THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, DELHI BEFORE MS. MADHUMITA ROY, JUDICIAL MEMBER &

SH. BRAJESH KUMAR SINGH, ACCOUNTANT MEMBER ITA No.2235/Del/2024 (Assessment Years:2017-18)

Fairleaf Real Estate Vs. PCIT Private Limited, DLF C. R. Building, Delhi Phase-III, Gurugram (cid:1)थायीलेखासं./जीआइआरसं./PAN/GIR No: AAACY3336L Appellant .. Respondent Appellant by : Sh. R. S. Singhvi, CA Sh. Satyajeet Goel, CA Sh. Rajat Garg, CA Respondent by : Sh. Surender Pal, CIT DR Heard on: 17.12.2024 Pronounced on: 13.03.2025

ORDER

PER MADHUMITA ROY, JM The instant appeal filed by the assessee is directed against the order dated 18.03.2024 passed by the Ld PCIT, Delhi-1 under Section 263 of the Income Tax Act, 1961(hereinafter referred to as ‘the Act’) for the assessment year 2017-18 whereby and where under the assessment order under Section 143(3) read with section 144C(3)/144B dated 26. 10.2021 was found to be erroneous in so far as prejudicial to the interest of the revenue and direction thereupon to the Assessing Officer to verify whether the claim of expense amounting to Rs.6,81,56,528/- in the Profit & Loss account being ‘Interest Expense on security deposit’ has been added back/disallowed while computing taxable income was issued.

2. We have heard the rival submissions made by the respective parties and we have also perused the relevant materials available on record including the order passed by the Ld. PCIT and the assessment order passed under section 143(3) of the Act.

3. The brief facts leading to the case are that the assessee, engaged in the business of developing, leasing real estate projects and providing facility management services, filed its return of income on 28.11.2017 declaring total loss at rupees (-)24,92,65,859/-. The case of the assessee was selected for complete scrutiny under CASS and notice under Section 143(2) dated 22.09.2019 was issued and duly served upon the assessee. After completion of all the procedural formalities the assessment was finalized under section 143(3)/144C(3)/144B of the Act on 26.10.2021 at a loss of Rs. (-)19,32,14,069/-.

4. Subsequently on 05.03.2024 the Ld. PCIT issued a show cause notice under Section 263 of the Act requiring the assessee to explain as to why action under Section 263 of the Act for revision of assessment order dated 26 October 2021 passed under Section 143(3)/144C(3)/144B of the act by the National faceless assessment centre (NFAC) should not be initiated in the case of the assessee as the assessment framed is found to be erroneous in so far as it is prejudicial to the interest of the revenue, the contents thereof is reproduced herein below:

“NOTICE FOR THE HEARING Subject: Notice for Hearing in respect of Revision proceedings u/s 263 of the THE INCOME TAX ACT, 1961 - Assessment Year 2017-

18 In this regard, a hearing in the matter is fived on 07/03/2024 at 12:00 PM. You are requested to attend in person or through an authorized representative to submit your representation, if any alongwith supporting documents/information in support of the issues involved (as mentioned below). If you wish that the Revision proceeding be concluded on the basis of your written submissions/representations filed in this office, on or before the said due date, then your personal attendance is not required. You also have the option to file your submission from the e-filing portal using the link: incometaxindiafiling.gov.in Sub.: Show Cause Notice u/s 263 of Income Tax Act in the case of M/s Fairleaf Real Estate Pvt. Ltd. (PAN: AAACY3336L) for A.Y.

2017-18-Final Opportunity-reg.-

You have filed return of income for the A.Y. 2017-18 on

28.11.2017 at a loss of Rs. 24,92,65,859/-. In your case, the assessment was completed u/s 143(3)/144C(3)/144B vide order dated 26.10.2021 at a loss of Rs. 19,32,14,069/-

2. I have called for the assessment records from the AO and examined the same. On perusal of the records, it is noticed that an amount of Rs. 6,81,56,528/- was debited as ‘Interest expense on securit