INCOME TAX ACT, 1961

Section 263

Revision under section 263 - Erroneous and prejudicial order - Debatable issue - AO took one of plausible view after necessary enquiry

Assessee was a cooperative credit society. Apart from carrying out co-operative credit activity, owned four holiday homes on its own and also maintained similar other holiday homes which were provided to its members in lieu of charging concessional maintenance charges. Assessee declared gross receipt of Rs. 30,19,125 under the head 'Income from other sources' on acount of maintenance of Holiday Homes and claimed expenses of Rs. 32,18,553 as well as depreciation of Rs. 1,49,456 aggregating to net loss of Rs. 3,48,884. AO assessed assessee\s income from said holiday homes under the head business income Pr. CIT took the view that income derived from holiday homes under assessee's ownership had to be assessed as income from house property and that from other holiday homes was to be treated as income from +'other' sources followed by corresponding consequential computation and therefore, assessment order was erroneous and prejudicial to the interest of revenue.Held: It was crystal clear that head of assessee's income derived from its holiday homes i.e. whether it was income from house property as per Pr. CIT, business income going by AO in assessment and CIT(A) and the residuary head of 'other' sources in assessee's computation, respectively, was purely a debatable issue and therefore, order of AO could not be held as erroneous and prejudicial by resorting to section 263 especially when AO had not only carried out necessary enquiries but also changed the head of its income from 'other sources' to business income and took one of the possible views in the factual backdrop.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2014-15

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