HOUSING DEVELOPMENT & INFRASTRUTURE LTD, MUMBAI V. PR CIT (C) 3, MUMBAI

ITA 2780/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9937 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 12-07-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 18-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ANUJ KRISNADWALA
• Keywords: Revision of order; Opportunity of being heard; Principle of natural justice; Maximum Marginal Rate; Revised return; Capital expenditure
• Section: 143(3); 153A; 115JB; 263; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) & SHRI RAVISH SOOD (JM) I.T.A. NO. 2780 /MUM/20 1 7 (ASSESSMENT YEAR 20 0 9 - 1 0 ) I.T.A. NO. 2781/MUM/2017 (ASSESSMENT YEAR 2010 - 11) I.T.A. NO. 2782/MUM/2017 (ASSESSMENT YEAR 20 12 - 1 3 ) HOUSING DEVELOPMENT & INFRASTRUCTURE LTD. 9 TH FLOOR HDIL TOWER ANANT KANEKAR MARG BANDRA EAST MUMBAI - 400 051. VS. PRINCIPAL COMMISSIONER OF INCOME TAX (C) - 3 1901, 19 TH FLOOR AIR INDIA BUILDING NARIMAN POINT MUMBAI - 400 021. ( APPELLANT ) ( RESPONDENT ) PAN NO . AAACH5443F ASSESSEE BY SHRI VIJAY MEHTA & SHRI ANUJ KRISNADWALA DEPARTMENT BY S HRI RAHUL RAMAN DATE OF HEARING 2 . 8 . 201 7 DATE OF PRONOUNCEMENT 1 . 9 . 201 7 O R D E R PER B.R. BASKARAN (AM) : - ALL THE THREE APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE REVISION ORDERS PASSED BY LD PR. CIT U/S 263 OF THE ACT FOR ASSESSMENT YEARS 2009 - 10, 2010 - 11 AND 2012 - 13. THE ASSESSEE IS CHALLENGING THE VALIDITY OF REVISION ORDERS PASSED BY LD PR. CIT. 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF BUILDERS AND PROPERTY DEVELOPERS. FOR ASSESSMENT YEARS 2009 - 10 AND 2010 - 11, THE ORIGINAL ASSESSMENTS WERE COMPLETED U/S 143(3) R.W.S. 153A OF THE ACT, CON SEQUENT TO THE SEARCH OPERATION CONDUCTED IN THE HANDS OF THE ASSESSEE U /S 132 OF THE ACT ON 10 - 09 - 2009. THE ASSESSEE HAD DECLARED A TOTAL INCOME OF RS.280.82 CRORES IN AY 2009 - 10 AFTER CLAIMING DEDUCTION U/S 80IB(10) AND SEC. 80IA(4) OF HOUSING DEVELOPMENT & INFRASTRUCTURE LTD. 2 THE ACT. THE AO COMPLETED THE ASSESSMENT AT RS.451.88 CRORES, INTER ALIA, REJECTING CLAI M FOR DEDUCTION U/S 80IA(4) OF THE ACT. 3. IN AY 2010 - 11, THE ASSESSEE DECLARED A TOTAL INCOME OF RS.195.35 CRORES AFTER CLAIMING DEDUCTION U/S 80IB(10) AND SEC. 80IA(4) OF THE ACT. THE AO COMPLETED THE ASSESSMENT AT RS.733.26 CRORES AND IN THIS YEAR ALSO, THE ASSESSEES CLAIM FOR DEDUCTION U/S 80IA(4) WAS REJECTED. 4. THE BACKGROUND RELATING TO CLAIM FOR DEDUCTION U/S 80IA(4) REQUIRES ELABORATION. THE AIRPORT AUTHORITY OF INDIA HAD ENTERED INTO AN AGREEMENT DATED 04 - 04 - 2006 WITH M/S MUMBAI INTERN ATIONAL AIRPORT LIMITED (MIAL) FOR MODERNISATION OF MUMBAI AIRPORT. THE CENTRAL GOVERNMENT AS WELL AS THE STATE GOVERNMENT EXTENDED THEIR SUPPORT TO MIAL. THE STATE GOVERNMENT AGREED TO PROVIDE SUPPORT TO MIAL AND AAI IN CLEARING THE LAND REQUIRED BY MIAL . THE STATE GOVERNMENT APPOINTED MMRDA AS NODAL AGENCY FOR CLEARING THE LAND REQUIRED FOR THE AIRPORT, SINCE IT WAS OCCUPIED BY SLUM DWELLERS. THE MIAL ENTERED INTO AN AGREEMENT WITH MMRDA TO FREE THOSE LANDS OCCUPIED BY SLUM DWELLERS. ACCORDINGLY THE MI AL ENTERED INTO A SLUM REHABILITATION AGREEMENT WITH THE ASSESSEE ON 15 - 10 - 2007, WHICH CONTAINED THE ENTIRE SCOPE OF WORK TO BE UNDERTAKEN FOR THE PURPOSES OF MODERNISATION AND UPGRADATION OF THE MUMBAI AIRPORT AND THE CONSIDERATION TO BE RECEIVED BY THE A SSESSEE. AS PER THE AGREEMENT, THE ASSESSEE SHALL CONSTRUCT FLATS IN SOME OTHER PLACE IN ORDER TO REHABILITATE THE SLUM DWELLERS AND IN LIEU OF THE SAME, THE ASSESSEE WILL GET 65 ACRES OF AIRPORT LAND TO DEVELOP NON - AERONAUTICAL SERVICES AS PART OF DEVELO PMENT OF AIRPORT AREA (REFERRED TO AS COMMERCIAL SPACE IN AIRPORT) (+) TDR GENERATED IN THIS PROCESS. 5. CONSEQUENT TO THE AGREEMENT, THE ASSESSEE PURCHASED 1900 ACRES OF LAND AND CONVEYED THE SAME TO THE SLUM REHABILITATION AUTHORITY AS PER SRA SCH EME. SINCE THE ASSESSEE PUT THE CLAIM THAT ITS ACTIVITIES ALSO FORM PART OF AIRPORT DEVELOPMENT, WHICH IS AN INFRASTRUCTURE FACILITY, AND HENCE IT IS ELIGIBLE TO CLAIM DEDUCTION U/S 80IA(4) IN RESPECT OF PROFITS RELATED TO TDR RECEIPTS LESS HOUSING DEVELOPMENT & INFRASTRUCTURE LTD. 3 COST RELATED T HERETO IN THE FORM OF PURCHASE OF LAND, CONSTRUCTION OF FLATS ETC. THE AO REJECTED THE CLAIM FOR DEDUCTION U/S 80IA(4) AND THE ASSESSEE CHALLENGED THE SAME BY FILING APPEAL BEFORE LD CIT(A). THE ASSESSING OFFICER ALSO MADE VARIOUS OTHER ADDITIONS. BEFORE LD CIT(A), THE ASSESSEE DID NOT GET FAVOURABLE ORDERS AND HENCE IT FILED APPEALS BEFORE THE TRIBUNAL FOR AY 2009 - 10 AND 2010 - 11. 6. THE IMPUGNED REVISION ORDERS FOR ASSESSMENT YEARS 2009 - 10 AND 2010 - 11 HAS BEEN PASSED AGAINST THE ORDERS PASSED BY THE AO IN ORDER TO GIVE EFFECT TO THE ORDERS PASSED BY THE TRIBUNAL. THE PROCEEDINGS THAT TOOK PLACE BEFORE THE TRIBUNAL REQUIRES LITTLE ELABORATION, IN ORDER TO UNDERSTAND THE BACKGROUND OF THE IMPUGNED REVISION ORDERS. 7. THE ASSESSEE PURCHASED 1900 A CRES OF LAND FOR REHABILITATING THE SLUM DWELLERS AND HANDED OVER THE SAME TO SLUM REHABILITATION AUTHORITY AS PER SRA SCHEME. THE ASSESS EE GOT TDR RIGHTS CONSEQUENT TO THE SAME. THE ASSESSEE SOLD ITS TDR RIGHTS IN ALL THE THREE YEARS UNDER CONSIDERATION . 