Jai Gurudev Infrastructure Pvt. Ltd, Bilaspur V. Pr. CIT, Bilaspur

ITA 65/RPR/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3398 (ITAT-RAIPUR)
• Duration Of Justice: 1 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Raipur
• Assessment Year: 2015-2016
• Appeal Filed On: 08-06-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset converted into stock in trade; Sale consideration of property below Jantri Value; Capital asset; Business income; Revision of order; Business expenditure; Rule of consistency; Transactions in derivatives; Cost of acquisition; Fair market value; Assessment record; Set aside; Capital Gains
• Section: 27; 263; 63; 45(2); 43CA; 143(3); 50C; 142(1); 143(2); 13; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI N. K. CHOUDHRY, JUDICIAL MEMBER ./ I.T.A. NO. 65/RPR/2020 ( / ASSESSMENT YEAR : 2015-16) JAI GURUDEV INFR ASTRUCTURE PVT LTD, C- 11, NETAJI COMPLEX, JARHABHATA, BILASPUR, CHHATTISGARH / VS. PRINCIPAL COMMISSIONER OF INCOME-TAX, BILASPUR ./ ./ PAN/GIR NO. : AACCJ 1895 R ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI SUNIL KUMAR AGRAWAL, CA / RESPONDENT BY : SHRI P.K. MISHRA, CIT-DR / DATE OF HEARING 29 .07.2021 / DATE OF PRONOUNCEMENT 14.10.2021 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE REVISIONAL ORDER OF THE PRINCI PAL COMMISSIONER OF INCOME TAX (PCIT IN SHORT), BILASPUR COMMUNICATED TO THE ASSESSEE ON 31.03.2020 PASSED UNDER SECTION 263 OF THE INCOM E TAX ACT, 1961 (THE ACT IN SHORT) WHEREBY THE ASSESSMENT ORDER P ASSED BY THE ASSESSING OFFICER (AO IN SHORT) DATED 25.04.2017 UNDER SECTION 143(3) OF THE ACT CONCERNING ASSESSMENT YEAR (AY IN SHORT) 2014- 15 WAS SOUGHT TO BE SET ASIDE FOR REFRAMING THE ASS ESSMENT IN TERMS OF SUPERVISORY JURISDICTION. 2. AS PER ITS GROUNDS OF APPEAL, THE ASSESSEE HAS C HALLENGED THE REVISIONAL ACTION OF THE PCIT WHEREBY THE ASSESSING OFFICER WAS DIRECTED TO PASS THE ASSESSMENT ORDER DE NOVO AFTER MAKING ENQUIRIES ON THE POINTS SET OUT IN THE NOTICE WHICH HAS ALREA DY EXAMINED AND ITA NO. 65/RPR/2020 JAI GURUDEV INFRASTRUCTURE PVT LTD VS. PCIT AY : 2015-16 - 2 - CONSIDERED DURING THE ORIGINAL ASSESSMENT PROCEEDIN GS CONCERNING AY 2014-15. THE ASSESSEE HAS CHALLENGED THE ASSUMPTIO N OF JURISDICTION BY THE PCIT UNDER SECTION 263 OF THE ACT ON THE GRO UND THAT THE ASSESSMENT ORDER UNDER REVISION IS NEITHER ERRONEOU S NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE. 3. BRIEFLY STATED, THE ASSESSEE COMPANY, IN THE ASS ESSMENT YEAR 2015-16 IN QUESTION, FILED THE RETURN SHOWING INCOM E AT RS.2,74,670/-. THE RETURN SO FILED WAS SELECTED FOR LIMITED SCRUT INY ASSESSMENT UNDER CASS AND CONSEQUENTLY NOTICES UNDER SECTION 1 43(2) AND 142(1) WERE ISSUED. IN THE COURSE OF THE ASSESSMEN T, THE ASSESSING OFFICER FOUND THAT THE ACTUAL SALE CONSIDERATION OF LAND PARCELS SHOWN AS BUSINESS ASSETS/STOCK-IN-TRADE IN THE BOOKS OF A CCOUNTS IS LESSER THAN THE CORRESPONDING VALUE ASSESSABLE FOR THE PUR POSES AS STAMP DUTY. CONSEQUENTLY, THE ASSESSING OFFICER INVOKED PROVISIONS OF SECTION 43CA OF THE ACT AND MADE AN ADDITION OF RS. 19,40,000/- FOR THE PURPOSES OF COMPUTING PROFIT AND GAINS FROM TRA NSFER OF LAND PARCELS IN QUESTION. THE INCOME WAS ACCORDINGLY AS SESSED AT RS.22,14,670/-. 4. SUBSEQUENT TO THE ASSESSMENT ORDER SO PASSED, TH E PCIT, IN EXERCISE OF REVISIONAL POWERS CONFERRED UNDER SECTI ON 263 OF THE ACT, CALLED FOR THE ASSESSMENT RECORDS AND OBSERVED THAT SUCH ORDER IS ERRONEOUS INSOFAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. CONSEQUENTLY, A SHOW-CAUSE NOTICE DATED 26.02.2020 WAS ISSUED TO SHOW-CAUSE AS TO WHY THE ASSESSMENT ORDER IN QUESTI ON SHOULD NOT BE MODIFIED/SET ASIDE ON THE GROUND THAT SUCH ORDER IS ERRONEOUS INSOFAR AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. IT WAS ESSENTIALLY ALLEGED IN THE SHOW-CAUSE NOTICE THAT THE LAND PARC ELS SOLD ON 30.10.2014 AND 05.11.2014 OUGHT TO HAVE BEEN TREATE D AS CAPITAL ITA NO. 65/RPR/2020 JAI GURUDEV INFRASTRUCTURE PVT LTD VS. PCIT AY : 2015-16 - 3 - ASSETS HELD FOR INVESTMENT INSTEAD OF BUSINESS ASSE TS HELD AS STOCK-IN- TRADE. CONSEQUENTLY, REVISIONAL ORDER WAS PASSED WH EREBY THE ASSESSMENT ORDER WAS SET ASIDE WITH THE DIRECTION T O COMPUTE CAPITAL GAINS ON SALE OF SUCH LAND PARCELS. 5. