TMI Blog2020 (6) TMI 633X X X X Extracts X X X X X X X X Extracts X X X X ..... The ld. Pr.CIT, accordingly, set aside the original assessment order passed U/s 143(3) of the Act dated 30/10/2013 and directed the A.O. to make fresh assessment after conducting a proper enquiry regarding the allowability of claim of expenses of ₹ 13.00 lacs. Thus, it is manifest from the record that there was no concluding finding given by the ld. Pr.CIT on the issue of allowability of claim of ₹ 13.00 lacs on account of sales return. Hence, when the A.O. has to take a decision based on the outcome of the enquiry conducted in the proceedings pursuant to the revision order U/s 263 of the Act then the said finding of the A.O. is subjected to challenge in the appeal and non-challenge of the revision order passed U/s 263 of the Act, will not operate as a bar for filing the appeal against the order passed by the A.O. As regard the allowability of claim of deduction on account of sales return for the year under consideration instead of the said claim made in the A.Y. 2010-11 when the transactions of sales return was completed - Even if the assessee would have made correct entry and claimed sales return for the A.Y. 2010-11 then the same would have been part of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pted in this case thus it falls under exception clause 10(c) of the Circular 03 of 2018. 2. The hearing of the appeal was concluded through video conference in view of the prevailing situation of Covid-19 Pandemic. The ld DR has pointed out that initially the assessment was completed U/s 143(3) of the Income Tax Act, 1961 (in short, the Act) on 31/10/2013. However, thereafter, in view of the audit objections, the ld. Pr.CIT invoked provisions of Section 263 of the Act and vide order dated 28/03/2016, the original assessment order was set aside on the issue of allowing the claim of deduction on account of resale of the flats earlier sold by the assessee to one Ms. Divya Goyal. The transaction of sale and resale was completed in the A.Y. 2009-10 and 2011-12 respectively, therefore, the claim of sales return for the assessment year under consideration was found to be not in accordance with law pursuant to the revision order passed U/s 263 of the Act. The A.O. has disallowed the said claim on account of sales return. However, the disallowance made by the A.O. was deleted by the ld. CIT(A) on the ground that it is only a mistake of entry in the books of account made by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d have been part of the closing stock of this said assessment year and opening stock of the assessment year under consideration. Therefore, showing the said amount under the head sales return will have no impact on the tax liability or income of the assessee. He has supported the finding of the ld. CIT(A). 4. We have considered the rival submissions as well as relevant material on record. As far as the objections of finality of the order passed U/s 263 of the Act and bar against raising the issue by the assessee against the assessment order passed in pursuant to the revision order passed U/s 263 of the Act we note that the ld. Pr.CIT has not given a concluding finding on the issue which was taken up in the proceedings U/s 263 of the Act. The A.O. while passing the impugned assessment order in pursuant to the revision order has reproduced the relevant part of the revision order at page No. 1 of the assessment order as under: During the course of assessment proceedings, AO did not make any enquiry to verify as to why the payment made to Ms. Divya Goyal as sales return was debited in the F.Y. 2010-11 whereas the same was actually paid in F.Y. 2009-10 itself. AO also failed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Herdillia Chemicals Ltd. Vs CIT (supra) has considered this issue in para 6 to 12 as under: 6. We have carefully considered the above submissions of the learned counsel for the assessee. We, however, do not find any merit in the same because even on a plain reading of the re visional order of the Commissioner passed under section 263, it is obvious that the Commissioner has specifically decided the question whether value of work-in-progress would form part of the capital employed for the purpose of relief under section 80J or not and has categorically held that it will not be so included. This is evident from the discussion contained in paragraphs 4 and 5 of the revisional order of the Commissioner. The following extracts from the said paragraphs are pertinent: The first contention of the assessee is that the item of capital works is an asset within the meaning of rule 19A of the Income-tax Rules, 1962. It was stated that the said asset could be treated as an asset not entitled to depreciation within the meaning of rule 19A(2)(ii)/( iii). It was thus argued that the asset ;n question formed part of the capital employed by the industrial undertaking. I have carefully consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Commissioner to the ITO to determine the relief under section 80J after giving an opportunity of being heard to the assessee was only for the purpose of recomputation of the amount of relief under section 80J by reducing the value of work-in- progress from the capital employed as held by him in paragraphs 4 and 5 and by reducing the written down value of the assets by the extra shift allowance allowed in the past as held in para 6 of the revisional order. The direction to the ITO in the operative part of the order cannot be read in isolation. The order of the Commissioner read as a whole makes it abundantly clear that the Commissioner arrived at categorical and definite findings in regard to the contentions of the assessee about inclusion of work-in-progress in the capital employed for the purpose of claiming relief under section 80J and in regard to deductibility of extra shift allowance allowed in the past from the value of fixed assets for the very same purpose and remitted the matter to the ITO merely to perform the ministerial function of recalculating the amount of relief under section 80J. 9. In such a situation, it is extremely difficult on our part to accept the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question No. 2 is also answered in favour of the revenue. In the facts and circumstances of the case, there shall be no order as to costs. Thus, it is clear that in the said case, the CIT in the revision order passed U/s 263 of the Act has given a definite finding on both the issues of excess claim of deduction U/s 80J of the Act. Therefore, in the said case, the ld. CIT has finally determined the issue on merits though only computation was left with the A.O. In those facts, the Hon ble High Court has held that the order passed by the CIT determining the question arising wherein has attained the finality as the assessee did not challenge the said order and therefore, the assessee cannot agitate the same issue in the proceedings arising from the order passed by the A.O. in pursuant to the revision order. Therefore, there is no quarrel on the point that if the ld. CIT in the revision proceedings has decided the issue and determining the dispute then it is not open to the A.O. to decide the said issue but the A.O. has just to give effect to the finding of the ld. CIT and in those circumstances the assessee cannot agitate the said point already decided by the ld.CIT in the revis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10-11 on 31.03.2011, which is wrong. Therefore, the assessee has wrongly debited ₹ 13,00,000/- in profit loss account for the year under consideration. (ii) During the appellate proceedings, it was submitted that the appellant is engaged in the business of real estate and sale / purchase of flats appears in profit and loss account. It was also submitted that Ms. Divya Goyal cancelled the flat booked by her and money paid by her was returned. It was also mentioned that the purchase/ sales return of the flat has increased the stock and has not impacted the profit / income of the appellant. Regarding the observation of the AO that further payment was made to Ms. Divya Goyal on 31.01.2011, it was submitted that the amount was initially debited in the account of Ms. Divya Goyal in AY 2010-11 which was later on squared up in AY 2011-12 whereby, the account of Ms. Divya Goyal was credited and sales return/ purchase account was debited. The appellant further submitted that there is a mistake in passing of the entry in sales return in AY 2011-12 in place of AY 2010] 1 but at the same time it was also mentioned that as the sales return has increased the stock of the company, it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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