DLF UTILITIES LIMITED,NEW DELHI V. PRINCIPAL COMMISSIONER OF INCOME TAX, DELHI-1, NEW DELHI, NEW DELHI

ITA 2584/DEL/2024

AI Insights

The case involves DLF Utilities Ltd appealing against the order of the PCIT, which had invoked revisionary powers under section 263 of the Income-tax Act, 1961, claiming that the assessment order passed by the AO was erroneous and prejudicial to the interest of the revenue. The PCIT's concerns included the computation of capital gains on a slump sale, the examination of various expenses, and the recognition of revenue under the Percentage of Completion Method (POCM). The Tribunal, after examining the submissions and the material on record, concluded that the issues were debatable and had been adequately addressed by the AO, thus reversing the PCIT's order.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 470211 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2018-2019
• Other Referred Cases: DCIT vs. Summit Securities, CIT vs Green World Corporation, Malabar Industrial Co Ltd vs CIT, Max India Ltd vs CIT, Gabriel India Ltd vs PCIT, Excel Industries Ltd vs CIT, Tara Devi Aggarwal vs CIT, Infosys Technologies Ltd vs CIT, Apollo Tyres Ltd vs CIT, Perfetti Van Melle India Pvt. Ltd vs CIT, Ramesh Kumar vs CIT, Shankar Tradex Pvt. Ltd vs PCIT, Surya Financial Services Ltd vs PCIT, Ashok Logani vs CIT, BSES Rajdhani Power Ltd vs PCIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: REVENUE RECOGNITION; SURENDER PAL
• Assessee Lawyers: R.S. SINGHVI
• Keywords: Difference of opinion; Change of opinion; Question of law; Capital Gains; Earning of tax free income; Revision of order
• Section: 143(3); 142(1); 143(2); 22; 13; 14A; 37(1)

Judgement Text

"Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B”: NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI SUDHIR KUMAR, JUDICIAL MEMBER ITA No. 2584/Del/2024 (Assessment Year: 2018-19) DLF Utilities Ltd, 9th Floor, DLF Centre, Sansak Marg, Delhi Vs. Pr. CIT-1, New Delhi (Appellant) (Respondent) PAN: AAACN3199A Assessee by : Shri R. S. Singhvi, CA Shri Satyejeet Goel, CA Shri Rajat Garg, CA Revenue by: Shri Surender Pal, CIT DR Date of Hearing 10/02/2025 Date of pronouncement 12/03/2025 O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in ITA No.2584/Del/2024 for AY 2018-19, arises out of the order of the Pr. Commissioner of Income Tax-1, New Delhi [hereinafter referred to as „ld. Pr. CIT‟, in short] in Appeal No. ITBA/REV/F/REV5/2023- 24/1063786847(1) dated 31.03.2024 against the order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) dated 16.04.2021 by the Assessing Officer, National e-Assessment Centre, Delhi (hereinafter referred to as „ld. AO‟). 2. The assessee has raised the following grounds of appeal:- “1(i). That on the facts and circumstances of the case, PCIT, Delhi-1 has wrongly assumed jurisdiction w/s. 263 of the Income tax Act, 1961 by treating the assessment order passed by Assessing Officer u/s. 143(3) as ITA No. 2584/Del/2024 DLF Utilities Ltd Page | 2 erroneous and prejudicial to the interest of revenue without appreciating facts of the case or application of mind. 1(ii) That in the absence of any finding that order passed by the AO u/s. 143(3) is erroneous and prejudicial to the interest of revenue, it is not open to set-aside the same for re-verification and as such direction of PCIT, Delhi- 1 are highly arbitrary and contrary to purpose, object and scope of sec, 263 of the Act. 2. That various issues regarding principles of revenue recognition raised by the PCIT, Delhi-1 in the notice u/s. 263 have already been examined by the Assessing Officer during assessment proceedings u/s. 143(3) and as such there is no case for treating the assessment order as erroneous and prejudicial to the interest of revenue. 3(1) That the direction by PCIT to compute capital gains of Rs 181,68,56,735/- (wrongly mentioned in the order as Rs.181,65,56,735/-) as against Rs.95,66,00,000/- on slump sale of business of power, maintenance and business support services, by relying upon the decision of Hon'ble ITAT- Special Bench, Mumbai in DCIT vs. Summit Securities (68 DTR 201), is not justified as the assessee has rightly computed the capital gains as per provisions of Income-tax Act. (ii) That the direction of PCIT is without application of mind and merely based on change of opinion and as such the said direction for enhancement of capital is contrary to provision of section 263 of the Act. 4. That the direction by PCIT to the Assessing Officer to examine the genuineness and details of various amounts of gratuity transferred and payment made to other companies of Rs. 5.83 crores and various other queries made for claim of expenses like salaries, wages and bonus at Rs. 72.45 lacs, Guarantee, finance and bank charge at Rs. 2764.99 lacs, Interest on term loan from banks at Rs. 4024.53 lacs, legal and professional at Rs. 139.06 lacs, amounts written off at Rs. 252.50 lacs impairment for doubtful advances/allowance for expected credit loss at Rs. 615.01 lacs, is without any valid basis as all the requisite details/documents sought during the assessment proceedings were duly provided by the company, hence there is no case for restoring the issue back to the Assessing Officer for re- consideration. 