ITAT, Mumbai Bench in the case of Damsak Projects (P.) Ltd., vs. DCIT, Range-6(2), Mumbai (2016) 45 ITR (Tribu.) 278 (Mum.). 4.2. He has submitted that since on explanation of assessee, the Ld. CIT did not make any enquiry, therefore, the order passed under section 263 of the I.T. Act, 1961, cannot be sustained in law. 5. On the other hand, Ld. D.R. submitted that this issue has not been examined by the A.O. and no enquiry have been made. No opinion have been expressed by the A.O. on the issue. The A.O. has not applied his mind. Therefore, it was rightly set aside by the Ld. CIT, under section 263 of the I.T. Act. 6. We have considered the rival submissions. The Hon ble Supreme Court in the case of Chennai Prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich were those assets that were handed over to it by the DMRC. That basic exercise of determining to what extent the depreciation was claimed in excess has not been undertaken by the PCIT. 12. Mr. Asheesh Jain then volunteered that the PCIT had exercised the second option available to him under Section 263 (1) of the Act by sending the entire matter back to the AO for a fresh assessment. That option, in the considered view of the Court, can be exercised only after the PCIT undertakes an inquiry himself in the manner indicated hereinbefore. That is missing in the present case. 13. Therefore, the Court is of the view that the IT AT was not in error in setting aside the impugned order of the PCIT under Section 263 of the Act. No substantial question of law arises. 14. The appeal is dismissed. 6.3. The ITAT, Mumbai Bench in the case of Damsak Projects (P.) Ltd., vs. DCIT, Range-6(2), Mumbai (supra), held as under : Held that a detailed reply was filed during assessment proceedings by which the assessee extensively explained why the rental income should not be assessed under the head 'Income from House property'. Copies of lease agreement were filed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o enquiry have been conducted by the Ld. CIT to come to the conclusion that original assessment orders were erroneous and prejudicial to the interests of the Revenue. Such course adopted by the Ld. CIT was not found favourable in favour of the Revenue as held by the Hon ble Delhi High Court in the case of Pr. CIT vs. Delhi Airport Metro Express Pvt. Ltd., (supra). The Hon ble Gauhati High Court in the case of Leela Choudhary vs. CIT 289 ITR 226 held that Order passed under section 263 of the I.T. Act without considering the reply of the assessee would not be valid. In the instant case, the assesseecompany produced sufficient evidence and material before the Ld. CIT in support of the contention that rental income is in fact Business Income of the assessee-company which have been correctly accepted by the A.O. Therefore, before taking any adverse view against the assessee-company, the Ld. CIT should have examined the explanation of assessee-company and should have considered the reply of the assesseecompany. However, nothing has been done and without any justification, the original assessment orders have been set aside. It may also be noted here that the A.O. in A.Y. 2013- 2014 has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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