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL. 6. THE LEARNED COUNSEL FOR THE ASSESSEE MADE DETAIL ED FACTUAL AND LEGAL SUBMISSIONS TO DEFEND THE STAND OF THE ASSESS EE AND THAT OF THE ASSESSING OFFICER. THE SUBMISSIONS FILED BEFORE THE TRIBUNAL ARE REPRODUCED HEREUNDER:- 1.1. THE ASSESSEE-CO HAS SHOWN INCOME OF RS.2, 74,670/- E-FILED ON 28-9-15 WITH AUDITED TURNOVER OF RS.4,26,97,035 U/S44AB SHO WING GP OF RS.6,34,073 AND NP OF RS.2,74,674; THEREAFTER, CASE HAS BEEN SE LECTED FOR LIMITED SCRUTINY' ASSESSMENT UNDER CASS AND NOTICE U/S 143(2) HAS BEE N ISSUED ON 17-3-16; THEREAFTER, NOTICE U/S 142(1) ALSO ISSUED; BOOKS OF ACCOUNT WERE PRODUCED HAVE BEEN EXAMINED BY TEST CHECK; REPLY TO THE QUERY RAI SED BY THE ID AO HAS BEEN GIVEN/ SUBMITTED BEFORE THE ID AO EXPLAINING THE IS SUES RAISED IN; 1.2. THE CASE OF THE ASSESSEE-CO HAS BEEN SELEC TED FOR 'LIMITED SCRUTINY' ASSESSMENT AND ORDER U/S 143(3) HAS BEEN PASSED BY THE ITO, 1(1), BILASPUR (I.E., THE LD AO) ON 25-4-17 AND MADE ADDITION OF R S. 19,40,000 U/S43CA ON THE COUNT OF DIFFERENCE FOUND IN SALE CONSIDERATION OF TWO LANDS, I.E., BUSINESS ASSETS AS 'STOCK IN TRADE SHOWN IN THE AUDITED BOO KS OF ACCOUNT OF THE ASSESSEE- CO AND DULY TREATED/ ACCEPTED BY THE ID AO ALSO; AN D THE ASSESSEE-CO HAS ACCEPTED THE ASSESSMENT ORDER PASSED U/S!43(3) AT R S.22,14,670 AS ASSESSED INCOME AND NOT MADE ANY APPEAL AGAINST SUCH ORDER; 1.3. THEREAFTER, THE LD PCIT HAS ISSUED SCN ON 26 -2-20 (PB-..........) AND RAISED VARIOUS ISSUES TO REPLY THE ASSESSEE-CO; IN RESPONS E TO THE SAME, THE ASSESSEE- CO HAS SUBMITTED REPLY AND EXPLANATION (PB-........ ..) ON THE VARIOUS ISSUES AS ASKED BY THE ID PCIT ALONG WITH THE SALE DEED OF TH E ALLEGED LAND; HOWEVER, EXCEPT THE ISSUE OF LAND SOLD ON WHICH ADDITION OF RS.19,40,000 HAS BEEN MADE BY THE LD AO AS PER THE ASSESSMENT ORDER U/S 143(3) DT.25-4-17, ALL OTHER ISSUES HAS BEEN ACCEPTED/ DROPPED BY THE LD PCIT AS THEY W ERE BEYOND THE SCOPE OF LIMITED SCRUTINY ASSESSMENT; 1.4. AND THEREAFTER, THE LD PCIT, BILASPUR HAS PASSED ORDER U/S263 ON 31-3- 20 AND DIRECTED TO THE AO TO TREAT THE ALLEGED LAND SOLD ON 30-10-14 & 5-11-14 AS CAPITAL ASSET HELD FOR INVESTMENT INSTEAD OF ' BUSINESS ASSETS AS STOCK IN TRADE' SHOWN IN ME AUDITED BOOKS OF ACCOUNT OF THE ASSESSEE-CO AND TO COMPUTE ITA NO. 65/RPR/2020 JAI GURUDEV INFRASTRUCTURE PVT LTD VS. PCIT AY : 2015-16 - 4 - 'CAPITAL GAIN ON SUCH SALE OF THE ALLEGED LAND; SO , AGAINST THE ALLEGED ORDER U/S263 DT.31-3-20, THE ASSESSEE-CO IS IN APPEAL BEF ORE YOUR HONORS; 1.5. IT IS SUBMITTED THAT EVEN IF THE CONTENTIO N OF THE LD PCIT IS CORRECT THAT THE LAND SOLD BY THE ASSESSEE-CO WHICH IS TREATED B Y THE ASSESSEE-CO AS 'BUSINESS ASSET/ STOCK IN TRADE IN ITS REGULAR AUDITED BOOKS OF ACCOUNT, HAS TO BE TREATED AS 'CAPITAL ASSET HELD FOR INVESTMENT' A ND IN SUCH A SITUATION, 'CAPITAL GAIN WOULD ARISE, THEN, RESULTANT/ REVISED COMPUT ATION OF 'BUSINESS INCOME AND 'CAPITAL GAIN WOULD BE AS UNDER: 1.6. WORKING OF 'BUSINESS INCOME (I.E., EXCLUD ING THE ALLEGED LAND SOLD): REVISED TRADING AND P&L ACCOUNT FOR THE YEAR ENDED ON 31-3-15 (AS PER THE CONTENTION OF THE LD PCIT AS PER ORDER U/S263 DT.31-3-20) PARTICULARS AMOUNT PARTICULARS AMOUNT SHARE PURCHASE 1,42,85,212 F&O SALES 58,81,595 CONTRACT EXPENSES 2,41,44,335 CONTRACT RECEIPT 1,63,27,091 TRANSPORTING RECE IPT 84,88,350 GROSS LOSS C/F 77,32,511 TOTAL 3,84,29,547 TOTAL 3,84,29,547 GROSS LOSS B/F 77,32,511 INDIRECT EXPENSES: INDIRECT INCOMES: SALARY EXPENSES 2,98,000 INTEREST ON LOANS & ADVANCES 5,17,317 ACCOUNTANT SALARY 24,000 INTEREST FR OM FDR 6,217 AUDIT & LEGAL FEES 15,000 INTEREST ON IT REFUND 16,048 BANK CHARGES 48,779 PROFIT ON SALE OF FIXED ASSET 6,489 BANK INTEREST 2,60,372 PROVISION FOR DEFERRED TAX 10,656 LOCAL CONVEYANCE EXP 58,420 MISC. EXP 24,180 OFFICE EXP 32,892 PRINTING & STATIONERY EXPS 18,714 PROVISION FOR IT 84,873 STOCK INSURANCE 984 SUNDRY BALANCES W/OFF 2,379 TELEPHONE EXP 59,610 TRAVELLING EXP 62,140 NET LOSS 81,66,127 TOTAL 87,22,854 TOTAL 87,22,854 ITA NO. 65/RPR/2020 JAI GURUDEV INFRASTRUCTURE PVT LTD VS. PCIT AY : 2015-16 - 5 - 1.7. WORKING OF 'CAPITAL GAIN FOR THE ALLEGE D LAND SOLD (AS PER THE CONTENTION OF THE ID PCIT AS PER ORDER U/S263 DT.31-3-20) FULL VALUE OF CONSIDERATION OF LAND SOLD ON 30-10-1 4 & 5-11- 14 (RS.40,12,000 PLUS RS.79,88,000) 1,20,00,000 LESS: TRANSFER EXPENSES (RS.2,40,901 PAID ON 30-10- 14 PLUS RS.4,94,979 PAID ON 5-1 1- 14 AS STAMP DUTY ON SALE OF THE ALLEGED LAND BEING BORNE BY THE SELLER) 7,35,880 NET CONSIDERATION 1,12,64,120 LESS: COST OF ACQUISITION (RS.25,94,091 PLUS RS.2,5 6,000 AS STAMP DUTY PAID ON ALLEGED LAND AT THE TIME OF PURC HASE ON 16-8- 10 & 23-8-10) 28, 50,091 INDEXED COST OF ACQUISITION: RS.28,50,091 X 