8. IN ALL THE THREE ASSESSMENT YEARS UNDER CONSIDERATION, THE ASSESSEE DETERMINED THE COST RELATING TO TDR SALES ON ESTIMATED BASIS AND ALLOCATED THE SAME AGAINST THE PROCEEDS OF TDR SALES . ACCORDINGLY IT COMPUTED PROFIT FROM TDR SALES AND CLAIMED THE SAME AS DEDUCTION U/S 80IA(4) OF THE ACT , AS IT IS THE CLAIM OF THE ASSESSEE THAT IT IS INVOLVED IN DEVELOPMENT OF INFRASTRUCTURE FACILITY . IN THE YEAR RELEVANT TO AY 2009 - 10, THE ASSESSEE SOLD TDR RIGHTS FOR RS.265 CRORES AND CLAIMED A SUM OF RS.105. 65 CRORES AS COST RELATED TO TDR. ACCORDINGLY THE PROFIT WAS ESTIMATED AT RS.159.08 CRORES (RS.265 CRORES LESS RS.105.65 CRORES) AND THE ASSESSEE CLAIMED DEDUCTION OF ENTIRE PROFIT U/S 80IA(4) OF THE ACT. IN THE YEAR RELEVANT TO AY 2010 - 11, TDR SALE RECE IPTS WAS RS.1307.87 CRORES AND THE ASSESSEE ESTIMATED THE COST OF SALES AT RS.627.61 CRORES. THE ASSESSEE ALSO ALLOCATED PROPORTIONATE ADMINISTRATION COST TO THE TUNE OF RS.154.89 CRORES. ACCORDINGLY IT COMPUTED THE PROFIT FROM AIRPORT CONTRACT AT RS.525 .36 CRORES AND CLAIMED THE SAME AS DEDUCTION U/S 80IA(4) OF HOUSING DEVELOPMENT & INFRASTRUCTURE LTD. 4 THE ACT. AS NOTICED EARLIER, THE AO HAD REJECTED THE ABOVE SAID CLAIM , WHICH WAS ALSO UPHELD BY LD CIT(A) AND HENCE THE MATTER REACHED BEFORE THE TRIBUNAL. 9. WHEN THE APPEALS WERE PENDING BE FORE THE TRIBUNAL, CERTAIN ADVERSE DEVELOPMENTS TOOK PLACE, I.E., THE MIAL TERMINATED THE SLUM DEVELOPMENT AGREEMENT DATED 15.10.2007 ENTERED WITH THE ASSESSEE AND THE TERMINATION WAS CONVEYED TO IT , VIDE LETTER DATED 06.02.2013. SINCE THE VERY BASIS OF C LAIMING DEDUCTION U/S 80IA(4) WAS REMOVED DUE TO THE TERMINATION OF AGREEMENT, THE ASSESSEE WITHDREW ITS CLAIM FOR DEDUCTION U/S 80IA(4) BEFORE THE TRIBUNAL. HOWEVER, THE ASSESSEE PUT AN ALTERNATIVE PLEA BEFORE THE TRIBUNAL THAT THE PROFIT COMPUTED BY THE ASSESSEE FROM AIRPORT CONTRACT WAS NOT CORRECT DUE TO SUBSEQUENT DEVELOPMENTS AND ACCORDINGLY PLEADED THAT THE PROFIT HAS TO BE CO MPUTE D AFRESH BY CONSIDERING ACTUAL EXPENSES. BY THAT TIME, THE ACTUAL COST INCURRED BY THE ASSESSEE IN CONNECTION WITH THIS PROJECT (AIRPORT PROJECT) WAS AVAILABLE. SINCE THE ASSESSEE BROUGHT NEW EVIDENCES AND ALSO PUT FORTH NEW PLEA, THE TRIBUNAL RESTORED THE MATTER BACK TO THE FILE OF THE AO FOR CONSIDERATION OF THE CLAIM OF THE ASSESSEE , AFTER FINDING MERIT IN THE PLEA OF T HE ASSESSEE . THE RELEVANT OBSERVATIONS MADE BY THE TRIBUNAL ARE EXTRACTED BELOW: - 41. AT THIS STAGE, WE WOULD LIKE TO APPRECIATION LD COUNSEL FOR THE ASSESSEE, DR. K. SHIVRAM FOR BRINGING TO THE NOTICE OF THIS BENCH THE FACTS WHICH HAVE ARISEN AFTER TH E CONCLUSION OF THE FIRST APPELLATE PROCEEDINGS. BY THIS FACTUAL SUBMISSION BY LD COUNSEL, MISCARRIAGE OF JUSTICE WOULD BE PREVENTED. THE FACTS AS THEY ARE BEFORE US TODAY LEAVE US NO CHOICE BUT TO RESTORE THIS ISSUE BACK TO THE FILES OF THE AO FOR FRAMI NG THE ASSESSMENT DENOVO. SINCE THE VERY BASIS OF THE CLAIM OF DEDUCTION U/S 80IA(4) OF THE ACT DO NOT EXIST, THE CLAIM OF DEDUCTION U/S 80IA(4) CANNOT BE ENTERTAINED AND THEREFORE REJECTED SUBJECT TO THE OUTCOME OF THE ARBITRATION PROCEEDINGS AND THE PRO FIT ARISING OUT OF THE SALE OF TDR HAS TO BE RECOMPUTED IN LINE WITH THE REVISED COMPUTATION OF COST OF SALE OF TDR AS FILED BEFORE US BY THE LD COUNSEL. THE AO IS DIRECTED TO CONSIDER THE REVISED COMPUTATION OF COST OF SALE OF TDR AFTER GIVING A REASONA BLE AND FAIR OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE IS DIRECTED TO SUBSTANTIATE ITS CLAIM BY BRINGING ANY RELEVANT MATERIAL WHICH WAS NOT SUBMITTED IN THE EARLIER PROCEEDINGS. THE AO IS ALSO FREE TO COLLECT ANY RELEVANT INFORMATION AS HOUSING DEVELOPMENT & INFRASTRUCTURE LTD. 5 P ER THE PROVISIONS OF LAW AND AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. .. THE ORDER PASSED BY THE TRIBUNAL COVERED ASSESSMENT YEARS 2009 - 10 AND 2010 - 11. ACCORDINGLY THE AO PASSED THE CONSEQUENTIAL ORDERS IN BOTH THE YEARS AND COMPUTED TOTAL INCOME AFTER ALLOWING REVISED COST OF SALES, AS DIRECTED BY THE TRIBUNAL. IN THE YEAR RELEVANT TO AY 2009 - 10, THE ASSESSEES CLAIM FOR DEDUCTION OF ADDITIONAL EXPENSES WAS TO THE TUNE OF RS.184 CRORES AND THE SAME WAS ALLOWED BY THE AO. IN AY 2010 - 11, THE AO ALLOWED THE CLAIM FOR ADDITIONAL EXPENSES OF RS.797.15 CRORES IN THE FORM OF UNABSORBED COST OF SALES OF TDR. 10. IN ASSESSMENT YEAR 2012 - 13, THE ASSESSEE FILED ORIGINAL RETURN OF INCOME DECLARING A TOTAL INCOME OF RS.49.49 CRORES. SUBSEQ UENTLY, IT FILED A REVISED RETURN OF INCOME DECLARING TOTAL INCOME AT NIL. IN THE REVISED RETURN OF INCOME, IT CLAIMED UNABSORBED COST OF TDR OF RS.644.31 CRORES AS DEDUCTION. THE AO ALLOWED THE ADDITIONAL CLAIM MADE IN THE REVISED RETURN OF INCOME CONSI STENT WITH THE VIEW TAKEN BY HIM IN AY 2009 - 10 AND 2010 - 11 . 11. THE LD PR. CIT TOOK THE VIEW THAT THE ASSESSING OFFICER HAS ALLOWED THE ADDITIONAL CLAIM OF THE ASSESSEE IN ALL THE THREE YEARS WITHOUT MAKING NECESSARY ENQUIR IES /INVESTIGATION S , PRIMA FA CIE WARRANTED ON FACTS AND CIRCUMSTANCES OF THE CASE. ACCORDINGLY HE CONSIDERED THE ORDERS PASSED BY AO TO GIVE EFFECT TO THE ORDER S PASSED BY TRIBUNAL IN AY 2009 - 10 AND 2010 - 11 AND ALSO THE ASSESSMENT ORDER PASSED IN AY 2012 - 13, AS ERRONEOUS AND PREJUDIC IAL TO THE INTERESTS OF THE REVENUE. ACCORDINGLY HE INITIATED THE IMPUGNED REVISION PROCEEDINGS. 