No Sec. 263 Revision if View Taken by AO Was Plausible View Supported by CBDT Circular No. 16/2017 | ITAT

Case Details: Agrani Buildestate v. Principal Commissioner of Income-tax - [2023] 153 taxmann.com 300 (Jaipur-Trib.)

Judiciary and Counsel Details

• • Sandeep Gosain, Judicial Member & Rathod Kamlesh Jayantbhai, Accountant Member
  • Rajeev Sogani, CA for the Appellant.
  • A.S. Nehra, Addl. CIT for the Respondent.

Facts of the Case

Assessee-firm was engaged in the business of letting out properties. Since income earned was from letting out properties along with various services to lessees, the income was offered for tax under the head income from business and profession. The very basis for partnership was to carry on business. The partnership deed also categorically provided for carrying on the business of leasing, managing, and maintaining the property.

During the assessment proceedings, a detailed questionnaire was issued by the Assessing Officer (AO) seeking pinpointed queries about the nature of business activities and verification of receipts. The nature of the business was explained, the partnership deed was submitted, and a complete explanation was rendered regarding income falling under the head ‘ income from business and profession’.

Reference was also drawn to CBDT’s Circular No. 16/2017 dated 25-4-2017. On being convinced of the facts and legal position, AO accepted the assessee’s explanation and assessed the income under the head ‘ income from business and profession.’

However, in the exercise of his jurisdictional power under section 263, the commissioner held that income from property under reference was in the nature of rental income and not business income.

Aggrieved-assessee filed an appeal to the Jaipur Tribunal.

ITAT Held

The Tribunal held that the scope of revision jurisdiction under section 263 is very specific, limited, and different from appellate jurisdiction. The law contained in section 263 does not allow the commissioner to impose his view over the judicious view adopted by the AO unless the view adopted by the AO is established to be not at all sustainable in law.

In the instant case, the view of AO was also supported by the CBDT Circular. AO was also duty-bound to follow the directions of CBDT, more so when specifically brought to his notice by the assessee during the assessment proceedings.

After adequate enquiry, AO has taken a reasonable view, and accordingly, the revision under section 263 is not permissible merely because the commissioner may entertain a different view on the issue. The stand adopted by AO was plausibly supported by the CBDT Circular and, therefore, cannot be said to be erroneous in terms of the provisions of section 263.

List of Cases Reviewed

• • Chennai Properties & Investments Ltd. v. CIT [2015] 56 taxmann.com 456/231 Taxman 336/373 ITR 673(SC)
  • Smt. Lata Phulwani v. Pr. CIT [IT Appeal No. 246 (JP.) of 2020, dated 6-10-2020]
  • CIT v. Ganpat Ram Bishnoi [2006] 152 Taxman 242/[2008] 296 ITR 292 (Raj.)
  • Annu Agrotech (P.) Ltd. v. Pr. CIT [IT Appeal No. 9 (JP.) of 2021, dated 15-9-2021]
  • Eveready Industries India Ltd. v. Pr. CIT [2020] 114 taxmann.com 610/181 ITD 528 (Kol. – Trib.)
  • Amira Pure Foods (P.) Ltd. v. Pr. CIT [IT Appeal No. 3205 (Delhi) of 2017, dated 29-11-2017]
  • ITAT Delhi Bench Narayan Tatu Rane v. ITO [2016] 70 taxmann.com 227 (Mumbai – Trib.)
  • CIT v. Ratlam Coal Ash Co [1987] 34 Taxman 443/[1988] 171 ITR 141 (MP)
  • Ashoke Kumar Parasramka v. Asstt. CIT [1998] 65 ITD 1 (Cal.)
  • CIT v. Mehrotra Brothers [2004] 270 ITR 157 (MP.)
  • CIT v. Parmeshwar Bohra [2003] 131 Taxman 145/[2004] 267 ITR 698 (Raj.)
  • Paul Mathews & Sons v. CIT [2003] 129 Taxman 416/263 ITR 101 (Ker.)
  • CIT v. Arvind Jewellers [2002] 124 Taxman 615/[2003] 259 ITR 502 (Guj.)
  • CIT v. Hastings Properties [2001] 119 Taxman 36/[2002] 253 ITR 124 (Cal.)
  • CIT v. J.P. Goel (HUF) [2000] 113 Taxman 229/[2001] 247 ITR 555 (Cal.) (para 2.4) followed.
  • Keyaram Hotels (P) Ltd. v. Dy. CIT [2014] 52 taxmann.com 469/[2015] 228 Taxman 354/373 ITR 494 (Mad.) (para 2.4) distinguished