1,024/7 11 (FY14-15/FY10-11) 41,04,772 LTCG ON SALE OF LAND 71,59,348 1.8. RESULTANT/ REVISED COMPUTATION OF TOTAL IN COME FOR THE AY15-16 WOULD BE AS UNDER: (AS PER THE CONTENTION OF THE ID PCIT AS PER ORDER U/S263 DT.31 -3-20) INCOME FROM BUSINESS NET LOSS AS PER THE REVISED TRADING AND P&L ACCOUNT (-) 81,66,128 CAPITAL GAIN LONG TERM CAPITAL GAIN ON SALE OF LAND 71,59,348 GROSS TOTAL INCOME AS PER SEC71(2), IN THE SAME AY, LOSS UNDER THE HEAD ' IFB' WOULD BE SET OFF AGAINST INCOME SHOWN UNDER THE HEA D 'CAPITAL GAINS' (-) 10,06,780 TOTAL INCOME (-) 10,06,780 ASSESSED INCOME U/S 143(3) DT.25-4-17 B Y THE ID AO: (TOTAL INCOME SHOWN AS PER ROI AT RS.2,74,670 PLUS RS.19,4 0,000 AS ADDITION MADE BY THE ID AO U/S43CA ON ACCOUNT OF THE ALLEGED LAND SOLD WHICH IS TREATED BY THE ID AO AND THE ASSESSEE-CO, AS BUSINESS ASSETS, LE., STOCK-IN- TRADE OF THE REGULAR BUSINESS OF REAL ESTATE DEVELOPERS/ TRADING AS DULY DISCLOSED IN THE AUDITED BOOKS OF ACCOUNT OF THE AS SESSEE- CO.) 22,14,670 THE INCOME ASSESSED BY THE ID AO U/S 143(3) DT.25-4 - 17 OF RS.22,14,670 WOULD BE REDUCED BY RS.32,21,450 AND T HE RESULTANT INCOME OF THE ASSESSEE-CO WOULD BE RS.(- ) 10,06,780. RS.32,21,450 WOULD BE REDUCED FROM THE INCOME ASSESSED BY THE ID AO DT.25-4-17 ITA NO. 65/RPR/2020 JAI GURUDEV INFRASTRUCTURE PVT LTD VS. PCIT AY : 2015-16 - 6 - 1.9. AS PER THE DIRECTION OF THE ID PCIT U/S263 DT.31-3-20, THE ALLEGED LAND SOLD SHOULD BE TREATED AS CAPITAL ASSET HELD FOR IN VESTMENT AND PROFIT ON SUCH SALE OF THE ALLEGED LAND SHOULD BE SHOWN UNDER THE HEAD 'CAPITAL GAINS'; THE LONG TERM CAPITAL GAIN WOULD BE RS.71,59,348 (I.E., AFTER CLAIMING INDEXATION OF SUCH LONG TERM CAPITAL ASSET) AND RESULTANTLY, AFTE R EXCLUDING THE ALLEGED LAND SOLD FROM THE BUSINESS ACCOUNTS, THE BUSINESS PROFI T AS PER THE REVISED TRADING & P&L ACCOUNT WOULD BE NET BUSINESS LOSS OF RS.81 ,66,128; AND AS PER THE SEC71(2), THE ALLEGED BUSINESS LOSS WOULD BE VERY W ELL AVAILABLE TO SET OFF AGAINST THE INCOME SHOWN UNDER THE HEAD 'CAPITAL GA IN' OF RS.71,59,348, AND THUS, GTI/ 'TOTAL INCOME' WOULD BE RS. (-) 10,06,78 0; AND COMPARING THIS RESULT, THE ASSESSMENT ORDER PASSED U/S 143(3) DT.25-4-17 W HEREIN ASSESSED INCOME HAS BEEN ASSESSED AT RS.22,14,670 (WHICH IS NOT SUB JECTED TO ANY APPEAL), CANNOT BE, IN ANY MANNER, TERMED AS PREJUDICIAL TO THE INTEREST OF REVENUE; AND THUS, IT CANNOT BE REVISED U/S263. 1.10. FROM PERUSAL OF THE ABOVE WORKING AS PER TH E DIRECTION OF THE ID PCIT U/S263 DT.31-3-20, IT IS VERY CLEAR THAT THE RESULT ANT INCOME OF THE ASSESSEE-CO WOULD BE COME DOWN BY RS.32,21,450 AND THE ASSESSED INCOME OF RS.22,14,670 U/S143(3) DT.25-4-17 WOULD BE CONVERTED INTO INCOME OF RS.(-)10,06,780; MORE SO, AGAINST THE ALLEGED INCOME ASSESSED OF RS.22,14 ,670 U/S143(3) DT.25-4-17, THE ASSESSEE-CO HAS NOT FILED ANY APPEAL BEFORE THE APPELLATE FORUM AND DULY ACCEPTED/ NOT DISPUTED SUCH ASSESSED INCOME OF RS.2 2,14,670 AND PAID TAX THEREON; HENCE, IT IS VERY CLEARLY PROVED THAT THE ASSESSMENT ORDER PASSED U/S143(3) DT.25-4-17 IS NOT PREJUDICIAL TO THE INTE REST OF REVENUE, WHICH IS A SINE QUA & PRECONDITION, PRE-REQUISITE FOR MAKING ORDER U/S263, AND IN ABSENCE OF THIS, THE IMPUGNED ORDER PASSED U/S263 DT.31-3-20 I S INVALID, VOID-AB-INITIO AND THUS, LIABLE TO BE QUASHED. MALABAR INDUSTRIAL CO L TD (2000) (SC) HAD CATEGORICALLY HELD THAT FOR THE ID PCIT TO INVOKE R EVISION JURISDICTION U/S 263, THE TWIN CONDITIONS SHOULD BE CUMULATIVELY SATISFIE D I.E., THE ORDER PASSED BY THE LD AO SHOULD BE ERRONEOUS AND IT SHOULD BE PREJUDIC IAL TO THE INTEREST OF THE REVENUE. IN THE INSTANT CASE, SINCE THE ENTIRE ISSU E IS REVENUE AND TAX NEUTRAL, THE TWIN CONDITIONS STIPULATED IN SEC263 ARE NOT SA TISFIED AND HENCE, THE SEC263 ORDER PASSED BY THE ID PCIT IS ELIGIBLE TO BE QUASH ED. WHETHER THE PROFIT ON THE ALLEGED LAND SOLD COULD BE ASSESSED UNDER THE HEAD 'IFB' OR UNDER THE HEAD 'CAPITAL GAIN', PER SE, IS CLEARLY A DEBATABLE ISSU E. HENCE, THE LAW IS NOW WELL SETTLED THAT A DEBATABLE ISSUE CANNOT BE SUBJECT MA TTER OF REVISION PROCEEDINGS U/S263. ONCE AN ISSUE BECOMES DEBATABLE, THE VIEW T AKEN BY THE ID AO IN HIS SCRUTINY ASSESSMENT ORDER COULD BE CONSTRUED AS ONE OF THE POSSIBLE VIEWS AND HENCE, THE ORDER PASSED BY HIM CANNOT BE TERMED AS ERRONEOUS. IN SUCH A SCENARIO, THE VIEW CANVASSED BY THE ID PCIT WOULD O NLY RESULT IN SUBSTITUTION OF HIS VIEW IN THE PLACE OF ONE OF THE POSSIBLE VIEWS ALREADY TAKEN BY THE ID AO. THE LAW IS VERY WELL SETTLED ON THIS POINT