TaxTMI 
TaxTMI 
2014 (2) TMI 646
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....otal income of Rs.15,53,33,004. In the computation of income filed along with the return of income, the assessee declared long term capital gain on sale of property of the assessee at Kensington Road, Ulsoor, Bangalore [hereinafter referred to as "the property"]. The property was sold by the assessee under a Sale Deed dated 08.06.2005. The assessee computed long term capital gain on sale of the property at Rs.17,00,33,992. The computation of total income filed by the assessee is at pages 36 to 38 of the assessee's paperbook. 3. The property was sold by the assessee to M/s. Prestige Estates Projects Pvt. Ltd. ["Prestige" for short]. Originally, the assessee had entered into a joint development agreement dated 22.09.2004 with Prestige, where....
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....ated 8.3.2011. He was of the view that the aforesaid order of the AO was erroneous and prejudicial to the interests of the revenue. According to him, under the Sale Deed dated 8.6.2005, apart from the sum of Rs.24 crores received under the joint development agreement, the assessee had received a sum of Rs.One crore. According to the CIT, the AO did not make enquiries for ascertaining the true nature of the receipt in the hands of the assessee. According to him, the sum of Rs.One crore ought to have been assessed as business receipt. He therefore proposed to revise the order of the AO u/s. 263 of the Act. 7. The assessee in its reply dated 21.03.2011 to the show cause notice u/s. 263 of the Act, pointed out that the sum of Rs.One crore rece....
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....he order of assessment any finding on the sum of Rs.One crore and therefore there was a failure on the part of the AO to apply his mind to the question as to whether the same has to be assessed under the head 'income from business' or 'capital gain'. He therefore held that the order of the AO was erroneous and prejudicial to the interests of the revenue. Thereafter the CIT set aside the order of the AO and directed the AO to make a fresh assessment on the issue considered in the order u/s. 263 afresh, after giving opportunity of being heard to the assessee. 9. Aggrieved by the order of the CIT, the assessee has preferred the present appeal before the Tribunal. 10. We have heard the submissions of the ld. counsel for the assessee, who drew....
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....h is inadequate, that by itself would not give occasion to the CIT to pass order u/s. 263, merely because he has a difference of opinion in the matter. It is only in cases where there is lack of enquiry, the CIT can resort to powers u/s. 263 of the Act. It was thus submitted that the order u/s. 263 cannot be sustained and the same has to be quashed. 11. The ld. DR, on the other hand, submitted that there was no proper application of mind on the part of the AO and the CIT had rightly invoked the jurisdiction u/s. 263 of the Act. According to him, the question as to whether the sum of Rs.One crore has to be assessed as capital gain or business income, ought to have been investigated by the AO and his failure to do so has resulted in a prejud....
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....nt was treated as capital gain, there is no reason why the sum of Rs.One Crore received over and above the sum of Rs.24 crores received under the joint development agreement at the time of sale on the very same property should be treated as income from business. As rightly submitted by the ld. counsel for the assessee, sale consideration received on sale of property cannot be bifurcated as partly giving rise to income from business and partly giving rise to income from capital gain. As we have already observed, there is nothing on record to indicate the basis on which the CIT comes to the conclusion in the order u/s. 263 of the Act that the sum of Rs.One crore is to be assessed as income from business. The order of the AO was therefore was ....