5. That the direction by PCIT to value the inventories correctly and compute revenue on the basis of Percentage of Completion Method instead of Completed Project method is without any basis as the assessee itself has followed Ind AS Percentage of Completion Method for revenue recognition, which is evident from the from audited financial statements and as such the direction of PCIT is contrary to facts and without application of mind. ITA No. 2584/Del/2024 DLF Utilities Ltd Page | 3 6. That the direction by PCIT to compute proportionate profit of the completed projects and brought the same to tax by observing that the assessee has debited cost to the projects in P&L A/c but has not offered to tax is without any basis as the assessee itself has recognized revenue / cost in terms of Ind AS Percentage of Completion Method, which is evident from the from audited financial statements. 7. That the direction by PCIT to the Assessing Officer to examine and verify the sale of plots of Rs.108 Crores from the view of taxing the same during the year is without any basis as the same represents advance received against sale of plots which is continuing from earlier years as is evident from Schedule 24 (Other Liabilities) of the audited financials and will be offered to tax when sale in respect of the same would take place. 8. That the direction by PCIT to the AO to compute disallowance for expenses related to exempted income u/s 14A as per past assessment years is not justified as during the year under consideration the assessee has not earned any exempt income and further the assessee has itself suo motto disallowed a sum of Rs.6,83,052/- in respect of amount inadmissible u/s 14A even though no disallowance was called for in absence of any exempt income. 9. That the direction by PCIT to the AO to examine the interest amount disallowable u/s 36(1)(iii) and disallow the same is contrary to past history and judgment of Hon'ble ITAT and Delhi High Court which are final and conclusive. 10. That order was passed by the Assessing Officer after necessary verification of issues under consideration and assessment order is neither erroneous nor prejudicial to the interest of the revenue. 11. That order passed by the PCIT, Delhi-1 is not justified on facts and same is bad in law. 12. That the appellant craves leave to add, alter, amend or forgo any of the grounds of appeal at the time of hearing.” 3. We have heard the rival submissions and perused the material available on record. At the outset, we find that the assessee has challenged the assumption of revision jurisdiction u/s 263 of the Act of the ld PCIT as well as on merits. The return of income for the AY 2018-19 was filed and assessment was completed u/s 143(3) of the Act on 16.04.2021. The case ITA No. 2584/Del/2024 DLF Utilities Ltd Page | 4 of the assessee was selected for complete scrutiny assessment under the e- assessment scheme, 2019 to examine the following issues:- 1. Stock valuation 2. Claim of any other amount allowable as deduction in Schedule BP. 3. Investments / Advances / Loans 4. Refund Claim 5. Business Loss. 6. Ind AS Compliance and Adjustment. 7. Investment in Immovable Property. 8. Income from House Property. The assessee had filed its return of income on 31-10-2018 declaring total loss of Rs. 66,92,57,968/-. In order to examine the aforesaid issues listed out , notices under Section 142(1) and 143(2) of the Act stood issued to the assessee along with Annexure thereon. In response to the same, the assessee furnished the details that were sought for with regard to the aforesaid issues through e-proceedings. The Learned AO, after considering the submissions of the assessee, accepted the returned loss of the assessee and completed the scrutiny assessment on 16-04-2021. 