Lion Palace, Rajula V. The Pr. CIT-1, Rajkot, Rajkot

ITA 106/RJT/2022

• Counselvise Citation: [2023] 101 COUNSELVISE.COM (IT) 9619 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 03-12-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 11-04-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRISHRAMDEEPSINHA
• Assessee Lawyers: SHRIMAHESHLADMOR
• Keywords: Depreciation

Judgement Text

आयकरअपीलीयअधिकरण , राजकोटनयायपीी INTHEINCOMETAXAPPELLATETRIBUNAL, RAJKOTBENCH,RAJKOT (ConductedthroughE-Court) BEFORESHRIWASEEMAHMED,ACCOUNTANTMEMBER And SHRITRSENTHILKUMAR,JUDICIALMEMBER आयकरअपीलसं ./ITANo.106/Rjt/2022 धििाधरणणवध / Asstt.Year:2016-2017 LionPalace, HotelLordsLion, NearByPass, JafarabadRoad, Rajula, District-Amreli. Gujarat-365560. PAN:AAEFL1238P Vs.ThePrincipalCommissioner ofIncomeTax, Rajkot-1, Rajkot. (Applicant)(Respondent) Assesseeby:ShriMaheshLadmor,A.R Revenueby:ShriShramdeepSinha,CIT.DR सुिणाईकीतारीख /DateofHearing:04/12/2023 घोवणाकीतारीख /DateofPronouncement:08/12/2023 आदेश /ORDER PERWASEEMAHMED,ACCOUNTANTMEMBER: Thecaptionedappealhasbeenfiledattheinstanceoftheassesseeagainst theorderoftheLd.PrincipalCommissionerofIncomeTax,Rajkot-1,arisinginthe matteroforderpassedunderSection263oftheIncomeTaxAct,1961(here-in- afterreferredtoas"theAct")relevanttotheAssessmentYear2016-17. ITANo.106/Rjt/2022 A.Y.2016-17 2 2.TheonlyissueraisedbytheassesseeisthattheLd.PCITerredinholding assessmentframedu/s143(3)oftheActaserroneousinsofarprejudicialtothe interestofrevenue. 3.Thenecessaryfactsarethattheassesseeinthepresentcaseisa partnershipfirmandderivingitsincomefromleaserentofthepropertygivento M/sLordSaiMaHotelsPvt.Ltd.Suchleaserentincomewasshownbythe assesseeasincomeunderthehead“businessandprofession”whichwasalso acceptedbytheAOintheassessmentframedu/s143(3)oftheActvideletter dated29/11/2018.However,theLd.PCITwasoftheviewthatsuchleaserent incomeshouldhavebeenchargedtotaxunderthehead“othersources”and thereforeotherexpensessuchasremuneration/salarytothepartnerandother expensesofgeneralinnatureshouldnothavebeenallowedasdeduction. However,theLd.PCIT,acceptedtoallowthedeductiononaccountof depreciationu/s32oftheActeventheincomefromleaserentischargedtotax undertheheadothersources.Accordingly,theLd.PCITheldthattheassessment framedu/s143(3)oftheActiserroneousinsofarprejudicialtotheinterestofthe revenueforthereasonthattheincomefromtheleaserentoughttohavebeen chargedunderthehead“othersources”insteadof“businessincome”. 4.BeingaggrievedbytheorderoftheLd.PCIT,theassesseeisinappeal beforeus. 5.TheLd.ARbeforeusfiledapaperbookrunningfrompages1to225and contendedthatthecasefortheassessmentu/s143(3)oftheActwasselectedfor limitedscrutinyasevidentfromthenoticeissuedu/s143(2)oftheAct,placedon page31ofthepaperbook.AspertheLd.AR,thecasewasselectedforlimited scrutinyonaccountofdepreciationclaimbyitwhetheritisadmissibleornot. Accordingly,thescopeofscrutinyassessmentwasverylimitedandtherefore therewasnopossibilityfortheAOtohaveverifiedwhethertheincomeshownby theassesseeischargeabletotaxunderthehead“othersources”orthe“business ITANo.106/Rjt/2022 A.Y.2016-17 3 income”.Accordingly,theLd.ARcontendedthattheLd.PCITcannotholdthe assessmentorderaserroneousinsofarprejudicialtotheinterestoftherevenue. Thus,itwasprayedthattheorderpassedbytheLd.PCITisliabletobequashed. 6.Ontheotherhand,theLd.DRvehementlysupportedtheorderofthe authoritiesbelow. 7.Wehaveheardtherivalcontentionsofboththepartiesandperusedthe materialsavailableonrecord.Atthethreshold,wenotethatthecaseofthe assesseewasselectedforlimitedscrutinywhichisevidentfromthenoticeissued u/s143(2)oftheActplacedonpage31ofthepaperbook.Onperusalofthe notice,thecasewasselectedforscrutiny“whetherdeductionclaimonaccountof depreciationisadmissible”so,itwasacaseoflimitedscrutinyandtherewasno optionfortheAOtoverifyanythingotherthantheissueforwhichthecasewas selectedforlimitedscrutiny.Inotherwords,therewasnopossibilityfortheAOto inquirewhethertheincomeshownbytheassesseewastobeassessedunderthe head“businessincome”or“othersources”unlessthelimitedscrutinyisconverted toregularscrutiny.Accordingly,weholdthattheLd.PCITcannotexercisehis poweru/s263oftheAct,toverifythoseitemswhichwerenotsubjectmatterof thescrutiny.Thus,weholdthattheLd.PCIThasexceededhisjurisdictionby holdingassessmentaserroneousinsofarprejudicialtotheinterestofthe revenueonaccountofnon-verificationoftheincomewhetherthesameshouldbe chargedunderhead“businessandprofession”or“othersources”.Thecontention oftheLd.Counselthatthelimitedscrutinywasnotconvertedintoregularscrutiny wasalsonotcontrovertedbytheLd.DRappearingonbehalfoftherevenue. Likewise,thecontentionoftheLd.ARthatintheearlierAY,theincomeofthe assesseewasacceptedasincomeunderthehead“businessandprofession”was notcontrovertedbytheLd.DR.Inviewoftheabove,weholdthattherevisional orderpassedbytheLd.PCITisnotsustainable.Hence,wequashthesame.Thus, thegroundofappealfiledbytheassesseeisallowed. ITANo.106/Rjt/2022 A.Y.2016-17 4 8.Intheresult,theappealfiledbytheassesseeisallowed. OrderpronouncedintheCourton08/12/2023atAhmedabad. Sd/-Sd/- (TRSENTHILKUMAR)(WASEEMAHMED) JUDICIALMEMBERACCOUNTANTMEMBER (TrueCopy) Ahmedabad;Dated08/12/2023 Manish,Sr.PSTRUECOPY