TaxTMI 
TaxTMI 
2017 (6) TMI 516
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.... taxable as capital gains. For this Revenue has raised following three grounds: - "1. On the facts and circumstances of the case, and in law, the Ld. CIT(A) erred in holding that the surplus on sale of land is taxable as capital gain in the assessee's hands, despite the fact that the assessee business consists of purchase and sale of land/buildings and that it is reasonable to infer that any transaction in a commodity which is in the normal line of business of the assessee constitutes a business transaction unless the contrary is proved by the assessee. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred inholding that the surplus on sale of land is taxable as capital gain in the assessee's hands, though the assessee has failed to discharge the onus cat on him by law to establish that the transaction in land which falls within the purview of the regular business of the assessee, was unrelated to the business of the assessee and that the land was held only as investment and not as stock-in-trade. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that the surplus on sal....
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....IT(A) has retreated the same position as the AO while giving appeal effect to the ITAT, only noted that the issue has been appealed by department before the Hon'ble Bombay High Court under section 260A of the Act. This effect is deliberated by CIT(A) in his order vide Para 3.1 to 3.3 which reads as under: - "3.1 In this case the Hon'ble ITAT, Mumbai's order in this very assessment year is available wherein Hon'ble authority has decided that the income has to be assessed as capital gain despite the fact that same Hon'ble authority has decided in subsequent A.Yrs the income from sale of flat as business income. The relevant portion of the decision given in ITA No.5262/Mum/07 are reproduced from the order as under: '8.3 In respect to the remaining grounds, and the additional grounds filed by the assessee, the matter is liable to be set aside to the file of the AO because of the reason that the AO has not granted exemption ufs.54EC for the reason that the sale consideration was treated under the head 'business income'. Since we have allowed the issue that the sale consideration is liable for capital gain; therefore, allowability of exemptio....
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....g the finding that investment in installments have been made within six months from the date of receipt of installments of sale proceeds of capital assets ignoring the fact that transfer of capital asset took place on 07.05.2003 (vide sale deed df. 07.052003) being land sold to MIS. Brahma Builders for a consideration of 13.90 crore, whereas investment in NABARD Bonds was not made within six months from the date of transfer of capital asset i.e. on 07.05.2003. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in directing the AO to verify the authenticity of investment claimed to have been made in the NABARD Bond Inspite of the fact that investment was mode beyond six months from the date of transfer of asset dtd. 07.05.2003, as receipt of sale consideration in installments is not material for eligible exemption against capital gain and the date of transfer is relevant as provided u/s. 54EC of I.T. Act, 1961. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in directing The AC to verify the authenticity of investment claimed to have been made in the NABARD Bond, Inspite of the fact that inves....
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....d in toto as per the eligibility. I have gone through the submissions and I am of the view that the matter is covered in favour of the appellant on account of the fact that vestments in installments have been made within six months from the date of receipt of installments of sales proceeds of capital asset in the case of appellant. the upper limit of Rs. 50,00,000/- being applicable for the A.Y. 2007-08 only, the appellant is entitled to exemption. In view of this the A.O. is directed verify the authenticity of these investments claimed to have been made in the bonds and according T1Tièxemption u/s.54EC of the Act." 10. From the above facts it is clear that during the year under consideration the assessee has invested in NABARD Bonds after receiving the installments of Rs. 2,51,00,000/- on 07-05-2003 and Rs. 50,00,000/- on 21-05-2003 made investment of Rs. 2,00,00,000/- on 13-06-2003 and 1,00,00,000/- on 22-10-2003. 11. From the above, we find that the investment in NABARD Bonds is made and when payment is received by assessee. This issue is covered by the Tribunals decision in the case of Chanchal Kumar Sircar Vs. Income Tax (2012) 50 SOT 0289 wherein considering the ....