4. The Learned PCIT sought to treat this order passed by the Learned AO as erroneous and prejudicial to the interest of the revenue, warranting invocation of revision jurisdiction under section 263 of the Act on the ground that the negative net worth of the business arising on slump sale of business of power, maintenance and business support services to DLF Power and Services Ltd should also be considered while computing the capital gains for slump sale in terms of section 50B of the Act. The Learned PCIT in support of this direction to the Learned AO placed reliance on the decision of Special ITA No. 2584/Del/2024 DLF Utilities Ltd Page | 5 Bench decision of Mumbai Tribunal in the case of DCIT vs Summit securities reported in 68 DTR 201. The Learned AR before us submitted at the outset that the decision of Special Bench of Mumbai Tribunal in the case of DCIT vs Summit securities referred supra had been appealed against before the Hon‟ble Bombay High Court and question of law has been framed and the appeal is admitted. To this effect, he drew our attention to pages 131 to 132 of the supplementary paper book wherein the Hon‟ble Bombay High Court vide its order dated 19-9-2014 had admitted the substantial questions of law. The said appeal is still pending before the Hon‟ble Bombay High Court. Accordingly, the Learned AR submitted that since the substantial question of law has been admitted by the Hon‟ble Bombay High Court, the same constitutes a debatable issue which alone prompted the Hon‟ble Bombay High Court to admit the appeal filed by the assessee. Hence, it could be reasonably concluded that the Learned AO in the course of assessment proceedings had taken one of the plausible views in the matter on a debatable issue. Hence, the same cannot be treated as erroneous much less prejudicial to the interest of the revenue warranting revision under section 263 of the Act. 5. The copy of slump sale agreement is enclosed in Pages 19 to 98 of the Supplementary Paper Book filed before us. On perusal of the various papers enclosed in the paper book, we find that the Learned AO has specifically taken note of the transaction of slump sale, vide query number 6 in the notice issued under section 142(1) of the Act dated 18-12-2020. Further, the fact of gain of slump sale was prominently disclosed in the computation of total income as well as in the exceptional item in the profit loss account in the audited financial statements. The Learned AO considering the reply given by the assessee to the query raised in the 142(1) notice dated 18-12-2020 and the proper disclosures made in the audited financial statements ITA No. 2584/Del/2024 DLF Utilities Ltd Page | 6 accepted the computation of capital gains on the slump sale while framing the assessment under section 143(3) of the Act. Accordingly, it was pleaded by the Learned AR that it cannot be considered as a lack of inquiry by the Learned AO warranting revision under section 263 of the Act. 6. Now, a crucial question that arises for our consideration is as to whether where a question of law has been framed by the Hon‟ble High Court on an appeal preferred either by the assessee or by the revenue, the same would constitute a debatable issue and thereby the learned PCIT could not invoke revision jurisdiction under Section 263 of the Act on such debatable issue. Reliance in this regard was placed on the decision of the Hon‟ble Supreme Court in the case of CIT vs Green World Corporation reported in 314 ITR 81 (SC). We have gone through the said decision and we find that the Hon‟ble Supreme Court had held that an order of assessment passed by an ITO should not be interfered with only because another view on the subject mentioned issue is possible according to Ld PCIT. This proposition was laid out by the Hon‟ble Supreme Court on the ground that if this view is entertained, then every case of the assessing officer would be subjected to revision jurisdiction under section 263 of the Act by the Ld PCIT, merely because he carries a different view on the issue thereon. That is certainly not the purpose of section 263 of the Act. Drawing analogy from the said decision, the Learned AR tried to impress upon this bench by stating that in the instant case, the Learned PCIT was only trying to rely on the decision of Special Bench of Mumbai Tribunal in the case of Summit Securities and gives directions to the assessing officer that as per the said decision, the negative net worth ought to have been added to the consideration reported by the assessee while computing capital gains in terms of section 50B of the Act. However, we are in agreement with yet another argument advanced by the Learned AR that the very fact that the ITA No. 2584/Del/2024 DLF Utilities Ltd Page | 7 substantial questions of law framed by the assessee were indeed admitted by the Hon‟ble Bombay High Court against the decision of Special Bench of Mumbai Tribunal, the issue decided by the Special Bench thereon becomes purely debatable. On a debatable issue, revision jurisdiction under section 263 of the Act would not lie. Reliance in this regard was rightly placed on the decision of Hon‟ble Supreme Court in the case of Malabar Industrial Co Ltd reported in 243 ITR 83 (SC) ; decision of Hon‟ble Supreme Court in the case of Max India Ltd reported in 295 ITR 282 (SC) and decision of Hon‟ble Bombay High Court in the case of Gabriel India Ltd reported in 203 ITR 108 (Bom). 