THAT IN THESE CIRCUMSTANCES, THE REVISION JURISDICTION U/S263 CANNOT BE INVOKED BY T HE LD PCIT. RELIANCE IN THIS REGARD IS PLACED ON GABRIEL INDIA LTD (1993) (BOM). ITA NO. 65/RPR/2020 JAI GURUDEV INFRASTRUCTURE PVT LTD VS. PCIT AY : 2015-16 - 7 - 1.11. IT IS SUBMITTED THAT IN POOJA MARKETING (20 21) (MUM-TRIB) DT.24-5-21, HELD AS UNDER: '6.2. IN THE PRESENT CASE BEFORE US, THE ASSESSEE H AD OFFERED ITS ENTIRE INCOME INCLUDING INCOME BY WAY OF WINNINGS FROM LOTTERIES ON UNSOLD LOTTERYTICKETS, AS INCOME CHARGEABLE UNDER THE HEAD IFB'. HOWEVER, TH E ID PCIT HAD SOUGHT TO TREAT THE INCOME BY WAY OF WINNINGS FROM LOTTERIES AS SEPARATELY ASSESSABLE UNDER THE HEAD 'IFO. WE FIND THAT THE NP FOR THE Y EAR IS RS.94,38,441 WAS ARRIVED AT BY THE ASSESSEE AFTER CONSIDERING THE PR IZES FROM UNSOLD LOTTERY TICKETS AMOUNTING TO RS.41,86,55,718. IF THESE WINN INGS ARE TO BE ASSESSED AS 'IFOS' U/S56(2)(IB), THEN THE NET RESULT OF THE BUS INESS OF DISTRIBUTING LOTTERY TICKETS WOULD BE A NET LOSS OF RS.40,86,75,277 AS W ORKED OUT ELSEWHERE IN THIS ORDER. 7. WE FIND LOT OF FORCE IN THE ARGUMENT ADVANCED BY THE ID AR ON THE POINT THAT THERE IS NO BAR ON SET-OFF OF LOSS PROVIDED IN SEC 115BB AS STATED SUPRA. SEC 15BB TALKS ONLY ABOUT TAXABILITY OF SUCH WINNINGS A T A SPECIAL RATE OF 30%. HENCE, ONLY THE NET WINNINGS IS TAXABLE AT 30%. THE NET WINNINGS IS TO BE DETERMINED AFTER SETTING OFF THE BUSINESS LOSS OF R S.40.86 CRORES AS WORKED OUT ABOVE WITH THE 'IFOS'. WE FIND THAT THE ID AR HAD N OT DISPUTED THE RATE OF TAXABILITY OF WINNING FROM LOTTERIES IN TERMS OF SE C 15BB. WE FIND THAT EVEN IF THE PRIZE WINNINGS FROM UNSOLD LOTTERY TICKETS IS S OUGHT TO BE TAXED UNDER THE HEAD 'IFOS' AS POINTED OUT BY THE ID PCIT IN HIS S. 263 ORDER, THE BUSINESS LOSS OF RS.40.86 CRORES IS STILL REQUIRED TO BE SET OFF WITH THE PRIZE WINNINGS FROM UNSOLD LOTTERY TICKETS U/S71 AND THE NET INCOME THE REON WOULD BE LIABLE FOR TAX AT SPECIAL RATE OF 30% IN TERMS OF SEC 15BB. AS LON G AS THE TAX RATE UNDER NORMAL PROVISIONS AND TAX RATE PRESCRIBED U/S 115BB ARE SAME, THE ENTIRE ISSUE BECOMES REVENUE AND TAX NEUTRAL. HENCE, THERE COULD BE NO PREJUDICE THAT COULD BE CAUSED TO THE INTEREST OF THE REVENUE FOR THE AY 14-15 EVEN IF THE ORDER OF THE ID AO IS FOUND TO BE ERRONEOUS. WE FIND THAT MA LABAR INDUSTRIAL CO LTD (2000) (SC) HAD CATEGORICALLY HELD THAT FOR THE ID PCIT TO INVOKE REVISION JURISDICTION U/S 263, THE TWIN CONDITIONS SHOULD BE CUMULATIVELY SATISFIED I.E., THE ORDER PASSED BY THE ID AO SHOULD BE ERRONEOUS A ND IT SHOULD BE PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN THE INSTANT CASE , SINCE THE ENTIRE ISSUE IS REVENUE AND TAX NEUTRAL, THE TWIN CONDITIONS STIPUL ATED IN SEC263 ARE NOT SATISFIED AND HENCE, THE SEC263 ORDER PASSED BY THE ID PCIT IS ELIGIBLE TO BE QUASHED THEREON.' 7.1. WE ALSO FIND THAT THE ISSUE COULD BE LOOKED IN TO FROM ANOTHER ANGLE. WHETHER THE PRIZE WINNINGS FROM UNSOLD LOTTERY TICK ETS DERIVED BY THE ASSESSEE DEALER COULD BE ASSESSED UNDER THE HEAD 'IFB OR UN DER THE HEAD 'IFOS', PER SE, IS CLEARLY A DEBATABLE ISSUE. HENCE, THE LAW IS NOW WELL SETTLED THAT A DEBATABLE ISSUE CANNOT BE SUBJECT MATTER OF REVISION PROCEEDI NGS U/S263. THE EXISTENCE OF THE ISSUE BECOMING DEBATABLE IS STARING ON US FROM THE FACT THAT MYSORE SALES INTERNATIONAL LTD (1979) (KAR) HAD DECIDED THE ISSU E IN FAVOUR OF THE ASSESSEE IN PRE 1972 ERA, WHEREAS MANJOO & CO (KER HC) AND J N SHARMA (ALL HC) HAD DECIDED THE ISSUE IN FAVOUR OF THE REVENUE. THESE D ECISIONS ARE CONSIDERED BY ITA NO. 65/RPR/2020 JAI GURUDEV INFRASTRUCTURE PVT LTD VS. PCIT AY : 2015-16 - 8 - US IN DETAIL IN THE LATER PART OF THIS ORDER. ONCE AN ISSUE BECOMES DEBATABLE, THE VIEW TAKEN BY THE ID AO IN HIS SCRUTINY ASSESSMENT ORDER COULD BE CONSTRUED AS ONE OF THE POSSIBLE VIEWS AND HENCE, THE ORDER PAS SED BY HIM CANNOT BE TERMED AS ERRONEOUS. IN SUCH A SCENARIO, THE VIEW CANVASSE D BY THE ID PCIT WOULD ONLY RESULT IN SUBSTITUTION OF HIS VIEW IN THE PLAC E OF ONE OF THE POSSIBLE VIEWS ALREADY TAKEN BY THE ID AO. THE LAW IS VERY WELL SETTLED ON THIS POINT THAT IN THESE CIRCUMSTANCES, THE REVISION JURISDICTION U/S263 CANNOT BE INVOKED BY THE ID PCIT. RELIANCE IN THIS REGARD IS PLACED ON GABRIEL INDIA LTD (1993) (BOM) AND IN NIRAV MODI (2016) (BOM). IT IS PERTINENT TO NOTE TH AT THE SLP PREFERRED BY THE REVENUE AGAINST NIRAV MODI (2016) (BOM) HAD BEEN DISMISSED BY THE HON'BLE SC REPORTED IN 77 TAXMANN.COM 15 (SC). [AS EXTRACTED FROM POOJA MARKETING (2021) 35 