INCOME TAX ACT, 1961

Section 263

Revision under section 263 - Erroneous and prejudicial order - Lack of enquiry on AO's part -

Pr. CIT treated order passed by AO as erroneous and prejudicial to the interest of revenue on the ground that AO had not verified the details of house property income offered by assessee. Rentals in relation to 1MG Mall were collected by M/s. Lido Mall Management (P) Ltd. As per agreement M/s Lido would retain 2% of licence fees and balance 98% was distributed amongst assessee-comppany and other co-owners. Assessee had reflected only 98% of receipts for the purpose of computing house property income, although entire receipts of 100% of its share should have been taken into account for arriving at annual value of the property. Held: Though agreement entered by the assessee with M/s. Lido stated that M/s. Lido would retain 2% of license fees/rent receipts and 75% of the other income, however, AO had not examined tax implication of agreement in the context of sections 23 and 24 as Mall income was offered by the assessee under the head 'Income from house property'. Tax on income from house property is charged on annual letting value and term 'Annual letting value' has been defined under section 23. Further, assessee was entitled to claim only those expenses which were listed out in section 24 from the annual letting value determined under section 23. Admittedly, the AO did not examine the issues and therefore, Pr. CIT was justified in passing impugned revision order.

Relied:Malabare Industries Company Ltd. v. CIT 243 ITR 83, CIT v. Max India Ltd. (2007) 295 ITR 282 (SC) 2007 : 2007 TaxPub(DT) 1548 (SC), Gee Vee Enterprises v. DCIT (1975) 99 ITR 375 & 386 (Delhi) : 1975 TaxPub(DT) 0267 (Del-HC)

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2014-15

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