The Tax Publishers2020 TaxPub(DT) 3646 (Mum-Trib)

INCOME TAX ACT, 1961

Section 263

Where notional house rent cannot be computed for stock-in-trade and Supreme Court in the case of CIT v. Vegetable Products Ltd.,[(1973) 88 ITR 192 (SC) : 1973 TaxPub(DT) 0421 (SC)] had expounded that if two constructions are possible, one in favour of assessee had to be adopted and department had submitted that the issue is now before Supreme Court and matter has not been decided by Supreme Court, therefore, in such circumstances as long as there was existence of debate about both points of view, CIT was not empowered to exercise jurisdiction under section 263.

Revision under section 263 - AO's order being erroneous and prejudicial to interest of Revenue - Assessee had not offered notional rent on its unsold flats -

PCIT had exercised his jurisdiction under section 263 on the ground that assessee had not offered notional rent on its unsold flats, which were assessee's stock-in-trade. PCIT in this regard had referred to the decision of Delhi High Court in the case of CIT v. Ansal Housing Finance & Leasing Co. Ltd., (2013) 354 ITR 180 (Del) : 2013 TaxPub(DT) 0681 (Del-HC). Held: Provision in the Act for bringing to tax the notional rent on unsold stock of house property was brought into effect from assessment year 2018-19. In present case, the assessment year is 2014-15 and hence, the said provision was not at all applicable for current assessment year. High Court in the case of Neha Builders (P.) Ltd. [2008 TaxPub(DT) 0294 (Guj-HC)] had held that notional house rent cannot be computed for stock-in-trade. Supreme Court in the case of CIT v. Vegetable Products Ltd.,[(1973) 88 ITR 192 (SC) : 1973 TaxPub(DT) 0421 (SC)] had expounded that if two constructions are possible, one in favour of assessee had to be adopted. Notional house rental income cannot be computed for the unsold flats of the assessee. Department submitted that issue was Supreme Court and the matter was not decided by Court. Admittedly, when an issue is before Supreme Court and has not yet been decided, the issue can be considered to be a debatable issue, therefore, CIT was not empowered to exercise jurisdiction under section 263.

Relied:CIT v. Vegetable Products Ltd. (1973) 88 ITR 192 (SC) : 1973 TaxPub(DT) 0421 (SC) CIT v. Ansal Housing Finance & Leasing Co. Ltd. & Ors. (2013) 354 ITR 180 (Delhi) : 2013 TaxPub(DT) 0681 (Del-HC) CIT v. Neha Builders Pvt. Ltd. (2008) 296 ITR 661 (Gujarat) : 2008 TaxPub(DT) 0294 (Guj-HC)Followed:Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR 83 (SC) : 2000 TaxPub(DT) 1227 (SC)

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2014-15



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