7. In any event, the ld AO had already made adequate enquiries on the issue of slump sale as narrated hereinabove and hence the ld PCIT erred in assuming revision jurisdiction under section 263 of the Act to look into the same issue of capital gains on slump sale. 8. It is also pertinent to note that Learned AO in the instant case had examined the list of 8 items and an offshoot of those items during the course of scrutiny assessment proceedings as mandated in the CBDT Complete Scrutiny Selection of Cases under E-Assessment Scheme 2019. Since only 8 items were mandated to be examined by the Learned AO by the CBDT, the Learned AO had confined himself to examination of those 8 items alone. Hence, no error could be attributed in his order for non- examination of other issues other than 8 items mentioned supra. The Learned PCIT actually expects the assessing officer to examine even those issues which were not mandated to him by the Board to examine, thereby making his order erroneous. Though this is not a limited scrutiny case, but still having selected the case for complete scrutiny, the Board had specifically identified only 8 items to the assessing officer and directed him to examine those items which were duly complied with by the assessing officer in the ITA No. 2584/Del/2024 DLF Utilities Ltd Page | 8 instant case. Hence, his order could not be termed as erroneous even if it is found to be prejudicial to the interest of the revenue. When the Learned AO could not have examined a particular item because it is not mandated by the Board while selecting the case for scrutiny, the Learned PCIT cannot assume revision jurisdiction on the same by stating that Learned AO ought to have looked into any other item. That would be in clear violation of directions of the Board. Further, the Learned DR before us vehemently relied on provisions of Explanation 2 to Section 263 of the Act. On perusal of the provisions of Explanation 2 to Section 263 of the Act, we find that the assessee‟s case would not be covered as deemed to be erroneous. When it is not covered as deemed to be erroneous, then the order passed by the Learned AO cannot be treated as erroneous. Further, as per Clause (d) of Explanation 2 to Section 263, only order of Hon‟ble High Court and Hon‟ble Supreme Court is mentioned which when not followed by the Learned AO would make his order erroneous. Whereas, in the instant case, the Learned PCIT is only trying to make the Learned AO follow the decision of Special Bench of Tribunal which is not covered in Clause (d) of Explanation 2 to Section 263 of the Act. Hence, even on deeming fiction, the order passed by the Learned AO cannot be treated as erroneous as per provisions of Explanation 2 to Section 263 of the Act. 9. For all the grounds, the ld DR vehemently relied upon the following decisions:- a) Decision of the Hon'ble Delhi High Court in the case of PCIT vs Paramount Propbuild (P.) Ltd. reported in 161 taxmann.com 85 (Delhi HC) b) Decision of Hon'ble Supreme Court in the case of Daniel Merchants Pvt. Ltd. vs. ITO in Appeal No. 2396/2017 dated 29.11.2017. ITA No. 2584/Del/2024 DLF Utilities Ltd Page | 9 c) Decision of Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. Vs CIT reported in 243 ITR 83 (SC) d) Decision of Hon'ble Supreme Court in the case of Tara Devi Aggarwal v. CIT reported in 88 ITR 323 (SC) e) Decision of Hon‟ble Calcutta High Court in the case of Rajmandir Estates (P.) Ltd. Vs PCIT reported in 386 ITR 162 (Cal) f) Decision of Hon‟ble Supreme Court in the case of Rajmandir Estates (P.) Ltd. Vs PCIT reported in 77 taxmann.com 285 (SC) g) Order of ITAT Delhi Bench in the case of PTC Impex (India) Pvt. Ltd. Vs CIT in ITA No. 2860/Del/2010 dated 03.04.2018 h) Order of Hon'ble Karnataka High Court in the case of CIT vs. Infosys Technologies Ltd. reported in 341 ITR 293 dated 04.01.2012 i) Order of Delhi ITAT in the case of CIT vs. Apollo Tyres Ltd reported in 65 ITD 263 j) Order of the Delhi ITAT in the case of Perfetti Van melle India Pvt. Ltd in ITA No. 3046/Del/2016 dated 11.01.2019 k) Order