List of Cases Referred to

• • Keyaram Hotels (P.) Ltd. v. Dy. CIT [2014] 52 taxmann.com 469/[2015] 228 Taxman 354/373 ITR 494 (Mad.) (para 2.3)
  • Keyaram Hotels (P.) Ltd. v. Dy. CIT [2015] 63 taxmann.com 30/235 Taxman 512 (SC) (para 2.3)
  • Chennai Properties & Investments Ltd. v. CIT [2015] 56 taxmann.com 456/231 Taxman 336/373 ITR 673 (SC) (para 2.4)
  • V.M. Salgaocar & Bros. (P.) Ltd. v. CIT [2000] 110 Taxman 67/243 ITR 383/160 CTR 225 (SC) (para 2.4)
  • State of Punjab v. Davinder Pal Singh Bhullar AIR 2012 SC 364 (para 2.4)
  • Supreme Court Employees, Welfare Association v. Union of India AIR 1990 SC 334 (para 2.4)
  • CIT v. Information Technology Park Ltd. [2014] 47 taxmann.com 239/225 Taxman 26 (Mag.)/369 ITR 460 (Kar.) (para 2.4)
  • Torrent Pharmaceuticals Ltd. v. Dy. CIT [2018] 97 taxmann.com 671/173 ITD 130 (Ahd. – Trib.) (para 2.4)
  • Eveready Industries India Ltd. v. Pr. CIT [2020] 114 taxmann.com 610/181 ITD 528 (Kol. – Trib.) (para 2.4)
  • Amira Pure Foods (P.) Ltd. v. Pr. CIT [IT Appeal No. 3205 (Delhi) of 2017, dated 29-11-2017] (para 2.4)
  • Narayan Tatu Rane v. ITO [2016] 70 taxmann.com 227 (Mum. – Trib.) (para 2.4)
  • Smt. Lata Phulwani v. Pr. CIT [IT Appeal No. 246 (JP.) of 2020, dated 6-10-2020] (para 2.4)
  • CIT v. Ganpat Ram Bishnoi [2006] 152 Taxman 242/[2008] 296 ITR 292 (Raj.) (para 2.4)
  • Annu Agrotech (P.) Ltd. v. Pr. CIT [IT Appeal No. 9 (JP.) of 2021, dated 15-9-2021] (para 2.4)
  • CIT v. Ratlam Coal Ash Co. [1987] 34 Taxman 443/[1988] 171 ITR 141 (MP.) (para 2.4)
  • Ashoke Kumar Parasramka v. Asstt. CIT [1998] 65 ITD 1 (Cal.) (para 2.4)
  • CIT v. Mehrotra Brothers [2004] 270 ITR 157 (MP.) (para 2.4)
  • CIT v. Parmeshwar Bohra [2003] 131 Taxman 145/[2004] 267 ITR 698 (Raj.) (para 2.4)
  • Paul Mathews & Sons v. CIT [2003] 129 Taxman 416/263 ITR 101 (Ker.) (para 2.4)
  • CIT v. Arvind Jewellers [2002] 124 Taxman 615/[2003] 259 ITR 502 (Guj.) (para 2.4)
  • CIT v. Hastings Properties [2001] 119 Taxman 36/[2002] 253 ITR 124 (Cal.) (para 2.4)
  • CIT v. J.P. Goel (HUF) [2000] 113 Taxman 229/[2001] 247 ITR 555 (Cal.) (para 2.4).