TMI Blog2023 (2) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... ue. As a result, grounds No. 2-5 raised in assessee s appeal are allowed. Claim of loss on sale of car - We find that vide notice issued under section 142(1) of the Act, the AO asked for claim of expenditure under the head of other expenses and subhead of miscellaneous expenses, vide point no.24. In reply to the said notice, the assessee vide letter filed before the AO, submitted that the loss has been incurred on sale of car, which was used by the partners for the smooth functioning of the business, and the same has been incurred wholly and exclusively for the purpose of business. We further find that vide aforesaid notice the AO also sought bills, vouchers with documentary proof, and justification for incurring the expenditure wholly and exclusively for business purposes. Apart from making the aforesaid submission, no details as sought by the AO were furnished by the assessee in support of its claim that the car was used by the partners wholly and exclusively for the purpose of business. We also find that there was no further enquiry on this issue by the AO and the claim of the assessee was accepted in absence of any documentary evidence. Allowability of TDS intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ionary proceedings u/s. 263 of the Act without appreciating that notional rent cannot be applied on Transferable Development Rights and as such, order u/s. 263 of the Act is misplaced and bad in law. 5. That on the facts and circumstances of the case and in law, the Ld. PCIT has erred in invoking revisionary proceedings u/s. 263 of the Act for raising the issue of adding notional rent u/s. 23 of the Act. 6. That on the facts and circumstances of the case and in law, the Ld. PCIT has erred in invoking revisionary proceedings u/s. 263 of the Act for disallowing loss sale of on amounting to Rs. 4,80,559/-. 7. That on the facts and circumstances of the case and in law, the Ld. PCIT has erred in invoking revisionary proceedings u/s. 263 of the Act for disallowing TDS interest and penalty amounting to Rs. 3,12,220/-. 3. The brief facts of the case as emanating from the record are: The assessee is a company engaged in the business of real estate development. The assessee e-filed its return of income on 07/11/2017 declaring total income of Rs.7,48,51,580. The return of income filed by the assessee was selected for scrutiny and statutory notices under section 143(2) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided by the assessee. The learned AR further submitted that the issue of taxing the annual letting value of the completed stock of flats as income from house property is a debatable issue and the AO has taken one of the plausible views, therefore, the same is out of the purview of revision proceedings under section 263 of the Act. The learned AR submitted that in its submission before the AO, the assessee had submitted that the car, in respect of which loss on sale has been incurred, was used by the partners for the smooth functioning of the business and therefore the said loss has been incurred wholly and exclusively for the purpose of business. Further, as regards TDS interest and penalty debited to the profit and loss account, the learned AR by placing reliance on certain judicial pronouncements submitted that the interest on late payment of TDS is allowable under section 37 of the Act. 6. On the contrary, the learned Departmental Representative ( learned DR ) submitted that there is no divergence of judicial opinion on the issue of taxability of the annual letting value of unsold stock of flats as income from house property. The learned DR by referring to the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing stock along with additions made and sales made during the year. 4. Please furnish detail of profit/loss recognized on sale of stock during the year along with the calculation thereof. 9. In reply to the said notice, the assessee vide letter dated 13/08/2019, forming part of the paper book from pages no.10-16, provided the details and statement of unit-wise inventory of opening stock as on 01/04/2019 and closing stock as on 31/03/2017. We further find that the assessee also provided the reconciliation of opening and closing stock with additions made and sales made during the year and details of profit/loss recognised on sale of stock, during the year, along with the calculation thereof. The assessee also submitted the details of flat/shop sales offered during the year under consideration. The AO vide assessment order passed under section 143(3) of the Act though made various additions and computed the total income of the assessee at Rs.10,94,98,090, however, made no addition on account of the annual letting value of the unsold stock of flats. 10. During the hearing, the learned AR placed reliance upon the decision of the coordinate bench of the Tribunal in S.D. Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d exclusively for business purposes. However, apart from making the aforesaid submission, no details as sought by the AO were furnished by the assessee in support of its claim that the car was used by the partners wholly and exclusively for the purpose of business. We also find that there was no further enquiry on this issue by the AO and the claim of the assessee was accepted in absence of any documentary evidence. Further, as regards the issue of allowability of TDS interest and penalty, we find that the AO did not make any enquiry, whatsoever, on this issue and no notice/questionnaire was issued. Thus, we are of the considered view that the assessment order to the extent of these two issues is erroneous insofar as it is prejudicial to the interest of Revenue, in view of Explanation 2 to section 263 of the Act. Accordingly, the impugned order passed by the learned CIT to this extent is upheld. As a result, grounds no.6 and 7 raised in assessee s appeal are dismissed. 12. In view of our aforesaid findings, ground no.1, raised in assessee s appeal, is partially allowed. 13. In the result, the appeal by the assessee is partly allowed. Order pronounced in the open Court on 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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