of the Delhi ITAT in the case of Ramesh Kumar in ITA No. 1982/Del/2018 dated 25.01.2019 l) Order for the Delhi ITAT in the case of Shankar Tradex Pvt. Ltd Vs. PCIT in ITA No. 2999/Del/2017 dated 16.04.2018 m) Order of Delhi ITAT in the case of Surya Financial Services Ltd Vs. PCIT dated 08.01.2018 n) Decision of Hon‟ble Delhi High Court in the case of CIT Vs. Ashok Logani reported in 347 ITR 22 o) Order of the Delhi ITAT in the case of Pooja Gupta in ITA No 4057/Del/ 2018 dated 31.01.2019 p) Decision of Hon'ble Delhi High Court in the case of BSES Rajdhani Power Ltd. vs Pr. CIT, Delhi reported in 88 taxmann.com 25 (Delhi) ITA No. 2584/Del/2024 DLF Utilities Ltd Page | 10 q) Decision of Hon'ble Supreme Court in the case of CIT vs Paville Projects (P.) Ltd. reported in 149 taxmann.com 115 (SC) 10. In all these cases, no enquiries were made by the ld AO at the time of assessment proceedings and hence the Hon‟ble Courts and Tribunal held that ld PCIT was justified in assuming revision jurisdiction u/s 263 of the Act. Whereas in the instant case before us, in respect of the issue of capital gains on slump sale, adequate enquires had already been made by the ld AO in the assessment proceedings as narrated supra. Hence, all the case laws relied upon by the ld CIT DR are factually distinguishable and not applicable to the case before us. The ld DR also relied on Explanation 2 to Section 263 of the Act to support the action of the ld PCIT. On perusal of the Explanation 2 to section 263 of the Act, we find that it is a deeming fiction and applicable only if the assessment order has been passed without making any enquiry or verification by the ld AO. In the instant case, adequate enquiry had already been made in this issue by the ld AO. 11. In view of the aforesaid elaborate observations and respectfully following the various judicial precedents relied upon hereinabove, we have no hesitation to hold that the Learned PCIT erred in invoking revisionary jurisdiction under section 263 of the Act in respect of ascertaining the capital gains on slump sale. 12. The next issue for which the Learned PCIT had assumed revision jurisdiction under Section 263 of the Act was by way of directing the Learned AO to examine the genuineness and allowability of expenses under Section 37 of the Act with regard to gratuity of Rs. 5.83 crores, salaries, wages and bonus, guarantee, finance and bank charges, interest on loans, legal and professional charges and amounts written off, etc. ITA No. 2584/Del/2024 DLF Utilities Ltd Page | 11 13. We have heard the rival submissions and perused the materials available on record. We find that the Learned AO had raised specific queries regarding all these issues vide notice under Section 142(1) of the Act dated 18-12-2020, vide query number 6(a) to 6(g) thereon, by seeking proper justification of claim of salaries, wages, bonus, guarantee, finance and bank charges, interest on loans, legal and professional charges and amounts written off and vide query number 10, the Learned AO specifically sought details of claim of gratuity to the extent of Rs. 5.83 crores. The assessee in response to the above queries filed detailed reply dated 20-1-2021 and 31- 01-2021 furnishing proper explanation along with all the documentary evidences in respect of the above claims. Hence, it could be seen that this is not a case of lack of enquiry by the Learned AO warranting revision jurisdiction by the Learned PCIT under Section 263 of the Act. Further, the same replies were even filed by the assessee before the Learned PCIT in response to show-cause notice issued under Section 263 of the Act. The Learned PCIT did not bother to look into those explanations and gave a general and vague directions to the Assessing Officer to examine the allowability of claim of these expenses under Section 37(1) of the Act. In our considered opinion, this direction of the Learned PCIT is only to enable the Learned AO to make roving and fishing enquiries which is not permissible by assuming revision jurisdiction under Section 263 of the Act, when especially adequate enquiries had already been made by the Learned AO. The Learned PCIT had nowhere even bothered to state as to how the order of the Learned AO becomes erroneous much less prejudicial to the interest of the revenue so as to justify the invocation of revision jurisdiction under Section 263 of the Act. Hence we have no hesitation to quash the assumption of revision jurisdiction under section 263 of the Act by the Learned PCIT on this issue of allowability of expenses under section 37(1) of the Act and gratuity expenditure. ITA No. 2584/Del/2024 DLF Utilities Ltd Page | 12 14. The next issue for which the ld PCIT has assumed revision jurisdiction is for the fact that assessee had disclosed inventories in the balance sheet, no revenue has been disclosed. Since, the assessee has been adopting Percentage Of Completion Method (POCM) for recognition of its revenue, the ld PCIT had directed the ld AO to verify and examine the details of the project including the cost of the project, its time line and as to what percentage of project value has been achieved till 31.03.2018 and compute the taxable income from the project accordingly. 