2019 (5) TMI 1381 - AT - Income Tax

Tribunal rules in favor of Assessee on penalty, dismisses appeal on capital gains computation.

Embrocia Farms Pvt. Ltd. Versus Dy. CIT, Circle 6, Pathankot

Embrocia Farms Pvt. Ltd. Versus Dy. CIT, Circle 6, Pathankot - TMI Issues:1. Quantum and penalty proceedings appeal by the Assessee.2. Dispute over computation of short-term and long-term capital gains.3. Application under section 154 for amendment of appellate order.4. Barred by time and non-est appeal order.5. Application of circle rate for land in composite sale.6. Correct commercial rate for land valuation.Analysis:1. The Assessee filed two appeals challenging the dismissal of application under section 154 for amendment of the appellate order and the confirmation of penalty under section 271(1)(c) for assessment year 2006-07. The dispute arose from the computation of short-term and long-term capital gains related to the sale of assets.2. The Assessee sold its feed mill unit and land, resulting in short-term capital gain and long-term capital gain. The Assessing Officer computed the gains based on the Written Down Value (WDV) of the assets. The first appellate authority upheld the separate computation of gains on land and assets, allowing relief to the Assessee.3. The Assessee filed an application under section 154, challenging the computation of gains and the application of circle rate for land valuation. The first appellate authority rejected the application, stating the issues were debatable and covered under section 154(1A), leading to the Assessee's appeal on various grounds.4. The appeal raised concerns about the order being time-barred and non-est, but the tribunal dismissed these grounds, emphasizing the mandatory nature of the amendment process under section 154. The tribunal cited legal precedents to support the directory nature of the time frame for such orders.5. The dispute over the application of the circle rate for land in a composite sale was considered contentious. The tribunal upheld the separate computation of gains on the land, emphasizing the distinction between land and other assets, as established in legal precedents.6. The issue of the correct commercial rate for land valuation was raised, but the tribunal noted that this aspect was not part of the original application under section 154. The tribunal highlighted the need for separate applications for new issues and emphasized the lack of impact on the overall capital gains computation.In conclusion, the tribunal dismissed the Assessee's appeal in one case and allowed it in the penalty proceedings, ruling in favor of the Assessee due to the absence of tax evasion and discrepancies in the capital gains computation.