12. BEFORE LD PR.CIT, THE ASSESSEE PLACED RELIANCE ON THE DECISION RENDERED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF SUSHILA SHANTILAL JAVERI VS. UOI & ANR. (2006)(286 ITR 428) AND SUBMITTED THAT THE SUBSEQUENT EVENTS OCCURRING , WHICH HAD EFFECT OF COMPLETELY CHANGING THE COLOUR OF ORIGINAL FINDINGS , CAN BE CONSIDERED. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAD HOUSING DEVELOPMENT & INFRASTRUCTURE LTD. 6 FURNISHED ALL THE RELEVANT DETAILS BEFO RE THE AO IN THE IMPUGNED PROCEEDINGS AND THE ORDERS HAVE BEEN PASSED BY THE AO BY DULY CONSIDERING ALL OF THEM. IT WAS ALSO SUBMITTED THAT THE ASSESSEE HAS NOT MADE ANY NEW CLAIM AS PRESUMED BY THE LD PR. CIT. T HE EXPENSES ALREADY INCURRED AND WHICH WER E ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS AND ONLY THE BASIS OF ALLOCATION HAS BEEN CHANGED, I.E., IN THE ORIGINAL RETURN OF INCOME, THE ASSESSEE HAD CLAIMED EXPENSES ON ESTIMATED BASIS AND ALLOCATED THE SAME AGAINST TWO STREAMS OF INCOME , WHEREAS, IT HAS B EEN CLAIMED NOW ON ACTUAL BASIS AND ALLOCATED TO ONLY ONE STREAM OF INCOME . ACCORDINGLY IT WAS CONTENDED THAT THE IMPUGNED ORDERS PASSED BY THE AO CANNOT BE CONSIDERED TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. 13. THE LD PR. CIT TOOK THE VIEW THAT THE REVISED EXPENSES CLAIMED BY THE ASSESSEE ARE NOT AUDITED AND NOT CERTIFIED BY ANY INDEPENDENT AUDITOR. HE ALSO TOOK THE VIEW THAT T HE ASSESSEE HAS ALSO NOT FURNISHED PAYMENT DETAILS RELATING TO ADDITIONAL CLAIM MADE NOR WAS IT SHOWN THA T THESE EXPENSES ACCRUED DURING THE YEAR. THE LD PR. CIT TOOK THE VIEW THAT THE AO HAS ALSO FAILED TO EXAMINE THE SUPPORTING DOCUMENTS. HE ALSO TOOK THE VIEW THAT THE CONTRACT WAS CANCELLED ON 06 - 02 - 2013, WHICH FALLS IN THE PERIOD RELATING TO AY 2013 - 14 AND HENCE THE LOSS ARISING FROM CANCELLATION SHOULD HAVE BEEN CONSIDERED ONLY IN AY 2013 - 14. THE LD PR. CIT ALSO EXPRESSED THE VIEW THAT THE ASSESSEE HAD CHALLENGED THE CANCELLATION OF CONTRACT THROUGH ARBITRATION PROCEEDINGS AND HENCE, UNLESS IT IS FINAL ISED, THE EXPENSES OR LOSS ARISING ON CANCELLATION CANNOT BE CONSIDERED IN AY 2013 - 14 AND IT CAN BE CONSIDERED IN THE YEAR IN WHICH THE ARBITRATION PROCEEDINGS BECOME FINAL AS PER THE RATIO OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. SW ADESHI COTTON AND FLOUR MILLS P LTD (1964)(53 ITR 134). HE ALSO EXPRESSED THE VIEW THAT THE AO DID NOT EXAMINE THE APPLICABILITY OF SEC. 40(A)(IA) OF THE ACT TO THE ADDITIONAL CLAIM MADE BY THE ASSESSEE. 14. THE LD PR. CIT TOOK SUPPORT OF THE DECISIO N RENDERED BY HONBLE SUPREME COURT IN THE CASE OF M/S MALABAR INDUSTRIAL CO. LTD (243 ITR 83), HOUSING DEVELOPMENT & INFRASTRUCTURE LTD. 7 WHEREIN IT WAS OBSERVED THAT THE SCHEME OF THE ACT IS TO LEVY AND COLLECT TAX IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AND THIS TASK IS ENTRUSTED TO THE REV ENUE. IF DUE TO AN ERRONEOUS ORDER OF THE AO, THE REVENUE IS LOSING TAX LAWFULLY PAYABLE BY A PERSON, IT WILL BE CERTAINLY BE PREJUDICIAL TO THE INTEREST OF REVENUE. IF THE ORDER OF THE AO IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF RE VENUE, THE CIT CAN INVOKE THE PROVISIONS OF SEC. 263 OF THE ACT . THE LD PR. CIT TOOK THE VIEW THAT THE AO HAS NOWHERE IN THE PROCEEDINGS CALLED FOR THE SUPPORTING IN RESPECT OF VARIOUS WORKING FURNISHED BY THE ASSESSEE OR CONDUCTED INDEPENDENT VERIFICATION OF CLAIMS MADE BY THE ASSESSEE. ACCORDINGLY THE LD PR. CIT TOOK THE VIEW THAT THE AO DID NOT FOLLOW THE DIRECTIONS GIVEN BY THE ITAT ALSO. ACCORDINGLY HE HELD THAT THE IMPUGNED ORDERS PASSED BY AO ARE ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST O F REVENUE. ACCORDINGLY HE SET ASIDE THE IMPUGNED ORDERS PASSED IN ALL THE THREE YEARS UNDER CONSIDERATION AND DIRECTED THE AO TO MAKE FRESH ORDERS AFTER MAKING PROPER ENQUIRIES, VERIFICATION AND BRINGING THE RELEVANT MATERIAL ON THE RECORD REGARDING ALLOW ABILITY OF UNABSORBED COST OF THE TDR AS DIRECTED BY THE ITAT IN AY 2009 - 10 AND 2010 - 11. IN ASSESSMENT YEAR 2012 - 13, THE LD PR. CIT ALSO EXPRESSED THE VIEW THAT A LIABILITY DEPENDING UPON A CONTINGENCY IS NOT A DEBT IN PRESENT OR IN FUTURE TILL THE CONTIN GENCY HAPPENS AND A CONTINGENCY THAT MAY ARISE IN FUTURE IS NOT EXPENDITURE AS THE CANCELLATION OF CONTRACT WAS DISPUTED BY THE ASSESSEE AND PENDING BEFORE ARBITRATION PROCEEDINGS. 15. THE ASSESSEE IS AGGRIEVED BY THE REVISION ORDERS PASSED BY LD PR. CIT IN ALL THE THREE YEARS UNDER CONSIDERATION. 16. BEFORE US, THE LD A.R PLACED RELIANCE ON THE DECISION RENDERED BY THE CO - ORDINATE BENCH IN THE CASE OF SHRI NARAYAN TATU RANE (ITA NO.2690 & 2691/MUM/2016 DATED 06 - 05 - 2016) TO REITERATE CERTAIN LEGAL PROPOSITIONS. WE PREFER TO EXTRACT THE LEGAL PROPOSITIONS CONSIDERED IN THE ABOVE SAID ORDER, AS THE SAME WOULD ALSO GUIDE US IN THE PRESENT CASES: - 12. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD. BEFORE GOING INTO THE MERITS OF THE ISSUE , WE WOULD LIKE TO DISCUSS ABOUT THE LEGAL HOUSING DEVELOPMENT & INFRASTRUCTURE LTD. 8 POSITION WITH REGARD TO THE POWER OF LEARNED CIT TO INVOKE REVISION PROCEEDINGS UNDER SECTION 263 OF THE ACT. THE SCOPE OF REVISION PROCEEDINGS INITIATED UNDER SECTION 263 OF THE ACT WAS CONSIDERED BY HON'BLE BOM BAY HIGH COURT, IN THE CASE OF GRASIM INDUSTRIES LTD. V CIT (321 ITR 92) BY TAKING INTO ACCOUNT THE LAW LAID DOWN BY THE HON'BLE SUPREME COURT. THE RELEVANT OBSERVATIONS ARE EXTRACTED BELOW: SECTION 263 OF THE INCOME - TAX ACT, 1961 EMPOWERS THE COMMISSI ONER TO CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDINGS UNDER THE ACT AND, IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN, BY THE ASSESSING OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, TO PASS AN ORDER UPON HEARI NG THE ASSESSEE AND AFTER AN ENQUIRY AS IS NECESSARY, ENHANCING OR MODIFYING THE ASSESSMENT OR CANCELLING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. THE KEY WORDS THAT ARE USED BY SECTION 263 ARE THAT THE ORDER MUST BE CONSIDERED BY THE COMMISSIONER TO BE ERRO NEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTER ESTS OF THE REVENUE. THIS PRO VISION HAS BEEN INTERPRETED BY THE SUPREME COURT IN SEVERAL JUDGMENTS TO WHICH IT IS NOW NECESSARY TO TURN. IN MALABAR INDUSTRIAL CO. LTD. V. CIT [2000] 243 ITR 83, T HE SUPREME COURT HELD THAT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER AND IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. THE SUPREME COURT HELD THAT AN INCORRECT ASSUMPTION OF FACT OR AN INCORRECT APPLICATION OF LAW, WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. AN ORDER PASSED IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND, WOULD BE AN ORDER FALLING IN T HAT CATEGORY. THE EXPRESSION PREJUDICIAL TO THE INTERESTS OF THE REVENUE, THE SUPREME COURT HELD, IT IS OF WIDE IMPORT AND IS NOT CONFINED TO A LOSS OF TAX. WHAT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE IS EXPLAINED IN THE JUDGMENT OF THE SUPREME CO URT (HEADNOTE) : THE PHRASE PREJUDICIAL TO THE INTERESTS OF THE REVENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER, CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, FOR EXAMPLE, WHEN AN INCOME - TAX OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME - TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PR EJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE INCOME - TAX OFFICER IS UNSUSTAINABLE IN LAW. THE PRINCIPLE WHICH HAS BEEN LAID DOWN I N MALABAR INDUSTRIAL CO. LTD. [2000] 243 ITR 83 (SC) HAS BEEN FOLLOWED AND EXPLAINED IN A SUBSEQUENT JUDGMENT OF THE SUPREME COURT IN CIT V. MAX INDIA LTD. [2007] 295 ITR 282. ......... .......... HOUSING DEVELOPMENT & INFRASTRUCTURE LTD. 9 16 . WE HAVE NOTICED EARLIER THAT THE LD PR. CIT CA N REVISED THE ORDER ONLY IF IT IS SHOWN THAT THE ASSESSMENT ORDER IS ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE QUESTION AS TO WHEN AN ORDER CAN BE TERMED AS ERRONEOUS WAS EXPLAINED BY HONBLE BOMBAY HIGH COURT IN THE CASE O F GABRIEL INDIA LTD (SUPRA) AS UNDER: - FROM THE AFORESAID DEFINITIONS IT IS CLEAR THAT AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH LAW. IF AN INCOME TAX OFFICER ACTING IN ACCORDANCE WITH THE LAW MAKES A CERTAIN ASSESSMENT, THE SAME CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SIMPLY BECAUSE, ACCORDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN MORE ELABORATELY. THIS SECTION DOES NOT VISUALISE A CASE OF SUBSTITUTION OF THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE INCOME - TAX OFFICER, WHO PASSED THE ORDER, UNLESS THE DECISION IS HELD TO BE ERRONEOUS. CASES MAY BE VISUALISED WHERE THE INCOME TAX OFFICER WHILE MAKING AN ASSESSMENT EXAMINES THE ACCOUNTS, MAKES ENQUIRIES, APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME EITHER BY ACCEPTING THE ACCOUNTS OR BY MAKING SOME ESTIMATE HIMSELF. THE COMMISSIONER, ON PERUSAL OF RECORDS, MAY BE OF THE OPINION THAT THE ESTIMATE MADE BY THE OFFICER CONCERNED WAS ON THE LOWER SIDE AND LEFT TO TH E COMMISSIONER HE WOULD HAVE ESTIMATED THE INCOME AT A FIGURE HIGHER THAN THE ONE DETERMINED BY THE INCOME TAX OFFICER. THAT WOULD NOT VEST THE COMMISSIONER WITH POWER TO EXAMINE THE ACCOUNTS AND DETERMINE THE INCOME HIMSELF AT A HIGHER FIGURE. IT IS BEC AUSE THE INCOME TAX OFFICER HAS EXERCISED THE QUASI JUDICIAL POWER VESTED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT A CONCLUSION AND SUCH A CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE COMMISSIONER DOES NOT FEEL SATISFIED WITH THE CONC LUSION. THERE MUST BE SOME PRIMA FACIE MATERIAL ON RECORD TO SHOW THAT THE TAX WHICH WAS LAWFULLY EXIGIBLE HAS NOT BEEN IMPOSED OR THAT BY THE APPLICATION OF THE RELEVANT STATUTE ON AN INCORRECT OR INCOMPLETE INTERPRETATION A LESSER TAX THAN WHAT WAS JUS T HAS BEEN IMP O SED THE HONBLE HIGH COURT HAS CONSIDERED THE DEFINITIONS GIVEN TO THE WORDS ERRONEOUS, ERRONEOUS ASSESSMENT AND ERRONEOUS JUDGMENT IN BLACKS LAW DICTIONARY AND ACCORDINGLY HELD THAT AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH LAW. AN ORDER CAN BE TERMED AS ERRONEOUS ONLY IF IT IS NOT IN ACCORDANCE WITH THE LAW. HOUSING DEVELOPMENT & INFRASTRUCTURE LTD. 10 17 . THE HONBLE DELHI HIGH COURT HAS ALSO FOLLOWED THE ABOVE SAID VIEW IN THE CASE OF CIT VS. SUNBEAM AUTO LTD (2011)(332 ITR 167). THE HONBLE DELHI HIGH COURT HAS ALSO EXTRACTED FOLLOWING OBSERVATIONS MADE BY THE TRIBUNAL: - 38. STILL FURTHER, THE HONBLE SUPREME COURT IN MALABAR INDUSTRIAL CO. (2000) 243 ITR 83 HAS HELD THAT WHEN TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAS T AKEN ONE OF THE POSSIBLE VIEW, THEN THE ORDER CANNOT BE HELD TO BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. SINCE THE COMMISSIONER OF INCOME TAX COULD NOT COME TO A DEFINITE FINDING THAT THE EXPENDITURE IN QUESTION WAS A CAPITAL EXPENDITURE IN THE PROC EEDINGS UNDER SECTION 263, IN OUR OPINION, THE ORDER OF THE ASSESSING OFFICER COULD NOT BE HELD TO BE ERRONEOUS. 