TaxTMI 
TaxTMI 
2015 (9) TMI 1342
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....l income, assessee offered capital gains income of Rs. 1,74,84,408/- and set off loss from the business of Rs. 1,74,48,332/-, thereby total income being Long Term Capital Gains at Rs. 36,076/- was offered. This computation of income filed by assessee was accepted by Assessing Officer (AO) in the order dt. 16-12-2010 u/s. 143(3) of the Act. Ld.CIT noticed that on verification of agreement of sale cum irrevocable Power of Attorney dt. 21-03-2009, it is seen that assessee-company agreed for transfer of 800 sq. yds., of land for an amount of Rs. 1.75 Crores and desired selling further plot of land of 1,800 sq. yds., to the same buyer for an amount of Rs. 3.80 Crores. The CIT was of the opinion that the sale of entire land of 2,600 sq. yds., was....
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....ing independent transactions though concluded by one agreement dt. 31-03-2009, the capital gains were offered as per the transactions in respective years. It was further stated that there is no prejudice caused to Revenue as entire capital gain was offered as Long Term Capital Gain in both years. 2.2 Ld.CIT however, did not agree and set aside the assessment by stating as under: "From the above it can be clearly established that no possession of the property was given to the buyer during the financial year 2007-08 and the amount of Rs. 1.75 Crores was only an advance and as such the assessee company is not correct in admitting part of the capital gain during the asst. year 2008-09. The assessee should have offered the entire Cap....
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.... sale, particularly item No. C, D & E to indicate that the capital gains was calculated separately in the year in which the transaction occurred. Therefore, assessee has rightly offered the capital gains in the respective assessment years. It was further contended that there was no prejudice caused to the Revenue as the capital gains was taxed @ 20% in either of the year and in fact by the order of CIT u/s. 263, prejudice is caused to the Revenue as the loss to be carried forward in 2008-09, instead of getting set-off to the Long Term Capital Gain in 2008-09, is being set-off in a later year to the business income being taxed at 30% of tax in AYs. 2011-12 and 2012-13. Assessee has furnished a chart indicating that for a period of seven asse....
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....Capital Gain, no prejudice is generally caused whether the capital gain is offered in AY. 2008-09 upon entering into an agreement or in AY. 2009-10 on conclusion of the agreement. 6. The issue whether the capital gains can be taxed in AY 2009-10 or not is not before me. What I am concerned here is whether the action of the CIT in exercising jurisdiction u/s. 263 in AY 2008-09 is valid or not. Provision of Section 263 empowers the CIT to exercise jurisdiction if he considers that any order passed there in by the AO is erroneous insofar as it is prejudicial to the interest of Revenue. Thus, there should be two conditions which require to be satisfied, (A.) that order of AO is erroneous and (B.) also is prejudicial to the interest of Revenu....
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....ead Ld.CIT exercised jurisdiction to direct the AO to exclude the capital gain offered in this assessment year, thereby income offered by assessee was excluded from computation during the year. This action of the CIT causes prejudice to the Revenue, not the order AO which was considered by the CIT as prejudicial to the interest of Revenue. Not only that, assessee also justified that the loss which was incurred during the year, would be eligible to set-off to the business profits earned in AY 2011-12 onwards, wherein assessee offered positive incomes, offering the tax at 30% of the total income + surcharge there on. Action of the CIT would result in refund of tax to assessee and is beneficial to assessee. Therefore, the second condition pres....