TMI Blog2022 (6) TMI 403X X X X Extracts X X X X X X X X Extracts X X X X ..... a development agreement entered into between the land owner and three developers including the assessee for developing the land and then sharing revenue/gains at the mutually agreed ratio. It is also an undisputed fact that after entering into the development agreement no further development took place and the amount advanced by the assessee as per the development agreement was refunded back in subsequent period. Thus the issue raised in the show cause notice has been examined properly by the Ld. AO after conducting necessary enquiry and has also examined the facts properly their hardly remains any scope for Ld. PCIT to exercise jurisdiction u/s. 263 of the Act. Therefore, since the Ld. AO has made necessary enquiry, applied his mind on the issue, examined the facts properly and has taken a possible view, we cannot agree with the finding of the Ld. PCIT of setting aside the assessment order. Accordingly, the proceedings u/s. 263 of the Act are quashed and the assessment order u/s. 143(3) of the Act is restored. Thus, all the grounds raised by the assessee are allowed. - I.T.A. No. 121/Kol/2021 - - - Dated:- 24-5-2022 - Sri Manish Borad , Accountant Member And Sri Sonjoy Sarm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the solitary grievance of the assessee is that Ld. PCIT erred in invoking the revisionary jurisdiction without satisfying the conditions precedent is as laid down u/s. 263 of the Act i.e. without validly holding that the Ld. Assessing Officer's (in short Ld. AO ) order is erroneous as well as prejudicial to the interests of the Revenue. Since the jurisdictional issue has been raised, we will first of all adjudicate the legal issue. 4. Brief facts of the case are that the assessee is an individual. Income of Rs. 10,13,620/- declared in the e-return filed on 14.10.2016 for AY 2016-17. Case selected for scrutiny for the reason to verify whether the investment and income relating to property disclosed . Notice issued u/s. 142(1) of the Act to verify details which were filed including the details filed for development agreement entered into by the assessee with other two developers with the landlord Mr. Mahendra Pratap Singh Others. After being satisfied with the details filed, Ld. AO concluded the assessment accepting the returned income vide assessment order dated 24.12.2018 passed u/s. 143(3) of the Act. 5. Subsequently, Ld. PCIT on perusal of the assessment reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... flats, 1 number of 4 bed room residential flat, a commercial area measuring 3000 sq. ft. on the ground floor and 3000 sq.ft., on the 1st floor after completion of multi-storied building. The landlords are also to receive refundable advance amount of Rs. 1.50 crores which shall be adjusted during the time of delivery of structural portions to the land vendors. Developers on the other hand Shall get remaining total built-up area of the multi-storied building. As per the agreement no assignment or conveyance in law by the land owners to the developers is permitted so as to create any right, title or interest in respect thereof other than an exclusive license to the developers to execute the work contemplated and to deal with the developers allocated share in the proposed new multi-storied building. Thus, it can be seen it is a joint development/venture agreement wherein assessee is a developer in the agreement. Thus, this is a business activity of the assessee and it is not a purchase of land by the assessee. Therefore, there is no question of income from capital gain or income from capital gain or income from any other source as per section 56(2)(vii). Section 45(5A) with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ert to the facts and law involved in this issue before us, let us revisit the law governing the issue before us. The assessee has challenged in the first place, the very usurpation of jurisdiction by Ld. PCIT to invoke his revisional powers enjoyed u/s. 263 of the Act. Therefore, first we have to see whether the requisite jurisdiction necessary to assume revisional jurisdiction is existing in this case before the PCIT rightfully exercises his revisional power. For that, we have to examine as to whether in the first place the order of the Assessing Officer found fault by the Principal CIT is erroneous as well as prejudicial to the interest of the Revenue. For that, let us take the guidance of judicial precedence laid down by the Hon'ble Apex Court in Malabar Industries Ltd. vs. CIT [2000] 243 ITR 83 (SC) wherein their Lordship have held that twin conditions need to be satisfied before exercising revisional jurisdiction u/s. 263 of the Act by the Ld. PCIT. The twin conditions are that the order of the Ld. AO must be erroneous insofar as prejudicial to the interests of the Revenue. In the following circumstances, the order of the Ld. AO can be held to be erroneous order, that is ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus, there is an undisclosed investment by the assessee. After going through the records, we are of the view that Ld. PCIT failed to examine the facts in the right prospective because the transaction in question is not a transaction of purchase of immovable property. As per the development agreement dated 28.08.2015, the assessee along with two other persons namely Mr. Rajendra Rampal and Mr. Bishwanath Sukumar Dey approached the land owner Mr. Mahendra Pratap Singh and Mr. Abhisekh Kumar Singh for developing their property located at Chandernagore, Dist.-Hooghly, land measuring 0.7680 acre while entering into the development agreement of Rs. 50 lakh each was paid as advance by the three developers including the assessee. The said transaction is not a purchase transaction being undertaken by the assessee and other two persons with Mr. Mahendra Pratap Singh and others. Actually the said agreement is a development agreement entered into between the land owner and three developers including the assessee for developing the land and then sharing revenue/gains at the mutually agreed ratio. It is also an undisputed fact that after entering into the development agreement no further devel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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