15. We have heard the rival submissions and perused the material available on record. The assessee is following POCM for recognition of its revenue on which fact there is no dispute. Since, the execution of the project was not commenced in the year under consideration, no revenue was recognized as per POCM. The inventories were duly reflected in the balance sheet. Primary basis of the ld PCIT drawing adverse inference on the assessee on this issue was disclosure of inventories in the balance sheet with no revenue being disclosed. We find that the ld AO vide notice u/s 142(1) dated 18-12-2020 specifically sought a query on the inventories together with method of accounting adopted by the assessee for valuation of stock and recognition of revenue vide Query No. 9 thereon. This query was duly responded by the assessee vide letter dated 31-01-2021 wherein, it was specifically brought to the knowledge of the ld AO that project activity had not started and hence, there is no scope for recognition or revenue as per POCM during the year. The ld AO having been satisfied with the said reply did not chose to make any addition towards recognition of revenue. Before us, it was also pointed out by the ld AR that assessee is following POCM as per IND-AS 18 which is mandatory, wherein, revenue from a project could be recognized only when a certain threshold of construction work has been completed. The ld AR also drew our attention to the relevant pages of the ITA No. 2584/Del/2024 DLF Utilities Ltd Page | 13 Paper Book containing the notes of accounts wherein, clear disclosure for real estate transaction and adoption of AS had been mentioned qua the recognition of revenue. It was also submitted that no revenue has been actually realized by the revenue. This fact was also brought to the knowledge of the ld PCIT in response to reply given to the show cause issued u/s 263 of the Act. Ld PCIT summarily ignored the entire contentions of the assessee and without any basis known to law, directed the ld AO to examine the issue afresh. It is pertinent to note as stated earlier, the ld AO had already examined the issue of inventories shown in the balance sheet vis-a-vis the recognition of revenue from the project and had taken a plausible view after considering the plausible explanation given by the assessee. The ld PCIT had merely made a general and vague observation by directing the ld AO to examine the issue in order to make fishing and roving enquiry which is not legally permitted while assuming revision jurisdiction u/s 263 of the Act. Further, it would be relevant to note at this point of time that recognition of revenue under POCM even if deferred by the assessee (though factually that is not the case of the assessee herein), still there would be no loss of tax to the exchequer as ultimately the same would only result in revenue neutral mechanism as it is only timing difference of recognition of revenue. Hence, it cannot be said that the order passed by the ld AO would be prejudicial to the interest of the revenue. Reliance in this regard is placed on the decision of the Hon'ble Supreme Court in the case of Excel Industries Ltd reported in 358 ITR 295. Hence, direction of the ld PCIT, being vague and mechanical and the impact not being prejudicial to the interest of the revenue, become fatal to the assumption of revision jurisdiction u/s 263 of the Act qua the issue of recognition of revenue under the POCM. Hence, the action of the ld PCIT in this regard is hereby quashed. ITA No. 2584/Del/2024 DLF Utilities Ltd Page | 14 16. The next issue for which revision jurisdiction under section 263 of the Act was assumed by the Learned PCIT was by way of giving directions to the Learned AO to verify the sale of plots of Rs 108 crores. 