NYPTTJ 341 (MUM-TRIB) ITA NO.2596/MUM/2019] 1.12. IT IS SUBMITTED THAT IN NOOR RESORTS (P) LTD (2021) (CHD-TRIB) DT.L 1- 11-20 HELD AS UNDER: '8. IN THE PRESENT CASE THE AO FRAMED THE ASSESSMEN T U/S!43(3), QUENAIRE ALONG WITH NOTICE U/S!42(L) WAS ISSUED TO THE ASSESSEE ON 9-8-16, IN COMPLIANCE THERETO THE ASSESSEE FURNISHED THE REQUISITE REPLIE S AND DOCUMENTS. HOWEVER THE ID PCIT EXERCISED HIS REVISIONARY POWERS U/S263 AND CONSIDERED THE ASSESSMENT ORDER PASSED BY THE AO AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE FOR THE REASONS THAT THE ASSESSEE WA S HAVING ONLY RENTAL INCOME WHICH WAS TO BE CONSIDERED AS 'IFHP' AND NOT AS 'BU SINESS INCOME'. SECONDLY, THERE WAS NO BUSINESS ACTIVITY THEREFORE, EXPENSES AND THE DEPRE WAS WRONGLY ALLOWED BY THE AO. NOW WE HAVE TO CONSIDER AS TO WH ETHER THE VIEW TAKEN BY THE AO WAS A POSSIBLE VIEW IN ACCORDANCE WITH LAW O R NOT. 8.1 IN THE PRESENT CASE, THE AO DURING THE COURSE O F ORIGINAL ASSESSMENT PROCEEDINGS, ISSUED THE QUENAIRE TO THE ASSESSEE, I N RESPONSE TO WHICH THE ASSESSEE FURNISHED THE REPLY AND THE DOCUMENTS WHIC H WERE CONSIDERED BY THE AO, SO IT CANNOT BE SAID THAT THE ENQUIRIES WERE NO T MADE BY THE AO. THE RENTAL INCOME SHOWN BY THE ASSESSEE WAS CONSIDERED TO BE ' BUSINESS INCOME' AS WAS DONE IN THE PRECEDING YEARS SINCE INCEPTION OF THE BUSINESS BY THE ASSESSEE. HOWEVER, THE ID PCIT WAS OF THE VIEW THAT THE SAID VIEW WAS NOT CORRECT AS THE LETTING OUT OF THE SHOP FROM WHICH THE RENT WAS REC EIVED WAS NOT THE MAIN OBJECT OF THE ASSESSEE. 8.2 TO RESOLVE THIS CONTROVERSY WE HAVE TO CONSIDER THE OBJECTS AND ANCILLARY OBJECTS AS MENTIONED IN THE MOA AND AOA OF THE ASSE SSEE-CO, COPY OF WHICH IS PLACED AT PAGE NO.22 TO 41 OF THE ASSESSEE'S COMPIL ATION. THE CL. 3 OF THE SAID MOA READS AS UNDER: ITA NO. 65/RPR/2020 JAI GURUDEV INFRASTRUCTURE PVT LTD VS. PCIT AY : 2015-16 - 9 - '3. TO CARRY ON THE BUSINESS OF REAL ESTATE DEALERS AND DEVELOPERS INCLUDING PURCHASE AND SALE OF LAND, LAND DEVELOPMENT, COLONI ZATION, PURCHASE, SALE, CONSTRUCTION AND LETTING OUT OF HOUSES, FLATS, FARM HOUSES.' THE ID PCIT CONSIDERED THE ABOVE SAID CLAUSE ONLY. HOWEVER, HE IGNORED THE ANCILLARY CLAUSE NO.19 WHICH READS AS UNDER: '19. TO SELL, IMPROVE, ALTER, MANAGE, DEVELOP EXCHA NGE, LEASE, MORTGAGE, DISPOSE OF, TURN TO ACCOUNT OR OTHERWISE DEAL WITH ALL OR ANY PARTS OF THIS BUSINESS, LANDS, PROPERTY, ASSETS, RIGHTS AND THE R ESOURCES AND UNDERTAKINGS OF THE COMPANY IN WHOLE OR IN PART IN SUCH MANNER AND ON SUCH TERMS AS THE DIRECTORS MAY THINK FIT.' FROM THE AFORESAID CLAUSE IT IS CLEAR THAT THE ASSE SSEE-CO WAS AUTHORISED TO LEASE OUT THE PROPERTY WHICH IN THE PRESENT CASE HA S BEEN DONE IN RESPECT OF FIRST FLOOR AND SECOND FLOOR OF SCO NO. 126 AND 127 , SEC-8C, CHANDIGARH. THE SAID ACTIVITY OF LEASING OUT WAS UNDERTAKEN BY THE ASSESSEE-CO FROM THE VERY BEGINNING WHEN THOSE ASSETS WERE PURCHASED, SO IT C ANNOT BE SAID THAT THIS ACTIVITY WAS ONLY FOR THE YEAR U/C. IT IS NOT IN DI SPUTE THAT IN ALL THE EARLIER YEARS THE INCOME RECEIVED FROM THOSE LEASED OUT PROPERTIE S WAS CONSIDERED AS 'BUSINESS INCOME', AS THE CLAUSE NO. 19 OF THE MOA AUTHORISED ASSESSEE TO LEASE OUT ITS PROPERTY WHICH WAS ITS ANCILLARY ACTI VITY. 8.3. ON A SIMILAR ISSUE CHENNAI PROPERTIES AND INVE STMENTS LTD (SC) HELD AS UNDER: 'THAT LETTING OF THE PROPERTIES WAS IN FACT THE BUS INESS OF THE ASSESSEE. THE ASSESSEE, THEREFORE, RIGHTLY DISCLOSED THE INCOME U NDER THE HEAD IFB. IT COULD NOT BE TREATED AS IFHP. IN THE PRESENT CASE ALSO THE MAIN OBJECT OF THE ASS ESSEE IN ITS MOA WAS TO CARRY ON THE BUSINESS OF REAL ESTATE DEALERS AND DEVELOPE RS INCLUDING PURCHASE AND SALE OF LAND, LAND DEVELOPMENT, COLONIZATION, PURCH ASE, SALE CONSTRUCTION AND LETTING OUT OF HOUSES, FLATS, FARMHOUSES. HOWEVER, AS PER CL.19 OF THE AFORESAID MOA THE ASSESSEE WAS AUTHORIZED TO SELL, IMPROVE, A LTER, MANAGE, DEVELOP EXCHANGE, LEASE, MORTGAGE,' DISPOSE OF, ETC. OF THE BUSINESS LANDS, PROPERTY, ASSETS ETC IN WHOLE OR IN PART IN SUCH MANNER AND O N SUCH TERMS AS THE DIRECTORS MAY THINK FIT. THEREFORE, THE INCOME OF T HE ASSESSEE RECEIVED ON LEASE OUT PROPERTY WAS ITS BUSINESS INCOME. 8.4. ON A SIMILAR ISSUE RAYALA CORPORATION (P) LTD (SC) HELD AS UNDER: 'THAT ADMITTEDLY, THE ASSESSEE HAD ONLY ONE BUSINES S AND THAT WAS OF LEASING ITS PROPERTY AND EARNING RENT THEREFROM. THE BUSINESS O F THE COMPANY WAS TO LEASE ITS PROPERTY AND TO EARN RENT AND THEREFORE, THE IN COME SO EARNED SHOULD BE ITA NO. 65/RPR/2020 JAI GURUDEV INFRASTRUCTURE PVT LTD VS. PCIT AY : 2015-16 - 10 - TREATED AS ITS BUSINESS INCOME. THE INCOME OF THE A SSESSEE WAS TO BE SUBJECT TO TAX UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS O R PROFESSION'. 