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....ces of the case and in law, the Ld. CIT(A) erred in holding that the claim of the assessee of long term capital gain and deduction u/s 54EC of the Act instead of business income on the sale of land is merely a change of head and hence no concealment of income. 3. On the facts and circumstances of the case and in law, the ld. CIT(A) erred in holding that the confirmation of disallowance of bogus expenses to an extent of 75% of the claim of the assessee is an estimate without appreciating the fact that the disallowance is based on lack of evidence and bogus claim of expenses. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that bogus claim of expenses without supporting evidences is not amounting to giving mac rate particulars of income." 13. Briefly stated facts are that the AO completed the assessment under section 143(3) of the act determining the total income at Rs. 7,25,25,000/- after making following additions: - (i) Business income on account of sale of land (development rights) to M/s. Satyam Builders 3,19,97,000/- (ii) Business income on account of sale of land (development rights) to M/s. B....
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....ve amount, the existence of expenses, keeping in mind the nature of business, could not be ruled out. Accordingly, the Hon'ble ITAT enhanced the disallowance out of the above amount of Rs. 41,28,262/- from 50% {upheld by the Ld. CIT(A)} to 75%, thereby upholding a further addition of Rs. 10,32,065/ - on this account. As discussed elaborately in the assessment order and in the appellate orders by the Ld. CIT(A) and Hon'ble ITAT, the assessee did not have any bill/vouchers etc. in support of its claim of above expenses. During the course of penalty proceedings, the assessee has relied upon certain judgments as mentioned in para 2 of its submission. It is seen that most of these judgments relate to additions made on estimated and adhoc basis without any sound basis. in the present case, it has been proved beyond doubt that the assessee did not have bills or collateral confirmations regarding the impugned purchases." 16. Similarly, in respect to business income computed by the AO in pursuance to Tribunals order in respect to sale of land (development rights) to M/s Satyam Builders amounting to Rs. 3,19,97,000/-, to M/s Brahma Builders Rs. 3,7,81,300/-, an amount received as ....
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....in declared by the appellant as business income and finally the compensation received of Rs. 49,03,620/- claimed as capital receipt as business income. All these additions have been consequent to the appeal effect of the second appellate\ order passed by the Hon'ble ITAT, Mumbai. It is thus clear that the A.O while giving appeal effect drew the inference that by claiming income from other head of income which was decided by Hon'ble ITAT, the appellants have furnished inaccurate particulars. As regards enhancement of disallowance of bogus purchase. the A.O opined that same is furnishing of inaccurate particulars. In fact for the bogus purchases, the appellant have not furnished the bills and hence 759", of the amount was disallowed as bogus purchases on estimated basis by Hon'ble ITAT. Further, treatment of capital gain declared by the appellant; as business income is again a matter of opinion on the facts. 3.2. In view of this, I am convinced that it is neither a case of concealment of income nor filing of inaccurate particulars. Taking a different opinion or interpreting the details do not amount to furnishing of inaccurate particulars and/or concealment of in....
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....ssion independent of the above submissions is made for admission of this appeal. 4. It is well settled that the penalty proceedings are independent and separate from quantum proceedings. Therefore, mere rejection of a claim in quantum proceedings would not ipso facto lead to levy of penalty under section 271(1)(c) of the Act. For imposition of penalty, the ingredients of Section 271(1)(c) of the Act must be satisfied. In this case, it is not the submission of the Revenue that the penalty is imposable as there has been concealment of income or furnishing of inaccurate particulars. At the very highest, it can only be a case of a claim of being taxed under a particular head of income being not accepted. The supreme Court in the matter of Commission of Income Tax vs. Reliance Petro products (P) Ltd. reported in 322 ITR 158 has held that mere rejection of a claim would not lead to imposition of penalty. In the above circumstances, we see no reason to entertain the proposed question of law." That means the issue in respect of the items of sale of land (development rights) to M/s Saytam Builders & sale of land (development rights) of M/s Brahma builders and an amount received ....