1 8. IN THE CASE OF NAGESH KNITWEARS P LTD (2012)(345 ITR 135), THE HONBLE DELHI HIGH COURT HAS ELUCIDATED AND EXPLAINED THE SCOPE OF THE PROVISIONS OF SEC. 263 OF THE ACT AND THE SAME HAS BEEN EXTRACTED BY THE DELHI HIGH COURT IN THE CASE OF CIT VS. GOETZE (INDIA) LTD (361 ITR 505) AS UNDER: - THUS, IN CASES OF WRONG OPINION OR FINDING ON MERITS, THE COMMISSIONER OF INCOME TAX HAS TO C OME TO THE CONCLUSION AND HIMSELF DECIDE THAT THE ORDER IS ERRONEOUS, BY CONDUCTING NECESSARY ENQUIRY, IF REQUIRED AND NECESSARY, BEFORE THE ORDER UNDER SECTION 263 IS PASSED. IN SUCH CASES, THE ORDER OF THE ASSESSING OFFICER WILL BE ERRONEOUS BECAUSE THE ORDER IS NOT SUSTAINABLE IN LAW AND THE SAID FINDING MUST BE RECORDED. THE COMMISSIONER OF INCOME TAX CANNOT REMAND THE MATTER TO THE ASSESSING OFFICER TO DECIDE WHETHER THE FINDINGS RECORDED ARE ERRONEOUS. IN CASES WHERE THERE IS INADEQUATE ENQUIRY BUT NOT LACK OF ENQUIRY, AGAIN THE COMMISSIONER OF INCOME TAX MUST GIVE AND RECORD A FINDING THAT THE ORDER/INQUIRY MADE IS ERRONEOUS. THIS CAN HAPPEN IF AN ENQUIRY AND VERIFICATION IS CONDUCTED BY THE COMMISSIONER OF INCOME TAX AND HE IS ABLE TO ESTABLISH A ND SHOW THE ERROR OR MISTAKE MADE BY THE ASSESSING OFFICER, MAKING THE ORDER UNS US TAINABLE IN LAW. IN SOME CASES POSSIBLY THOUGH RARELY, THE COMMISSIONER OF INCOME TAX CAN ALSO SHOW AND ESTABLISH THAT THE FACTS ON RECORD OR INFERENCES DRAWN FROM FACTS ON RECORD PER SE JUSTIFIED AND MANDATED FURTHER ENQUIRY OR INVESTIGATION BUT THE ASSESSING OFFICER HAD ERRONEOUSLY NOT UNDERTAKEN THE SAME. HOWEVER, THE SAID FINDING MUST BE CLEAR, UNAMBIGUOUS AND NOT DEBATABLE. THE MATTER CANNOT BE REMITTED HOUSING DEVELOPMENT & INFRASTRUCTURE LTD. 11 FOR A FRESH DEC ISION TO THE ASSESSING OFFICER TO CONDUCT FURTHER ENQUIRIES WITHOUT A FINDING THAT THE ORDER IS ERRONEOUS. FINDING THAT THE ORDER IS ERRONEOUS IS A CONDITION OR REQUIREMENT WHICH MUST BE SATISFIED FOR EXERCISE OF JURISDICTION UNDER SECTION 263 OF THE ACT. IN SUCH MATTERS, TO REMAND THE MATTER/ I SS U E TO THE ASSESSING OFFICER WOULD IMPLY AND MEAN THE COMMISSIONER OF INCOME TAX HAS NOT EXAMINED AND DECIDED WHETHER OR NOT THE ORDER IS ERRONEOUS BUT HAS DIRECTED THE ASSESSING OFFICER TO DECIDE THE ASPECT/QUESTI ON. SIMILAR VIEW HAS BEEN EXPRESSED BY HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. AMALGAMATIONS LTD (238 ITR 963). 17. THE LD A.R FURTHER SUBMITTED THAT THE CO - ORDINATE BENCH, A FTER CONSIDERING THE LEGAL PROPOSITIONS LA ID DOWN BY HONBLE HIGH COURTS, E XPLAIN ED LEGAL POSITION AS UNDER: - 19. THE LAW INTERPRETED BY THE HIGH COURT MAKE S IT CLEAR THAT THE LD PR. CIT, BEFORE HOLDING AN ORDER TO BE ERRONEOUS, SHOULD HAVE CONDUCTED NECESSARY ENQUIRIES OR VERIFICATION IN ORDER TO SHOW THAT THE FIN DING GIVEN BY THE ASSESSING OFFICER IS ERRONEOUS, THE LD PR. CIT SHOULD HAVE SHOWN THAT THE VIEW TAKEN BY THE AO IS UNSUSTAINABLE IN LAW. IN THE INSTANT CASE, THE LD PR. CIT HAS FAILED TO DO SO AND HAS SIMPLY EXPRESSED THE VIEW THAT THE ASSESSING OFFICER SHOULD HAVE CONDUCTED ENQUIRY IN A PARTICULAR MANNER AS DESIRED BY HIM. SUCH A COURSE OF ACTION OF THE LD PR. CIT IS NOT IN ACCORDANCE WITH THE MANDATE OF THE PROVISIONS OF SEC. 263 OF THE ACT. THE LD PR. CIT HAS TAKEN SUPPORT OF THE NEWLY INSERTED EXPL ANATION 2(A) TO SEC. 263 OF THE ACT. EVEN THOUGH THERE IS A DOUBT AS TO WHETHER THE SAID EXPLANATION, WHICH WAS INSERTED BY FINANCE ACT 2015 W.E.F. 1.4.2015, WOULD BE APPLICABLE TO THE YEAR UNDER CONSIDERATION, YET WE ARE OF THE VIEW THAT THE SAID EXPLANA TION CANNOT BE SAID TO HAVE OVER RIDDEN THE LAW INTERPRETED BY HONBLE DELHI HIGH COURT, REFERRED ABOVE. IF THAT BE THE CASE, THEN THE LD PR. CIT CAN FIND FAULT WITH EACH AND EVERY ASSESSMENT ORDER, WITHOUT CONDUCTING ANY ENQUIRY OR VERIFICATION IN ORDER TO ESTABLISH THAT THE ASSESSMENT ORDER IS NOT SUSTAINABLE IN LAW AND ORDER FOR REVISION. HE CAN ALSO FORCE THE AO TO CONDUCT THE ENQUIRIES IN THE MANNER PREFERRED BY LD PR. CIT, THUS PREJUDICING THE INDEPENDENT APPLICATION OF MIND OF THE AO. DEFINITELY, THAT COULD NOT BE THE INTENTION OF THE LEGISLATURE IN INSERTING EXPLANATION 2 TO SEC. 263 OF THE ACT, SINCE IT WOULD LEAD TO UNENDING LITIGATIONS AND THERE WOULD NOT BE ANY POINT OF FINALITY IN THE LEGAL PROCEEDINGS. THE HONBLE SUPREME COURT HAS HELD IN THE CASE OF PARASHURAM POTTERY WORKS CO. LTD VS. ITO (1977)(106 ITR 1) HOUSING DEVELOPMENT & INFRASTRUCTURE LTD. 12 THAT THERE MUST BE A POINT OF FINALITY IN ALL LEGAL PROCEEDINGS AND THE STALE ISSUES SHOULD NOT BE REACTIVITATED BEYOND A PARTICULAR STAGE AND THE LAPSE OF TIME MUST INDUCE REPOSE IN AN D SET AT REST JUDICIAL AND QUASI - JUDICIAL CONTROVERSIES AS IT MUST IN OTHER SPHERES OF HUMAN ACTIVITY. 