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of <h1>Tribunal rules in favor of assessee: Income from property sale classified as business income.</h1> <h3>The Asst. Commissioner of Income Tax, Circle – 1, Nashik Versus Smt. Priya K. Jagtiyani</h3> The Asst. Commissioner of Income Tax, Circle – 1, Nashik Versus Smt. Priya K. Jagtiyani - TMI Issues Involved:1. Deletion of addition under section 50C of the Income-tax Act.2. Classification of transactions as business income or capital gains.3. Addition under section 68 of the Act for peak cash balance.4. Addition under section 68 for a loan received from the wife.Analysis:Issue 1: Deletion of addition under section 50C:The Revenue challenged the deletion of an addition of Rs. 98,96,077 under section 50C by the CIT(A). The Assessing Officer treated the income from the sale of property as short term capital gains based on stamp duty valuation. However, the CIT(A) accepted the assessee's claim that it was business income due to being engaged in the construction business. The CIT(A) emphasized the principle of consistency and referred to previous years' assessments where the property was treated as stock-in-trade. The CIT(A) directed the Assessing Officer to delete the addition, citing the duty of the Revenue to rectify mistakes made by the assessee. The Tribunal upheld the CIT(A)'s decision, concluding that the income from the property sale should be assessed as 'Income from business', making section 50C inapplicable.Issue 2: Classification of transactions as business income or capital gains:The Revenue also contested the classification of the transactions as business income instead of capital gains. The Tribunal noted that the assessee had a history of filing returns as a construction business and treating the sold property as stock-in-trade in previous years. The Tribunal emphasized that the declaration of short term capital gains was due to an inadvertent error and upheld the CIT(A)'s decision to assess the income as 'Income from business'.Issue 3: Addition under section 68 for peak cash balance:The Revenue challenged the deletion of an addition of Rs. 46,38,879 under section 68 related to peak cash balance. The CIT(A) upheld the deletion, noting that the opening cash balance had been accepted in earlier years. The Tribunal dismissed the Revenue's appeal, agreeing with the CIT(A)'s decision regarding the opening cash balance.Issue 4: Addition under section 68 for a loan received from the wife:The Revenue raised an issue regarding the addition of Rs. 5,59,879 for a loan received from the wife of the assessee. The Tribunal found that the wife had been assessed to tax in her individual capacity and had sufficient funds to provide the loan. Consequently, the Tribunal dismissed the Revenue's appeal, concluding that the loan from the wife was adequately explained.In conclusion, the Tribunal dismissed the Revenue's appeal on all grounds, affirming the CIT(A)'s decisions regarding the issues raised.
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