TMI Blog2020 (9) TMI 1128X X X X Extracts X X X X X X X X Extracts X X X X ..... No addition on account of notional rental value of the flats held as stock in trade by the assessee could have been made by the Assessing Officer in the impugned assessment year. We hold that the PCIT clearly fell in error in invoking revisonal jurisdiction u/s 263 of the Act. Consequently, the impugned order is quashed and the appeal of assessee is allowed. Revision u/s 263 - Income from House Property - AO being satisfied with the reply made no additions on account of notional rental value of flats in inventory - HELD THAT:- We find that facts in the assessment year under appeal are pari-materia to the facts in the assessment year 2014-15. The reasons for invoking revisional jurisdiction under section 263 of the Act in both the assessment years are identical. The findings given by us while adjudicating the appeal of the assessee for assessment year 2014-15 would mutatis mutandis apply to the present appeal. In the result, the impugned order is quashed and the appeal of the assessee is allowed. - ITA NO.3492/MUM/2019, ITA NO.3493/MUM/2019 - - - Dated:- 28-9-2020 - Shri Vikas Awasthy, Judicial Member And Shri Manoj Kumar Aggarwal, Accountant Member For the Appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer under section 142(1) r.w.s. 129 of the Act dated 15/06/2016 at pages 109 and 110 of the Paper Book. The ld.Authorized Representative of the assessee submitted that a perusal of the notice would show that at Sl.No. 9-A a query was raised by the Assessing Officer seeking explanation on large investments made in the property during the period relevant to the assessment year 2014-15. Further, at Sl. No.9-N, the Assessing Officer made specific query regarding difference in the closing stock shown in Balance Sheet and P L Account for the impugned year as per Return of Income. The assessee filed reply to the said notice on 22/12/2016 (at page 112 to 124 of the Paper Book). In reply the assessee furnished details of the business and also explained the reasons for difference in the closing stock, as shown in the Balance Sheet and P L Account for the impugned Financial Year. The Assessing Officer was well aware about the nature of business of the assessee and the closing inventory of the flats. The Assessing Officer after having applied his mind made no addition in respect of notional annual letting value of flats held as stock. The assessee has been consistently declaring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /M/2012 (Mum-ITAT); (2) Runwal Constructions vs. ACIT,(52 CCH 569)(Mum-ITAT); (3) ACIT vs. Haware Constructions Pvt. Ltd., (ITA No.3321/Mum/2016); (4) ITO vs. Arihant Estates Pvt. Ltd. (53 CCH 321)(Mum-ITAT) (5) Mahanagar Constructions vs. ITO (ITA No.623/Pun/2018 (Pune-ITAT) 4. Per contra, Shri R. Manjunatha Swamy, representing the Department vehemently defended the impugned order and prayed for dismissing the appeal of the assessee. The ld.Departmental Representative submitted that the case of the assessee is squarely covered by the decision rendered in the case of Ansal Housing Finance Leasing Co. Ltd. (supra). 5. We have heard the submissions made by rival sides and have examined the documents available on record. We have also considered the decisions on which rival sides have placed reliance. We find that the only reason for invoking revisional jurisdiction by the PCIT is that the Assessing Officer has failed to examine taxability of notional rental value of flats held as stock-intrade by the assessee. We find that during the assessment proceedings the Assessing Officer had issued notice to the assessee, wherein query was raised regarding nature of assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rroneous order prejudicial to the interests of the revenue unless the view taken by the ITO is unsustainable in law. Similar view has been expressed by the Hon ble Supreme Court of India in the case of Commissioner of Income-tax (Central) v. Max India Ltd, reported as 295 ITR 282. 7. The provisions of section 263 of the Act can be invoked if, the twin conditions mandated under the section are satisfied, i.e: (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the revenue. If any one of these two conditions is absent, the Commissioner of Income Tax cannot take recourse to section 263 of the Act. In the present case we are of considered view that the assessment order sought to be revised does not suffer from error as pointed by the PCIT. Merely for the reason that PCIT does not agree with one of the possible view taken by the Assessing Officer, would not make the assessment order erroneous. The PCIT has erred in invoking the provisions of section 263 of the Act, therefore, the impugned order is liable to be quashed. 8. We may also like to add here that sub-section (5) to Section 23 has been inser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in Neha Builders (P.) Ltd.'s case (supra) wherein the Hon'ble Court has taken a view that, if property is used as a stock-in-trade, then said property would become or partake character of stock and any income derived from such stock would be Income from Business and not Income from House Property . Therefore, keeping in view the contrary decision of non-jurisdictional High Court, we are of the view that issue is debatable and two views are possible. The Hon'ble Supreme Court in Max India Ltd.'s case (supra) held that when two views are inherently possible, the provision of section 263 would not attract. We may refer here that the unsold flat was treated by assessee as stock-in-trade in its books of account. The flats sold by the assessee were assessed under the head Income from Business . Therefore, in our considered view that the order for not bringing the unsold flats to tax at notional letting value under the head Income from Other Sources is not erroneous. The assessing officer has taken one of the possible views. Even otherwise, sub-section (5) in section 23 was inserted by Finance Act, 2017 and is applicable only from 01.04.2018 and no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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