20. FURTHER CLAUSE (A) OF EXPLANATION STATES THAT AN ORDER SHALL BE DEEMED TO BE ERRONEOUS, IF IT HAS BEEN PASSED WITHOUT MAKING ENQUIRIES OR VERIFI CATION, WHICH SHOULD HAVE BEEN MADE. IN OUR CONSIDERED VIEW, THIS PROVIS I ON SHALL APPLY, IF THE ORDER HAS BEEN PASSED WITHOUT MAKING ENQUIRIES OR VERIFICATION WHICH A REASONABLE AND PRUDENT OFFICER SHALL HAVE CARRIED OUT IN SUCH CASES, WHICH MEANS THAT TH E OPINION FORMED BY LD PR. CIT CANNOT BE TAKEN AS FINAL ONE, WITHOUT SCRUTINISING THE NATURE OF ENQUIRY OR VERIFICATION CARRIED OUT BY THE AO VIS - - VIS ITS REASONABLENESS IN THE FACTS AND CIRCUMSTANCES OF THE CASE. HENCE, IN OUR CONSIDERED VIEW, WHAT IS R ELEVANT FOR CLAUSE (A) OF EXPLANATION 2 TO SEC. 263 IS WHETHER THE AO HAS PASSED THE ORDER AFTER CARRYING OUR ENQUIRIES OR VERIFICATION, WHICH A REASONABLE AND PRUDENT OFFICER WOULD HAVE CARRIED OUT OR NOT. IT DOES NOT AUTHORISE OR GIVE UNFETTERED POWERS TO THE LD PR. CIT TO REVISE EACH AND EVERY ORDER, IF IN HIS OPINION, THE SAME HAS BEEN PASSED WITHOUT MAKING ENQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN MADE. IN OUR VIEW, IT IS THE RESPONSIBILITY OF THE LD PR. CIT TO SHOW THAT THE ENQUIRIES OR VERIF ICATION CONDUCTED BY THE AO WAS NOT IN ACCORDANCE WITH THE ENQU I RIES OR VERIFICATION THAT WOULD HAVE BEEN CARRIED OUT BY A PRUDENT OFFICER. HENCE, IN OUR VIEW, THE QUESTION AS TO WHETHER THE AMENDMENT BROUGHT IN BY WAY OF EXPLANATION 2(A) SHALL HAVE RETR OSPECTIVE OR PROSPECTIVE APPLICATION SHALL NOT BE RELEVANT. 18. THE LD A.R SUBMITTED THAT THE ASSESSEE WAS EXPECTED TO DERIVE TWO STREAMS OF INCOME, VIZ., (A) COMMERCIAL SPACE IN THE AIRPORT AND (B) TDR RIGHTS UPON REHABILITATION OF SLUM DWELLERS . HE SUBMITTED THAT THE TDR RIGHTS WERE GIVEN ON HANDING OVER OF THE LAND TO SRA AUTHORITY. ACCORDINGLY THE ASSESSEE ALLOCATED THE EXPENSES INCURRED BY IT BETWEEN BOTH THE STREAMS OF INCOME ON CERTAIN BASIS . I.E., BY GIVING MORE WEIGHT TO THE COMMERCIAL S PACE TO BE OBTAINED IN THE AIRPORT. AS STATED EARLIER, THE MIAL TERMINATED THE CONTRACT WITH THE ASSESSEE AND HENCE THERE WAS NO SCOPE OF OBTAINING COMMERCIAL SPACE IN THE AIRPORT AS ENVISAGED EARLIER. THE CONTRACT WAS TERMINATED ON 06 - 02 - 2013 AND AT THA T POINT OF TIME, THE APPEALS FILED BY THE ASSESSEE WERE PENDING BEFORE TRIBUNAL. HENCE THE ASSESSEE SOUGHT TO REALLOCATE THE EXPENSES HOUSING DEVELOPMENT & INFRASTRUCTURE LTD. 13 AGAINST THE TDR INCOME, WHICH WAS FOUND TO BE ACCEPTABLE TO THE TRIBUNAL. ACCORDINGLY THE TRIBUNAL HAS RESTORED THE MATT ER BACK TO THE FILE OF THE AO TO EXAMINE THE CLAIM OF THE ASSESSEE AFTER CONSIDERING THE VARIOUS MATERIALS. 19. THE LD A.R SUBMITTED THAT THE ASSESSEE HAS REALLOCATED THE COSTS ON THE BASIS OF ACTUAL FIGURES, WHICH HAVE ALREADY BEEN RECORDED IN THE BOOK S AND AUDITED, SINCE BY THAT TIME THE ACTUAL FIGURES WERE AVAILABLE WITH THE ASSESSEE. HE SUBMITTED THAT THE LD PR CIT WAS NOT JUSTIFIED IN OBSERVING THAT THE AO HAS NOT PROPERLY EXAMINED THE CLAIM OF THE ASSESSEE. HE SUBMITTED THAT THE ASSESSING OFFICER , DURING THE COURSE OF ASSESSMENT PROCEEDINGS, CALLED FOR RELEVANT DETAILS AND HAS DULY EXAMINED ALL OF THEM. THE LD A.R SUBMITTED THAT THE ASSESSEE HAS FURNISHED COPIES OF LETTER ISSUED BY MIAL TERMINATING THE CONTRACT. THE ASSESSEE HAS FURNISHED DETAIL ED REPLIES THROUGH LETTERS DATED 14 - 02 - 2014, 16 - 05 - 2014, 22 - 05 - 2014, AND 06 - 06 - 2014 FILED BEFORE THE ASSESSING OFFICER, WHEREIN IT HAS DULY EXPLAINED THE BASIS OF REVISED CLAIM. THE COPIES OF ABOVE SAID LETTERS HAVE BEEN PLACED IN THE PAPER BOOK. THE ASS ESSEE HAS FURNISHED REVISED COMPUTATION OF INCOME, THE ORIGINAL COMPUTATION FOR ALLOCATION OF COSTS, REVISED COMPUTATION FOR ALLOCATION OF EXPENSES ETC. , BEFORE THE AO. HE SUBMITTED THAT THE COST PERTAINING TO TDR HAS INCREASED, SINCE THE INCOME FROM AIRP ORT AUTHORITY WAS CONSIDERED AS NIL AFTER TERMINATION OF CONTRACT. HE SUBMITTED THAT THE ASSESSEE HAS SOUGHT REVISION OF BOOK PROFITS U/S 115JB OF THE ACT ALSO , BUT THE SAME WAS REJECTED BY THE AO. HE SUBMITTED THAT THIS ACTION OF THE AO WOULD SHOW THAT THE ASSESSING OFFICER HAS APPLIED HIS MIND OVER THE CLAIMS OF THE ASSESSEE AND ACCEPTED THE CLAIM FOR DEDUCTION OF EXPENSES AND REJECTED THE REVISION OF BOOK PROFIT. THE LD A.R FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS DISCUSSED ABOUT THE CLAIM OF THE ASSESSEE IN THE CONSEQUENTIAL ORDER S /ASSESSMENT ORDER S . HE SUBMITTED THAT THE QUESTION OF NON - GENUINE EXPENSES WOULD NOT ARISE IN THIS CASE, SINCE THE ISSUE WAS RELATED TO ALLOCATION OF EXPENSES ALREADY RECORDED IN THE BOOKS OF ACCOUNT. ACCORDINGLY H E SUBMITTED THAT THE ASSESSING OFFICER HAS TAKEN A POSSIBLE VIEW OF THE MATTER AFTER DUE APPLICATION OF MIND IN ALL THE THREE YEARS HOUSING DEVELOPMENT & INFRASTRUCTURE LTD. 14 UNDER CONSIDERATION AND HENCE THE REVISION ORDERS PASSED BY LD PR. CIT ARE NOT JUSTIFIED. 20. THE LD A.R SUBMITTED THAT THE ASSESSEE HAS GIVEN A DETAILED REPLY EXPLAINING THE ABOVE SAID FACTS BEFORE PR. CIT DURING THE COURSE OF REVISION PROCEEDINGS. HE SUBMITTED THAT THE LD PR. CIT DID NOT APPRECIATE THE REPLIES IN PROPER PERSPECTIVE. HE SUBMITTED THAT IN THE CASE OF NARA YAN TATU RANE (SUPRA), THE CO - ORDINATE BENCH HAS EXPRESSED THE VIEW THAT THE ENQUIRIES CONTEMPLATED IN EXPLAN A TION 2 TO SEC. 263 IS THE KIND OF VERIFICATION WHICH A PERSON PROPERLY INSTRUCTED WOULD HAVE DONE. HE SUBMITTED THAT THE KIND OF ENQUIRIES MADE B Y THE AO, IN THE INSTANT CASES, WOULD SHOW THAT HE HAS MADE PROPER ENQUIRIES WITH REGARD TO THE ADDITIONAL CLAIM OF THE ASSESSEE. 