8.5. SIMILARLY, SHIBANI S BHOJWANI (MUM-TRIB) HELD AS UNDER: 'INCOME FROM COMPOSITE LETTING OF FURNISHED FLATS B Y THE ASSESSEE, AFTER THOROUGH VETTING AND SCRUTINY, HAVING BEEN ACCEPTED AND ASSESSED AS 'BUSINESS INCOME' BY THE DEPTT IN THE EARLIER YEARS WHILE FRA MING REGULAR ASSESSMENTS, IN THE ABSENCE OF ANY NEW FACTS EMERGING DURING THE YE AR U/C, SUCH INCOME CANNOT BE ASSESSED UNDER THE HEAD 'IFHP'; COMPOSITE RENTAL RECEIPTS ARE ASSESSABLE AS BUSINESS INCOME IN THE RELEVANT AY ALSO IN VIEW OF RULE OF CONSISTENCY.' 8.6. IN THAT VIEW OF THE MATTER, IT CANNOT BE SAID THAT THE VIEW TAKEN BY THE AO WAS WRONG AND IF THE VIEW TAKEN BY THE AO WAS ONE O F THE POSSIBLE VIEWS THE ASSESSMENT ORDER DT.16-9-16 PASSED BY HIM CANNOT BE CONSIDERED TO BE ERRONEOUS. FOR THE AFORESAID VIEW, WE ARE FORTIFIED BY THE RATIO LAID DOWN BY MAX INDIA LTD (2007) (SC), WHEREIN IT HAS BEEN HELD THAT AS UNDER: 'THE PHRASE 'PREJUDICIAL TO THE INTEREST OF THE REV ENUE' IN SEC263, HAS TO BE READ IN CONJUNCTION WITH THE EXPRESSION 'ERRONEOUS' ORDER PASSED BY THE AO. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE AO CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. FOR EXAMPLE, WHEN THE AO ADOPTS ONE OF 2 COURSES PERMISSIBLE IN LAW AND IT HAS RESU LTED IN LOSS OF REVENUE, OR WHERE 2 VIEWS ARE POSSIBLE AND THE AO HAS TAKEN ONE VIEW WITH WHICH THE CIT DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOU S ORDER PREJUDICIAL TO THE REVENUE, UNLESS THE VIEW TAKEN BY THE AO IS UNSUSTA INABLE IN LAW.' 8.7. IN THE INSTANT CASE, THE ASSESSEE FURNISHED A CHART BEFORE THE AUTHORITIES BELOW EXPLAINING THAT IF THE INCOME RECEIVED BY IT WAS TO BE TREATED AS 'IFHP' INSTEAD OF 'BUSINESS INCOME', THERE WOULD BE AN INC REASE IN THE LOSS. THE SAID CHART HAD BEEN REPRODUCED IN THE FORMER PART OF THI S ORDER. HOWEVER, THE ID PCIT BY CONSIDERING THE WRONG CALCULATIONS, WAS OF THE VIEW THAT THERE WAS A PROFIT INSTEAD OF LOSS CLAIMED BY THE ASSESSEE, IF THE RENTAL INCOME TO BE CONSIDERED AS 'IFHP' AND NOT 'AS BUSINESS INCOME' W HILE ADOPTING THE SAID CALCULATION, THE PCIT DID NOT ALLOW THE DEPRE AND T HE OTHER EXPENSES ON THIS BASIS THAT THE ASSESSEE WAS NOT INVOLVED IN ANY BUS INESS ACTIVITY DURING THE YEAR U/C HE IGNORED THIS EXPLANATION OF THE ASSESSEE THA T THERE WAS LULL IN BUSINESS, BUT THE BUSINESS ACTIVITY WAS NOT CLOSED AND THE AS SESSEE WAS HAVING SIT. IT IS WELL SETTLED THAT THERE IS A DIFFERENCE BETWEEN DIS CONTINUATION OF BUSINESS AND THE CLOSURE OF BUSINESS. IN THE PRESENT CASE, IF TH ERE WAS NO CLOSURE OF THE BUSINESS, THEREFORE, IT CANNOT BE SAID THAT THE ASS ESSEE WAS NOT ALLOWED TO CLAIM EXPENSES IF THOSE WERE INCURRED FOR THE BUSINESS PU RPOSES. 8.9. IN THE PRESENT CASE ALSO THE ASSESSEE WAS NOT FINDING THE BUYER TO SELL THE PROPERTY WHICH WAS KEPT AS SIT, SO IT CANNOT BE SAI D THAT THE ASSESSEE CLOSED THE BUSINESS, THEREFORE, THE EXPENSES INCURRED FOR THE PURPOSES OF BUSINESS AS ITA NO. 65/RPR/2020 JAI GURUDEV INFRASTRUCTURE PVT LTD VS. PCIT AY : 2015-16 - 11 - WELL AS THE DEPRE CLAIMED WERE ALLOWABLE TO THE ASS ESSEE AS BUSINESS EXPENSES, AS SUCH THE ID PCIT WAS NOT JUSTIFIED IN NOT CONSID ERING THE DEPRE AS WELL AS THE EXPENSES TO WORK OUT THE INCOME/ LOSS OF THE ASSESS EE. 8.10. IN VIEW OF THE AFORESAID DISCUSSION, IN THE P RESENT CASE, IT CAN BE SAID THAT BY CONSIDERING THE RENTAL INCOME RECEIVED BY THE AS SESSEE AS 'BUSINESS INCOME 15 WHICH WAS CONSISTENTLY CLAIMED BY THE ASSESSEE IN THE PRECEDING YEARS ALSO AND THE DEPTT HAD ACCEPTED THE SAME, THE ASSES SMENT ORDER PASSED BY THE AO WAS NOT PREJUDICIAL TO THE INTEREST OF THE REVEN UE, PARTICULARLY WHEN THE LOSS WOULD HAVE BEEN MORE AT RS.7,70,160 INSTEAD OF RS.3,89,226 IF THE RENTAL INCOME WAS TO BE CONSIDERED AS 'IFHP', INSTEAD OF ' BUSINESS INCOME', AS DECLARED BY THE ASSESSEE. 