Section 263 - Income tax Commissioner - Jurisdiction - in the absence of appeal, the commissioner has no jurisdiction to reopen the case as there is possibility of two versions - Tribunal rightly set aside the orders of Commissioner as the lease rentals were earned from the land which are developed for creating film shooting facilities/locations and it is directly connected with the main activity of the assessee, i.e., development of infrastructure for shooting locations.= No Grounds to admit the appeal =The Commissioner of Income Tax Hyderabad I.. Appellant M/s. Usha Kiran Movies Limited Eenadu Compound Somajiguda Hyderabad.. Respondent... Respondent = 2014 (Feb.Part) judis.nic.in/judis_andhra/filename=10868
Section 263 - Income tax Commissioner - Jurisdiction - in the absence of appeal, the commissioner has no jurisdiction to reopen the case as there is possibility of two versions - Tribunal rightly set aside the orders of Commissioner as the lease rentals were earned from the land which are developed for creating film shooting facilities/locations and it is directly connected with the main activity of the assessee, i.e., development of infrastructure for shooting locations.= No Grounds to admit the appeal =
the assessee respondent has filed a
return for the assessment year 1995-96 showing nil income explaining that there
has been no income after commencement of the business. The assessee started
development of certain area for making it suitable for development of
infrastructure for shooting locations.
"For the relevant previous year, the assessee was engaged in developing
the Film project under the name and style of 'Ramoji Film City' at Anajpur, near
Hyderabad. The business had not yet started. The assessee filed 'NIL' return
of income on 30-11-1995. Notice U/s.143(2) was issued. The case was
represented by Shri G. Sambasiva Rao, CA. After examining the details, the
income returned is 'accepted'."
However, the
Commissioner of Income Tax, in exercise of jurisdiction under Section 263 of the
Income Tax Act, had reversed the aforesaid order and directed that the aforesaid
income would not have been capitalized and it should have been brought to tax
under the head 'income from other sources'.
the assessee filed appeal before tribunal -
"On a conspectus of the matter, we are of the view that the income earned
by the assessee was in the process of development of the project and therefore
the factual matrix lend support to the claim of the assessee that the decision
in the case of Bokaro Steels Ltd. (supra) is applicable to this case...
...As could be seen from the reply given to the show cause notice, the
assessee categorically stated that the lease rentals were earned from the land
which are developed for creating film shooting facilities/locations and it is
directly connected with the main activity of the assessee, i.e., development of
infrastructure for shooting locations. Learned CIT has not controverted the
submissions of the assessee but merely stated in the order that unutilized land
was utilized by the other group companies. In other words, the findings of the
CIT were not based on correct appreciation of facts."
High court held that-
In view of the aforesaid fact finding, which has not been said to be
perverse by the appellant, it is difficult to decide otherwise. Therefore, it
has to be held that the income derived by the assessee is in the nature of
capital one as it was connected with main activity. Accordingly, we think that
this cannot be said to be income, as rightly held on fact finding by the
Assessing Officer initially and thereafter by the Tribunal. We noticed that the
learned Tribunal has taken a correct view of the matter as the Commissioner of
Income Tax has no jurisdiction to reopen this case, because one of the two
possible views was taken by the Assessing Officer and such change of view cannot
be any ground to reopen the issue under Section 263 of the Income Tax Act.
Therefore, the Commissioner of Income Tax had passed the order in total illegal
exercise of jurisdiction and the learned Tribunal has correctly upset the same.
HONOURABLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE
HONOURABLE SRIJUSTICE SANJAY KUMAR
I.T.T.A.Nos.31 of 2007 and BATCH
06-2-2014
The Commissioner of Income Tax Hyderabad I.. Appellant
M/s. Usha Kiran Movies Limited Eenadu Compound Somajiguda Hyderabad..
Respondent... Respondent
!COUNSEL FOR APPEALLANT : Sri J.V. Prasad,
Standing Counsel for
Income Tax Department
COUNSEL FOR RESPONDENT : Ms. Mamata Chowdary
<GIST:
>HEAD NOTE:
? CITATIONS:
THE HON'BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA
AND
THE HON'BLE SRI JUSTICE SANJAY KUMAR
I.T.T.A. NOs.31 OF 2007 AND 60 OF 2010
COMMON JUDGMENT:
(per the Hon'ble the Chief Justice Sri Kalyan Jyoti Sengupta)
I.T.T.A. NO.60 OF 2010
This appeal was admitted for hearing without formulating substantial
question of law as required to be done under Section 260-A of the Income Tax
Act. After hearing the learned counsel for the parties, we are of the view, we
would have formulated such questions had we decided the matter in favour of the
appellant. However, on perusal of the impugned judgment we noticed that even
this case is not fit for admission and the reasons for the aforesaid conclusion
of ours are as follows:
The short fact of the case is that the assessee respondent has filed a
return for the assessment year 1995-96 showing nil income explaining that there
has been no income after commencement of the business. The assessee started
development of certain area for making it suitable for development of
infrastructure for shooting locations. While doing so, there has been some
rental income which was directly inter-linked with the above activity.
Explaining all these details, the return was filed and the Assessing Officer has
accepted such return. Therefore, we quote the relevant portion of the order of
the Assessing Officer:
"For the relevant previous year, the assessee was engaged in developing
the Film project under the name and style of 'Ramoji Film City' at Anajpur, near
Hyderabad. The business had not yet started. The assessee filed 'NIL' return
of income on 30-11-1995. Notice U/s.143(2) was issued. The case was
represented by Shri G. Sambasiva Rao, CA. After examining the details, the
income returned is 'accepted'."
The Revenue did not prefer any appeal against this order. However, the
Commissioner of Income Tax, in exercise of jurisdiction under Section 263 of the
Income Tax Act, had reversed the aforesaid order and directed that the aforesaid
income would not have been capitalized and it should have been brought to tax
under the head 'income from other sources'.
Being aggrieved by the aforesaid order of the revisional authority, an
appeal has been preferred before the Tribunal.
The learned Tribunal on fact found that the income derived by the assessee
herein was at the stage of development activities. In other words, the income
derived was having close and direct link with the development activities. That
fact finding of the learned Tribunal is as follows:
"On a conspectus of the matter, we are of the view that the income earned
by the assessee was in the process of development of the project and therefore
the factual matrix lend support to the claim of the assessee that the decision
in the case of Bokaro Steels Ltd. (supra) is applicable to this case...
...As could be seen from the reply given to the show cause notice, the
assessee categorically stated that the lease rentals were earned from the land
which are developed for creating film shooting facilities/locations and it is
directly connected with the main activity of the assessee, i.e., development of
infrastructure for shooting locations. Learned CIT has not controverted the
submissions of the assessee but merely stated in the order that unutilized land
was utilized by the other group companies. In other words, the findings of the
CIT were not based on correct appreciation of facts."
In view of the aforesaid fact finding, which has not been said to be
perverse by the appellant, it is difficult to decide otherwise. Therefore, it
has to be held that the income derived by the assessee is in the nature of
capital one as it was connected with main activity. Accordingly, we think that
this cannot be said to be income, as rightly held on fact finding by the
Assessing Officer initially and thereafter by the Tribunal. We noticed that the
learned Tribunal has taken a correct view of the matter as the Commissioner of
Income Tax has no jurisdiction to reopen this case, because one of the two
possible views was taken by the Assessing Officer and such change of view cannot
be any ground to reopen the issue under Section 263 of the Income Tax Act.
Therefore, the Commissioner of Income Tax had passed the order in total illegal
exercise of jurisdiction and the learned Tribunal has correctly upset the same.
Accordingly, we do not find any merit in this appeal and the same is
accordingly dismissed. There will be no order as to costs.
I.T.T.A. NO.31 OF 2007
Since the issue raised in this appeal is similar to the one raised in the
above appeal (ITTA No.60 of 2010) and the parties are same, present appeal is
also dismissed in terms of the above said judgment. There will be no order as
to costs.
________________________
K.J. SENGUPTA, CJ
______________________
SANJAY KUMAR, J
6.2.2014
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