21. THE LD A.R SUBMITTED THAT THE LD PR. CIT HAS DISCUSSED ABOUT THE EXAMINATION OF PROVISIONS OF SEC. 40(A)(IA) OF THE ACT IN RESPECT OF ADDITIONAL CLAIM. HE SUBMITTED THAT FIRST OF ALL , THE SAME WOULD NOT ARISE, SINCE THERE IS ONLY A CHANGE IN THE AMOUNT OF EXPENDITURE ALLOCATED AND SECONDLY THE LD PR. CIT HAS DISCUSSED ABOUT THE SAME WITHOUT SEEKING EXPLANATIONS FROM TH E ASSESSEE. HE SUBMITTED THAT THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF AMITABH BACHCHAN (286 CTR 113) HAS BEEN DISTINGUISHED BY THE KOLKATTA BENCH OF TRIBUNAL IN THE CASE OF DAMODAR VALLEY CORPORATION (2016)(182 TTJ 765)(KOL). HE SUBM ITTED THAT THE HONBLE JURISDICTIONAL BOMBAY HIGH COURT HAS HELD IN THE CASE OF MOIL LTD VS. CIT (2017)(81 TAXMANN.COM 420) HAS HELD THAT THE NON - DISCUSSION OF ENQUIRIES MADE BY THE AO IN THE ASSESSMENT ORDER WOULD NOT GIVE POWER TO LD CIT TO INVOKE REVISI ONAL JURISDICTION. 22. THE LD A.R FURTHER SUBMITTED THAT THE LD PR. CIT HAS EXPRESSED THE VIEW IN AY 2012 - 13 THAT THE ASSESSING OFFICER HAS NOT EXAMINED THE EVIDENCES. HE SUBMITTED THAT THE ISSUE UNDER CONSIDERATION WAS NOT RELATING TO EVIDENCES, BUT IT RELATED TO ONLY ALLOCATION OF EXPENSES. HOUSING DEVELOPMENT & INFRASTRUCTURE LTD. 15 23. THE LD D.R, ON THE CONTRARY, SUBMITTED THAT THE ASSESSEE HAS MADE ADDITIONAL CLAIM FOR EXPENSES BEFORE THE TRIBUNAL FOR THE FIRST TIME . HE SUBMITTED THAT THE SAID ADDITIONAL CLAIM HAS RESULTED IN DETERM INING THE TOTAL INCOME LOWER THAN THAT RETURNED BY THE ASSESSEE. HE SUBMITTED THAT HE HAS OBTAINED A REMAND REPORT FROM THE ASSESSING OFFICER AND FURNISHED A COPY OF THE SAME TO THE BENCH, WHEREIN THE AO HAS CONCURRED WITH THE VIEW TAKEN BY LD PR. CIT . T HE LD D.R SUBMITTED THAT THE ASSESSING OFFICER , IN THE IMPUGNED PROCEEDINGS, HAS ALLOWED THE CLAIM OF THE ASSESSEE WITHOUT MAKING PROPER ENQUIRIES AND ACCORDINGLY SUBMITTED THAT THE LD PR. CIT WAS JUSTIFIED IN PASSING THE IMPUGNED REVISION ORDERS. 24. IN THE REJOINDER, THE LD A.R STRONGLY OBJECTED TO THE REMAND REPORT OBTAINED FROM THE ASSESSING OFFICER. HE SUBMITTED THAT THE ASSESSEE IS CHALLENGING THE REVISION ORDERS PASSED BY LD PR. CIT AND HENCE THE REPORT OF THE AO SHOULD NOT BE CONSIDERED AT ALL, SINCE THE SAME H AS INFLUENCED BY THE REVISION ORDERS. HE SUBMITTED THAT THE ASSESSEE HAS GIVEN PROPER REASONS FOR SEEKING REVISION OF EXPENDITURE CLAIM, I.E., CANCELLATION OF AIRPORT CONTRACT. HE SUBMITTED THAT THE TRIBUNAL WAS CONVINCED WITH THE CLAIM OF THE ASSESSEE AND ACCORDINGLY RESTORED THE MATTER TO THE FILE OF THE AO IN AY 2009 - 10 AND 2010 - 20 11. HE SUBMITTED THAT THE AO HAS FOLLOWED THE DIRECTIONS OF THE TRIBUNAL AND ALLOWED THE CLAIM AFTER CARRYING OUT DUE VERIFICATIONS IN BOTH THE YEARS . H E SUBMITTED THAT THE AO, FOLLOWING HIS ORDER PASSED IN AY 2009 - 10 AND 2010 - 11, HAS ALLOWED THE ADDITIONAL CLAIM IN AY 2012 - 13 ALSO. HE SUBMITTED THAT THE AO HE HAS TAKEN A POSSIBLE VIEW OF THE MATTER AND ACCORDINGLY CONTENDED THAT THE IMPUGNED REVISION OR DERS ARE BEYOND JURISDICTION. 25. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD. WE HAVE NARRATED THE FACTS RELATING TO THE CASE IN THE EARLIER PARAGRAPHS. THE SETTLED LEGAL POSITION HAS ALSO BEEN DISCUSSED IN THE PREVIOUS PARAGRAPHS B Y TAKING ASSISTANCE OF THE ORDER PASSED BY THE CO - ORDINATE BENCH IN THE CASE OF NARAYAN TATU RANE (SUPRA). FROM THE FACTS DISCUSSED AND THE ARGUMENTS ADVANCED BY THE ASSESSEE, WE NOTICE THAT THE CLAIM FOR DEDUCTION OF ADDITIONAL EXPENSES WAS HOUSING DEVELOPMENT & INFRASTRUCTURE LTD. 16 FIRST PUT BEF ORE THE TRIBUNAL BY THE ASSESSEE. WE NOTICE THAT THE ADDITIONAL CLAIM WAS MADE ON ACCOUNT OF THE CANCELLATION OF AIRPORT CONTRACT. THE WORKINGS FURNISHED BY THE ASSESSEE, WHICH IS PLACED AT PAGE NO.51 OF PAPER BOOK, WOULD SHOW THAT THE ASSESSEE HAD ESTIM ATED THE EXPENSES INITIALLY AND ALLOCATED THE SAME BETWEEN TDR RECEIPTS AND COMMERCIAL FSI OF AIRPORT. THE ASSESSEE HAS GIVEN WEIGHTAGE POINT OF 1 TO TDR AND 5 TO COMMERCIAL SPACE. ACCORDINGLY THE ASSESSEE HAS ARRIVED AT THE WEIGHTED AREA AND ALLOCATED T HE EXPENSES. THE ASSESSEE HAS ESTIMATED EXPENSES IN THE FORM OF (A) COST OF LAND (B) REHABILITATION COST (COST OF CONSTRUCTION OF FLATS FOR SLUM DWELLERS) (C) APPROVAL AND SRA CHARGES. 26. AFTER THE CANCELLATION OF THE AIRPORT CONTRACT, THE ASS ESSEE HAS SOUGHT TO RE VISE THE ALLOCATION OF EXPENSES AT THE APPELLATE STAGE, I.E., WHEN THE APPEAL WAS PENDING BEFORE THE TRIBUNAL. WE NOTICE THE TRIBUNAL HAS PASSED THE ORDER ON 25.09.2013 AND AT THAT POINT OF TIME, THE DETAILS OF ACTUAL EXPENSES WERE A LREADY AVAILABLE WITH THE ASSESSEE. WE NOTICE THAT THE TRIBUNAL HAS APPRECIATED THE PLEA OF THE ASSESSEE AND ALSO OBSERVED THAT BY THE FACTUAL SUBMISSIONS MADE BY LD COUNSEL, MISCARRIAGE OF JUSTICE WOULD BE PREVENTED. ACCORDINGLY THE TRIBUNAL FOUND MERIT IN THE PLEA OF THE ASSESSEE AND ACCORDINGLY RESTORED THE MATTER TO THE FILE OF THE AO FOR EXAMINING THE SAME. THE DETAILS OF ACTUAL EXPENSES AND THEIR ALLOCATION ARE GIVEN IN PAGE 55 OF THE PAPER BOOK. A PERUSAL OF THE SAME WOULD SHOW THAT EVEN THE CONST RUCTED AREA HAS ALSO UNDERGONE A CHANGE AND THE QUANTUM OF VARIOUS EXPENSES HAS ALSO UNDERGONE CHANGE . AS STATED BY LD A.R, THE NECESSITY OF REVISING THE