8.11. WE THEREFORE, BY CONSIDERING THE TOTALITY OF THE FACTS AS DISCUSSED HEREIN ABOVE ARE OF THE VIEW THAT THE ASSESSMENT ORDER PAS SED BY THE AO WAS NOT PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN THAT VIEW OF THE MATTER, THE IMPUGNED ORDER PASS ED BY THE ID PCIT U/S263 IS QUASHED.' [AS EXTRACTED FROM NOOR RESORTS (P) LTD (2021) 1.13. IT IS SUBMITTED THAT IN LATE SHRI RAMAVTAR GUPTA (2020) (JAI- TRIB) DT.13-12-19, HELD AS UNDER: '2.4. THE ASSESSEE HAS SOLD THE ANCESTRAL PROPERTY DURING THE YEAR U/C FOR A CONSIDERATION OF RS.1,08,28,148. THE SDV OF THE SAI D PROPERTY WAS AMOUNTING TO RS.1,08,25,150. THEREFORE, THE DEEMED 'FVC' U/S5 0C CANNOT BE APPLIED IN THE CASE OF THE ASSESSEE WHERE THE SALE CONSIDERATI ON SHOWN IN THE SALE DEED AND DECLARED BY THE ASSESSEE IS EQUIVALENT TO THE S DV. THE AO WHILE PASSING THE ASSESSMENT U/S!43(3) ON 27 -3-17 HAS ACCEPTED THE CAPITAL GAIN AS CLAIMED BY THE ASSESSEE FROM THE SA LE OF ANCESTRAL PROPERTY. SUBSEQUENTLY, THE ID PCIT HAS EXERCISED ITS REVISIO NARY POWER U/S263 AND ISSUED SCNDT.3-1-19 AS UNDER: 'DURING THE RELEVANT PERIOD, YOU HAD SOLD YOUR ANCE STRAL PROPERTY AND GOT YOUR SHARE AMOUNTING TO RS, 1,08,28,148 WHEREON YOU HAD COMPUTED CG. THEREAFTER, YOU HAD PURCHASED A PROPERTY I.E., D-15 -A PREM COLONY KACHHI BASTI, PANI PECH, JAIPUR FOR RS. 23 LAKHS ON 11-2-1 5 AND CLAIMED DEDUCTION U/S54F THEREON. YOU HAD ALSO INVESTED RS.50 LAKHS IN NHAI BONDS ON 31-3-15 AND CLAIMED DEDUCTION U/S54EC THEREON SEPARATELY. ITA NO. 65/RPR/2020 JAI GURUDEV INFRASTRUCTURE PVT LTD VS. PCIT AY : 2015-16 - 12 - IT IS PERUSED FROM THE RECORD THAT YOU HAD SOLD YOU R ANCESTRAL PROPERTY BY PLOTTING TO 59 DIFFERENT PERSONS AND OFFERED CAPITA L GAIN THEREON FOR TAXATION, HOWEVER, IN VIEW OF RAJA J. RAMESHWAWR RAO (1961) ( SC)-THE NATURE OF SUCH TRANSACTION SHOULD HAVE BEEN JUDGED AS BUSINESS INC OME INSTEAD OF CG, AFTER COMPUTING CAPITAL GAIN U/S45(2) ON CONVERSION OF CA PITAL ASSETS INTO 'SIT'.' THUS, IT IS CLEAR THAT THE ID PCIT INVOKED THE SEC2 63 ONLY IN RESPECT OF CAPITAL GAIN DECLARED BY THE ASSESSEE FROM THE SALE OF ANCESTRAL PROPERTY AS THE AO HAS NOT APPLIED THE SEC45(2) AND CONSEQUENTL Y THE PROFIT ARISING FROM SALE OF THE PROPERTY OUGHT TO HAVE BEEN BIFURCATED INTO CAPITAL GAINS AS WELL AS BUSINESS INCOME. THERE IS NO ALLEGATION BY THE I D PCIT IN SCN THAT THE ASSESSMENT ORDER PASSED BY THE AO IS ERRONEOUS ON A CCOUNT OF LACK OF ENQUIRY. AT THE OUTSET, WE NOTE THAT WHEN THE ANCESTRAL PROP ERTY WAS SOLD BY THE ASSESSEE DURING THE YEAR U/C BY PLOTTING TO 59 DIFF ERENT PERSONS, THEN EVEN IF SEC45(2) ARE APPLIED IN THE CASE AND THE CAPITAL AS SET IS TREATED AS CONVERTED INTO SIT THEN THE FMV. OF THE ASSET ON THE DATE OF SUCH CONVERSION OR TREATMENT SHALL BE DEEMED TO BE THE FVC' RECEIVED OR ACCRUIN G AS A RESULT OF TRANSFER OF CAPITAL ASSET. THUS, FOR THE PURPOSE OF COMPUTING THE CAPITAL GAINS, THE FMV OF THE ASSET AS ON THE DATE OF SUCH CONVERSION WILL BE DEEMED AS 'FVC' RECEIVED OR ACCRUED ON TRANSFER OF CAPITAL ASSET AND CONSEQUENT LY, THE SAME AMOUNT WILL BE TAKEN AS COA OF SIT. IN THE CASE IN HAND, THE FMV OF THE ASSET SHALL BE TAKEN AS THE VALUATION ADOPTED BY THE SD AUTHORITY AS PROVIDED U/S 50C BEI NG FVC AND THEREFORE, FOR THE PURPOSE OF COMPUTING THE CG, THE SAID AMOUN T OF RS. 1,08,25,150 WOULD BE DEEMED TO BE 'FVC WHICH IS THE ACTUAL SAL E CONSIDERATION. THEREFORE, THERE WILL BE NO CHANGE IN THE CAPITAL G AIN COMPUTED AND DECLARED BY THE ASSESSEE EVEN AFTER APPLYING THE SE C45(2). RESULTANTLY, THE BUSINESS INCOME, IF ANY, FROM THE SAID TRANSFER UNDER THE SEC 45(2) WOULD BE NIL BEING THE COA OF SIT AND THE SAL E CONSIDERATION OF THE SAID PROPERTY IS THE SAME. THEREFORE, EVEN AFTER IN VOKING THE SEC45(2), THERE WOULD BE NO CHANGE IN THE TAX LIABILITY OF THE ASSE SSEE AND HENCE, THE ORDER PASSED BY THE AO CANNOT BE SAID PREJUDICIAL TO THE INTEREST OF THE REVENUE. IT IS UNDISPUTED PROPOSITION OF LAW THAT FOR EXERCISIN G THE POWER U/S263, THE CIT HAS TO SATISFY ITSELF THAT THE ORDER PASSED BY THE AO IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. WITH OUT SATISFACTION OF THE TWIN CONDITIONS THAT THE ORDER PASSED BY THE AO IS ERRON EOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE, THE SEC 263 CANT BE INVOKED. THEREFORE, IN THE CASE IN HAND, WHEN THERE WILL BE NO REVENUE LOSS EVEN IF SEC 45(2) ARE APPLIED THEN IN SUCH A SITUATION THE CIT IS NOT ALLOWED TO EXERCISE ITS POWER U/S263 MERELY BECAUSE THE AO HAS ACCEPTED THE CAPITAL GAIN DECLARED BY THE ASSESSEE. ITA NO. 65/RPR/2020 JAI GURUDEV INFRASTRUCTURE PVT LTD VS. PCIT AY : 2015-16 - 13 - HENCE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE IMPUGNED EX-PARTE ORDER PASSED BY THE ID PCIT WITHOUT PROPER OPPORTUN ITY OF HEARING TO THE ASSESSEE AND WITHOUT ESTABLISHING THE ORDER OF THE AO IS PREJUDICIAL TO THE INTEREST OF THE REVENUE IS NOT SUSTAINABLE IN LAW A ND CONSEQUENTLY, THE SAME IS QUASHED AND SET ASIDE.' [AS EXTRACTED FROM LATE SHRI RAMAVTAR GUPTA (2020) 203 TTJ 643 (JAI-TRIB(] SUBMITTED FOR JUDICIOUS CONSIDERATION YOURS FAITHFIILLY SD/- CA SUNIL KUMAR AGRAWAL COUNSEL FOR THE ASSESSEE-CO 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, RELIED UPON THE OBSERVATIONS MADE BY THE PCIT WHILE COMING TO THE CONCLUSION ADVERSE TO THE ASSESSEE. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. SECTION 263 OF THE INCOME-TAX ACT, 1961 (THE ACT IN SHORT ) CONFERS THE POWERS UPON THE DESIGNATED AUTHORITY TO CALL FOR AN D EXAMINE THE RECORDS OF A PROCEEDING UNDER THE ACT AND REVISE AN Y ORDER IF HE CONSIDERS THE SAME TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE REVISIONAL AUTHORITY (PCIT IN THE INSTANT CASE) CAN TAKE RECOURSE TO REVISION UNDER SECTION 263 WHERE T HE ASSESSMENT ORDER IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE IN TEREST OF THE REVENUE. THE TWIN CONDITIONS ARE REQUIRED TO BE SAT ISFIED SIMULTANEOUSLY. IN THIS BACKDROP, WE NOTICE THE SUB MISSIONS MADE ON BEHALF OF THE ASSESSEE. ON PERUSAL OF THE SUBMISSI ONS REPRODUCED IN THE PRECEDING PARAGRAPH, IT IS OBSERVED THAT, IF TH E COURSE SUGGESTED BY THE PCIT IS ADOPTED AND ON PROFITS ARISING ON SA LE OF LAND PARCELS ARE TAXED UNDER THE HEAD CAPITAL GAINS, THE ASSES SED INCOME COULD BE LOWER THAN THE INCOME ASSESSED BY THE ASSESSING OFFICER. THE TABULAR STATEMENT DEMONSTRATING THE AFORESAID FACT IS SELF-SPEAKING IN ITA NO. 65/RPR/2020 JAI GURUDEV INFRASTRUCTURE PVT LTD VS. PCIT AY : 2015-16 - 14 - THIS REGARD AND DOES NOT REQUIRE MUCH DELINEATION. CONSEQUENTLY, WHERE THE COURSE SUGGESTED BY THE PCIT RESULTS IN G REATER PREJUDICE TO THE REVENUE AND THE COURSE ADOPTED BY THE AO HAS RE SULTED IN LESSER PREJUDICE, THE ACTION OF THE PCIT UNDER SECTION 263 FALLS FLAT ON THE GROUND. IT IS TRITE THAT IN ORDER TO USURP JURISDI CTION UNDER SECTION 263, BOTH THE CONDITIONS, I.E. ORDER BEING ERRONEOU S AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE, MUST SI MULTANEOUSLY CO- EXIST. IN ABSENCE OF ANY PREJUDICE CAUSED TO THE RE VENUE BY THE ACTION OF THE ASSESSING OFFICER, THE ORDER CANNOT BE REVIS ED EVEN IF IT IS MOMENTARILY CONSIDERED TO BE ERRONEOUS. HENCE, THE REVISIONARY ACTION OF THE PCIT REQUIRES TO BE SET ASIDE ON THIS GROUND ALONE WITHOUT GOING INTO OTHER ASPECT OF ARGUMENTS. 9. NOTWITHSTANDING THE CONCLUSION DRAWN IN THE PREC EDING PARAGRAPH, WE ALSO TAKE INTO ACCOUNT THE OTHER LINE OF ARGUMENTS PROPOUNDED ON BEHALF OF THE ASSESSEE THAT THE NATUR E AND CHARACTER OF AN INCOME DEPENDS ON HOST OF FACTORS WHICH ARE REQU IRED TO BE CUMULATIVELY WEIGHED AND THUS IS INHERENTLY A VERY HIGHLY SUBJECTIVE EXERCISE. THERE IS NO STRAIGHT JACKET FORMULA TO D ETERMINE WHETHER AN ASSET HELD BY THE ASSESSEE SHOULD BE TREATED AS CAP ITAL ASSET OR BUSINESS ASSET. SUCH ISSUES ARE INHERENTLY HIGHLY D EBATABLE AND ARGUABLE IN NATURE. ONE CANNOT DEFINITELY SAY WITH PRECISION AND MORE SO UNDER THE REVISIONAL JURISDICTION THAT THE ACTIO N OF THE AO IN ADOPTING ONE COURSE OF VIEW IS ERRONEOUS PER SE. THERE IS INVARIABLY A SCOPE OF ARGUMENT ON DETERMINATION OF CHARACTER OF INCOME. INDULGENCE ON SUCH ASPECT UNDER THE REVISIONAL JURI SDICTION IS NOT APPROPRIATE IN THE ABSENCE OF COGENT FACTS ADVERSE TO THE ASSESSEE. WE DO NOT SEE ANY SUCH MATERIAL WHICH CAN MAKE THE CON CLUSION OF THE PCIT INDEFEASIBLE. THIS BEING SO, THE ACTION OF THE PCIT CANNOT BE ENDORSED ON THIS GROUND ALSO. HENCE, LOOKING FROM A NY ANGLE, THE ITA NO. 65/RPR/2020 JAI GURUDEV INFRASTRUCTURE PVT LTD VS. PCIT AY : 2015-16 - 15 - REVISIONAL ACTION OF THE PCIT UNDER SECTION 263 IS NOT SUSTAINABLE IN LAW. CONSEQUENTLY, THE REVISIONAL ORDER UNDER SECT ION 263 OF THE ACT IS QUASHED AND SET ASIDE. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. PRONOUNCED ON 14.10.2021 AS PER RULE 34(4) OF THE INCOME TAX APPELLATE TRIBUNAL RULES, 1963. SD/- SD/- (N. K. CHOUDHRY) (PRADIP K UMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMB ER BT TRUE COPY / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE 3. / CONCERNED CIT 4. - / CIT (A) 5. , , / DR, ITAT, RAIPUR 6. / GUARD FILE. BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR 1.DATE OF DICTATION ON ..08.10.2021.. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER 11.10.2021 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 14.10.2021.. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 14.10.2021 .. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 14.10.2021 .. 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER.. 9.DATE OF DESPATCH OF THE ORDER