17. We have heard the rival submissions and peruse the materials available on record. On perusal of the financial statements of the assessee, we find that there is no case of sale of plots made during the year under consideration. The advances received on sale of plots were lying as liability in the balance sheet and they were received in the earlier year. This transaction has got absolutely nothing to do with the year under consideration. The Learned PCIT had not looked into even this preliminary aspect, but proceeded to give a general and vague direction to the Learned AO to make fishing and roving enquiries with regard to the sale of plots of Rs 108 crores. This direction of the Learned PCIT being very vague, without pointing out what is the error committed by the Learned AO in its order, becomes fatal to the very assumption of revision jurisdiction under Section 263 of the Act by the Learned PCIT. Hence, we have no hesitation to quash the assumption of revision jurisdiction under Section 263 of the Act on this issue by the Learned PCIT. 18. The next issue for which the Learned PCIT had assumed revision jurisdiction under Section 263 of the Act is to consider disallowance of expenses under Section 14A of the Act in relation to earning of exempt income. 19. We have heard the rival submissions and peruse the materials available on record. It is not in dispute that there was no exempt income at all derived by the assessee during the year under consideration. Hence, the provisions of Section 14A of the Act could not be made applicable at all for the year under consideration. Further, there was a specific query raised ITA No. 2584/Del/2024 DLF Utilities Ltd Page | 15 by the Learned AO in the notice under Section 142(1) of the Act dated 18- 12-2020, vide query number 5 and query number 11, asking details of disallowance under Section 14A of the Act made in the last three scrutiny assessments. The assessee gave detailed reply dated 20-1-2021 by furnishing the necessary details together with the past history of disallowance under Section 14A of the Act and which were also deleted by the Tribunal. In any event, we find that no disallowance under Section 14A of the Act could even operate in view of the decision of Hon‟ble Delhi High Court in the case of ERA Infrastructure Limited as there was no exempt income at all. Hence, the assumption of revision jurisdiction under Section 263 of the Act by the Learned PCIT on this issue is flawed both on law as well as on merits. 20. The next issue for which the Learned PCIT had assumed revision jurisdiction under Section 263 of the Act was by directing the Learned AO to make disallowance of interest under Section 36(1)(iii) of the Act on the ground that such disallowance was made in the past and the matter is pending before the Hon‟ble Delhi High Court at the behest of the Revenue. 21. We have heard the rival submissions and perused the materials available on record. With regard to utilisation of borrowed funds for the purpose of business and the interest cost paid thereon, the Learned AO raised a specific query vide notice under Section 142(1) of the Act dated 18- 12-2020 in query number 5C. Further, vide query number 11, the Learned AO also asked the assessee to furnish details about the disallowance made in the last three scrutiny assessments under Section 36(1)(iii) of the Act. The assessee filed a reply dated 20-1-2021 furnishing all the necessary details. The Learned AO accepted the contentions of the assessee and since the issue was decided in favour of the assessee by the order of the Tribunal, no disallowance of interest was proposed by the Learned AO in the order. The ITA No. 2584/Del/2024 DLF Utilities Ltd Page | 16 Learned PCIT says in his revision order that the issue is pending before Hon‟ble Delhi High Court. This was buttressed by the Learned AR before us by placing an order dated 18-1-2019 for Assessment Year 2011-12 by the Hon‟ble Delhi High Court wherein the issue has already been decided by the Hon‟ble High Court in favour of the assessee. Hence, it could be safely concluded that (i) the issue is already decided in favour of the assessee by the Hon‟ble Delhi High Court on merits and (ii) the Hon‟ble Delhi High Court had already decided the issue even prior to framing of assessment. Hence, the assumption of revision jurisdiction under Section 263 of the Act per se was based on incorrect facts by the Learned PCIT that the issue was pending before the Hon‟ble Delhi High Court. 22. In view of the above, we have no hesitation to quash the assumption of revision jurisdiction under Section 263 of the Act by the Learned PCIT both on law as well as on facts qua this issue also. 23. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 12/03/2025. -Sd/- -Sd/- (SUDHIR KUMAR) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated:12/03/2025 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi "