2019 (2) TMI 802 - AT - Income Tax

Tribunal Upholds Capital Gain Treatment Over Business Income, Penalty Deleted, Appeal Dismissed

ITO, WARD 19 (1), NEW DELHI Versus M/s ONKARESHWAR PROPERTIES PVT. LTD.

ITO, WARD 19 (1), NEW DELHI Versus M/s ONKARESHWAR PROPERTIES PVT. LTD. - TMI Issues:- Penalty under section 271(1)(c) of the Income Tax Act, 1961 for wrongly declaring income as capital gain instead of business income.Analysis:1. Background: The Revenue filed an appeal against the Order of the Ld. CIT(A) concerning the assessment year 2009-10. The AO treated the income declared as capital gain as income from business, resulting in a penalty under section 271(1)(c) of the Act.2. Penalty Proceedings: The penalty proceedings were initiated by the AO, alleging that the assessee tried to pay lesser tax by declaring income as capital gain instead of business income. The AO imposed a penalty of Rs. 6,35,91,247 which was challenged by the assessee before the Ld. CIT(A).3. Ld. CIT(A) Decision: The Ld. CIT(A) allowed the appeal of the assessee, stating that the income arising from the sale of land held as a capital asset should be assessed as long-term capital gain, not business income. This decision was based on the Tribunal's order and the High Court's decision.4. Tribunal's Decision: The Tribunal upheld the Ld. CIT(A)'s decision, emphasizing that the income should be taxed as capital gain, not business income. The Tribunal referred to previous orders and held that there was no substantial question of law arising for consideration.5. Conclusion: The Tribunal dismissed the Revenue's appeal, stating that the basic premise for taxing the income as business income did not hold after considering the Tribunal and High Court decisions. Therefore, the penalty under section 271(1)(c) was rightly deleted by the Ld. CIT(A), and the Tribunal upheld this decision, resulting in the dismissal of the Revenue's appeal.