EXPENSES RELATING TO TDR SALES AROSE MAINLY BECAUSE OF CANCELLATION OF AIRPORT CONTRACT. THE PLEA OF THE ASSESSEE WAS TO ALLOCATE ACTUAL EXPENSES, WHICH PLEA CAN BE CONSIDERED AS ONE OF THE POSSIBLE VIEWS ONLY. 27. FROM THE LETTERS FURNISHED BY THE ASSESSEE BEFORE THE AO, WE NOTICE THAT THE ASSESSING OFFICER HAS BEEN APPRAISED OF THE NECESSITY OF MAK ING ADDITIONAL CLAIM AND THE DETAILS OF ADDITIONAL CLAIM WERE ALSO FURNISHED TO HIM . WE NOTICE HOUSING DEVELOPMENT & INFRASTRUCTURE LTD. 17 THAT THE ASSESSEE HAS ALSO SOUGHT REVISION OF BOOK PROFIT, BUT THE SAME HAS BEEN REJECTED BY THE ASSESSING OFFICER. THIS FACT, AS CONTENDED BY LD A.R, WOULD SH OW THAT THE ASSESSING OFFICER HAS APPLIED HIS MIND OVER THE CLAIMS OF THE ASSESSEE AND HAS TAKEN HIS DECISION ACCORDINGLY. HENCE, WE ARE OF THE VIEW THAT IT CANNOT BE SAID THAT THE ASSESSING OFFICER HAS ACCEPTED THE CLAIM OF THE ASSESSEE WITHOUT MAKING NE CESSARY ENQUIRIES OR WITHOUT APPLICATION OF MIND. 28. THE LD PR. CIT HAS ALSO EXPRESSED THE VIEW THAT THE ARBITRATION PROCEEDINGS ARE PENDING AND HENCE THE ADJUSTMENTS COULD BE MADE ONLY AFTER FINALIZATION OF THE ARBITRATION PROCEEDINGS. THE ASSESSEE H AS PURCHASED THE LAND FOR REHABILITATING THE SLUM DWELLERS AND HANDED OVER THE SAME TO SRA. THE EXPENDITURE TO BE INCURRED BY THE ASSESSEE IS THE COST OF LAND AND CONSTRUCTION OF FLATS FOR SLUM DWELLERS. IN CONNECTION THEREWITH, THE SRA AUTHORITY HAS ALR EADY ALLOTTED TDR RIGHTS. THE SOURCE OF REVENUE IS THE PROCEEDS ON SALE OF TDR RIGHTS AND THE VALUE OF COMMERCIAL SPACE ALLOTTED TO THE ASSESSEE IN THE AIRPORT. THE LD A.R SUBMITTED THAT THE ASSESSEE HAS ALREADY OBTAINED AND SOLD TDR RIGHTS AND HENCE IT IS CONSTRAINED TO COMPLETE THE CONSTRUCTION OF FLATS, MEANING THEREBY, WHETHER THE ASSESSEE GETS THE COMMERCIAL SPACE IN THE AIRPORT OR NOT, IT HAS TO NECESSARILY INCUR THE EXPENSES IN CONSTRUCTION OF FLATS. ADMITTEDLY THOSE EXPENSES ARE RELATED TO TDR RI GHTS ONLY AND IT IS THE ASSESSEE WHICH HAS DECIDED TO ALLOCATE PART OF EXPENSES TOWARDS COMMERCIAL SPACE ALSO. CONSIDERING THE PECULIAR FACTS SURROUNDING THE CASE, THE CLAIM OF THE ASSESSEE TO ALLOCATE ENTIRE EXPENSES TOWARDS TDR RIGHTS AND ACCEPTANCE OF THE SAME, IN OUR VIEW, IS ONE OF THE POSSIBLE VIEWS. HENCE THE VIEW TAKEN BY LD PR. CIT THAT THE ASSESSEE SHOULD HAVE MADE THE CLAIM AFTER COMPLETION OF ARBITRATION PROCEEDINGS CANNOT BE TAKEN AS ONLY POSSIBLE VIEW. 2 9 . IT IS WELL SETTLED PROPOSITION OF LAW THAT THE TWIN CONDITIONS SPECIFIED IN SECTION 263, VIZ., THE ORDER IS ERRONEOUS AND IT SHOULD BE PREJUDICIAL TO THE INTERESTS OF REVENUE SHOULD BE SATISFIED CUMULATIVELY. THE HONBLE SUPREME COURT HAS HELD IN THE CASE OF MALABAR INDUSTRIAL COM PANY (SUPRA) THAT IF THE HOUSING DEVELOPMENT & INFRASTRUCTURE LTD. 18 ASSESSING OFFICER HAS TAKEN ONE OF THE POSSIBLE VIEWS WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE AO IS UNSUSTAINABLE I N LAW. IN THE INSTANT CASE, THE LD PR. CIT HAS NOT , FOR THE REASONS DISCUSSED IN THE PRECEDING PARAGRAPH, SHOWN THAT THE VIEW TAKEN BY THE ASSESSING OFFICER WAS NOT SUSTAINABLE IN LAW. ON THE CONTRARY, THE ASSESSEE HAS DEMONSTRATED THAT IT WAS CONSTRAINE D TO MAKE ADDITIONAL CLAIM IN VIEW OF THE CANCELLATION OF THE AIRPORT CONTRACT AND FURTHER THE SAID ADDITIONAL CLAIM WAS NOT IN THE FORM OF ANY ADDITIONAL EXPENSES AS PRESUMED BY LD PR. CIT, BUT IN THE FORM OF ALLOCATION OF ACTUAL EXPENSES. WE HAVE NOTICE D THAT THE ASSESSEE HAD EARLIER ALLOCATED THE ESTIMATED EXPENSES BETWEEN THE TWO STREAMS OF INCOME, VIZ., (A) TDR RECEIPTS AND (B) COMMERCIAL SPACE IN AIRPORT. AFTER CANCELLATION OF AIRPORT CONTRACT , IT HAD ALLOCATED ACTUAL EXPENSES AGAINST TDR RECEIPTS. IT IS QUITE COMMON IN THE CASE OF CONSTRUCTION CONTRACTS THAT THE INCOME AND EXPENSES ARE DISCLOSED ON ESTIMATED BASIS IN THE INITIAL YEARS. WHEN THE WHOLE SCENARIO CHANGED, THE TRIBUNAL FOUND MERIT IN THE PLEA OF THE ASSESSEE THAT THE ALLOCATION OF EXPEN SES ON THE BASIS OF THEN PREVAILING CONDITIONS SHOULD BE CHANGED. WE HAVE ALREADY EXPRESSED THE VIEW THAT T HE CLAIM OF THE ASSESSEE AS WELL AS ACCEPTANCE OF THE SAME BY THE AO CANNOT BE SAID TO BE U NSUSTAINABLE IN LAW, IF ONE CONSIDERS THE PRINCIPLE OF TA XING THE REAL INCOME. HENCE WE AGREE WITH THE CONTENTIONS OF THE ASSESSEE THAT THE VIEW TAKEN BY THE AO IS A POSSIBLE VIEW, IN WHICH CASE, THE IMPUGNED REVISION ORDERS CANNOT BE SUSTAINED. ACCORDINGLY WE SET ASIDE THE IMPUGNED REVISION ORDERS PASSED BY L D PR. CIT. 29. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 1 . 9 .201 7. SD / - SD/ - (RAVISH SOOD ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 1 / 9 / 20 1 7 HOUSING DEVELOPMENT & INFRASTRUCTURE LTD. 19 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR ) PS ITAT, MUMBAI S.NO DESCRIPTION DATE INTLS 1 PREPARED BY BRB /DICTATION PAD ENCLOSED 1.9 . 201 7 2 DRAFT DICTATED ON 1.9. 201 7 SR.P.S. 3 DRAFT PLACED BEFORE AUTHOR 1 . 9 .201 7 SR.P.S 4 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM /AM 5 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 6 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S. 7. KEPT FOR PRONOUNCEMENT ON . 9 . 201 7 SR. P.S. 8. FILE SENT TO THE BENCH CLERK . 9 . 2017 SR.P.S. 9 DATE ON WHICH FILE GOES TO THE HEAD C LERK 10 DATE OF DISPATCH OF ORDER