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TMI Blog2020 (11) TMI 133X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment framed u/s 143(3) of the I. Tax Act, 1961 on 07.12.2016, holding that as the ld. AO had not taken into consideration the ALV method on the unsold flats held as closing stock by the appellant firm to derive house property income, the order u/s 143(3) on 07.12.2016 was erroneous in so far as it is prejudicial to be interest of revenue. 3. The appellant craves leave to add, alter, amend and/or vary any of the grounds at any time before the decision of the appeal." 2. Briefly stated, the assessee firm which is engaged in the business of a builder and developer had filed its return of income for A.Y. 2014-15 on 05.11.2014, declaring its total income at Rs. 1,06,91,500/-.Original assessment under Sec.143(3) was framed on 07.12.2016, wherein the income of the assessee firm was assessed at its returned income of Rs. 1,06,91,500/-. After the culmination of the assessment proceedings the Pr.CIT in exercise of the powers vested with him u/s 263 of the Act called for the assessment records of the assessee. Observing, that the A.O while framing the assessment had failed to take cognizance of the fact that the assessee had not offered for tax under the head 'house property' the Annu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Representative (for short 'A.R') for the assessee at the very outset of the hearing of the appeal submitted that the present appeal involved a delay of 20 days. It was submitted by the ld. A.R that the aforesaid delay had occasioned, for the reason, that the old residential house of one of the partner of the assessee firm where the order of the Pr.CIT under Sec. 263 was stated to have been served, during the relevant period, was locked, as the partner who owned the said house had shifted his residence. As such, it was the claim of the ld. A.R that due to the aforesaid circumstances the impugned order of the Pr.CIT under Sec.263 of the Act was not delivered to the assessee firm and had remained unattended. It was further submitted by the ld. A.R, that it was only when the assessee firm received a notice dated 29.05.2019 from the ACIT, Circle 32(3), Mumbai, with regard to the 'set aside' assessment, that, it was only then that the assessee firm on the basis of inquiries learnt about the order passed by the Pr.CIT under Sec. 263 of the Act. In order to fortify the aforesaid factual position the ld. A.R took us through the affidavit filed by Shri Ashok Mohanlal Mehta, partner of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment. Accordingly, it was submitted by the ld. A.R that now when the A.O had after calling for the requisite details formed a possible view that the ALV of the aforesaid property was not liable to be brought to tax under the head 'house property', therefore, the Pr.CIT had exceeded his jurisdiction by revising the assessment order with a purpose to substitute his view as against that arrived at by the A.O. Further, it was submitted by the ld. A.R that the law did not prescribe any method for determination of ALV of property held by an assessee as its closing stock. It was submitted by the ld. A.R that sub-section (5) to Section 23 of the Act, which therein mandates determination of the ALV of a property held by an assessee as stock-in-trade had been made available on the statute vide the Finance Act, 2017, w.e.f 01.04.2018, and was thus not applicable to the year under consideration. Insofar the judgment of the Hon'ble High Court of Delhi in the case of Ansal Housing Finance & Leading Co. Ltd. (supra) as was relied upon by the Pr.CIT, it was submitted by the ld. A.R that the Special Leave Petition (SLP) of the assessee against the said order had been admitted by the Hon'ble Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aluing Rs. 10,05,08,511/-) as part of its inventory of stock-in-trade during the year under consideration. As observed by us hereinabove, the Pr.CIT was of the view that the failure on the part of the A.O in not taking cognizance of the fact that the ALV of the unsold flats held by the assessee as closing stock of its business as that of a builder and developer was not offered by it for tax under the head 'house property', had thus, rendered his order erroneous insofar it was prejudicial to the interest of the revenue in terms of 'Explanation 2' to Sec.263 of the Act. On the basis of his aforesaid observation the Pr. CIT by relying on the judgment of the Hon'ble High Court of Delhi in the case of Ansal Housing Finance & Leasing Co. Ltd. Vs. CIT (2012) 354 ITR 1820 (Del), had concluded, that incidence of charge of ALV of a property was backed by the factum of ownership, and the aspect, that as to whether the assessee carried on a business or held the property as a landlord would have no bearing on determination of the ALV. On the other hand, the ld. A.R had tried to support the order of the A.O, on the ground, that the view of the A.O that the ALV of the property held by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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