Case Law Details
Texraj Realty Pvt. Ltd Vs PCIT (ITAT Ahmedabad)
Assessing Officer noted in the assessment order that the compensation of Rs.10 crores was paid by the assessee to M/s. Bosch Rexroth India Ltd. for vacating the land situated at Vinzol bearing Survey No.324/1 admeasuring 40,087 sq. mtrs. and the land situated at Vatva bearing Survey No. 1037 admeasuring 10,080 sq. mtrs. He also gathered from the submissions made by the assessee that it had sold land only at Vinzol admeasuring 40,087 sq. mtrs. while the land at Vatva admeasuring 10,080 sq. mtrs. was retained by the assessee. Since the entire land for which compensation of Rs.10 crores was paid by the assessee to M/s. Bosch Rexroth India Ltd. on account of land vacation compensation charges was not sold by the assessee and only the portion of the said land admeasuring 40,087 sq.mtrs. was sold, the Assessing Officer allowed the claim of the assessee for land vacation compensation charges only to the extent pertained to the land sold. The claim of the assessee for deduction on account of said charges to the extent pertaining to the land at Vatva admeasuring 10,080 sq. mtrs., which was retained by the assessee, was disallowed by the Assessing Officer and accordingly an addition of Rs.2,00,92,889/- was made by him to the total income of the assessee in the assessment completed under Section 143(3) of the Act.
Keeping in view this position, we find merit in the contention of the learned Counsel for the assessee that the issue relating to the land vacation compensation charges claimed by the assessee in the year under consideration was duly examined by the Assessing Officer by making the necessary inquiries and after satisfying himself on perusal of the relevant details and documents placed on record by the assessee, the claim of the assessee for land vacation compensation charges was allowed by the Assessing Officer partly by applying his mind. It is noted that, in reply to the notice issued by the learned PCIT under Section 263 of the Act, a detailed submission was made on behalf of the assessee by pointing out the inquiries made by the Assessing Officer on the issue and the details and documents submitted by it during the course of assessment proceedings. It appears that the learned PCIT, however, overlooked the same and held the order passed by the Assessing Officer under Section 143(3) of the Act on the issue as erroneous and prejudicial to the interest of the Revenue on the ground that the Assessing Officer did not inquire into certain specific issues.
In our opinion, these issues pointed out by the learned PCIT in his impugned order were not that material or relevant to examine the claim of the assessee for deduction on account of land vacation compensation charges, and since the factual position which the learned PCIT wanted the Assessing Officer to ascertain by making inquiry was clearly evident from the details and documents already filed by the assessee during the course of assessment proceedings including the agreement for vacating and handover, we are of the view that it is not a case where the Assessing Officer can be said to have passed the order under Section 143(3) of the Act without inquiries or verification which should have been made in the facts and circumstances of the case as envisaged in Explanation 2(a) to Section 263 of the Act.
In our opinion, there was thus no error in the order of the Assessing Officer passed under Section 143(3) of the Act on this issue as alleged by the learned PCIT calling for revision under Section 263 of the Act. We accordingly cancel the impugned order passed by the learned PCIT under Section 263 of the Act to the extent it revises the order of the Assessing Officer passed under Section 143(3) of the Act on the issue of assessee’s claim for deduction on account of land vacation compensation charges.
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