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....Under these circumstances, remanding the matter back to the file of the Assessing Officer also will not serve any purpose. Considering the totality of the facts of the case and considering the fact that relief of 50% granted by the CIT(A) appears on the higher size, restriction of disallowance to 75% as against 50% by the CIT(A), in our opinion, will be justified. The ground raised by the Revenue is accordingly partly allowed." 20. From the above order of Tribunal confirming the disallowance of bogus purchases at 75%, we find that the Tribunal has just estimated and AO has simply levied the penalty on the basis of confirmation of Tribunal order. We are of the view that mere on confirmation of disallowance of expenses and that also on estimate basis, the penalty for concealment of income u/s 271(1)(c) of the Act cannot be levied and hence, we confirm the order of CIT(A) deleting the penalty. This appeal of revenue is dismissed. 21. The only issue in ITA No. 2954/Mum/2012 for the AY 2007-08 in assessee's appeal is against the order of CIT-22, Mumbai revising the assessment under section 263 of the Act on account of sale of land as business income as against the assessee's claim....
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....ugh the order u/s. 143(3) was passed by the Assessing Officer, as is pointed out in the above reply, in keeping with the order of the Hon'ble ITAT for A.Y. 2004-05 which was in favour of the assessee was available with the Assessing Officer is nothing but mis-construction of facts. Even though the Hon'ble ITATs order for A.Y. 2004-05 was in favour of the but the Assessing Officer has preferred an appeal to the Hon'ble Bombay High Court and thus Hon'ble ITAT order for A.Y. 2004-05 was not accepted by the Assessing Officer. The Assessing Officer on the one hand has given effect to the Hon'ble ITAT order for A.Y. 2004-05 in the assessment order for A.Y. 2007-08 and on the other hand has not accepted the findings of the Hon'ble ITAT for A.Y. 2004-05 by preferring the appeal to the Hon'ble Bombay High Court. Moreover, for A.Y. 2005-06, the Hon'ble ITAT has given a finding in the assessee's own case which is in favour of the Department. This is the sole reason why the assessment order passed u/s. 143(3) for A.Y. 2007-08 is prejudicial to the interest of Revenue." 23. Accordingly, he held that the assessment order framed by the AO is erroneous as well as....
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....that the assessment order framed for AY 2005-06 is in favour of department whereby the Tribunal in ITA No. 3980/Mum/2009 dated 13-10-2010 has held that the income on account of sale of land is to be assessed as business income. On this the learned Counsel for the assessee argued that once there are two views possible, revision proceedings under section 263 of the Act is not applicable. On the other hand, the learned Sr. DR supported the order of CIT revising the assessment. 26. We have heard the rival contentions and gone through the facts and circumstances of the case. Admitted facts are that in this year the AO has discussed the facts while framing the assessment under section 143(3) and finally assessed the income arising out of the sale of plot of land by entering into development agreement with Kubix Realities Pvt. Ltd. on 27-04-2006 as long term capital gain. Similarly, in assessee's own case sale of plot of land was assessed as business income. But, Tribunal finally held that the same should be assessed as long term capital gain for AY 2004-05. However, in AY 2005-06, the Tribunal took a different view in assessee's own case and held that the profit on sale of plot of lan....
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....ny commercial area which was not completed. 5. Ld. CIT(A) has erred in Not appreciating the correct proposition of law laid down by the Hon'ble Bombay High Court in case of Brahma Associates while disallowing the appellant's claim of deduction under section 80IB (10)." 29. Briefly stated facts are that the assessee claimed deduction under section 80IB of the Act on account of project at Pimpri being known as Manish Garden. The assessee has disclosed net profit of Rs. 2,41,5,224 on account of this project and same has been claimed as deduction under section 80IB (10) of the Act. A survey under section 133A of the Act was carried out in the case of the assessee on 23-12-2008 whereby it was noticed that the assessee commenced construction activity for this project in FY 2003-04 with sanction planned of 8 buildings. Admittedly, assessee obtained completion certificate for 7 buildings on 31-03-2008 and claimed deduction under section 80IB of the Act. The survey party on verification of project noticed that the project Manish Garden consists of 8 buildings i.e. A1, A2, B1, B2, C1, C2 and building D. It was admitted that the 7 buildings were completed but D building which is a....
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....pellant has not claimed 801B (10) rebate on the same. In support of the same the appellant has cited case law of Bhrama Associate vs. JCIT. -------------------------------------------------------------------- 7.4 As far as the issue if a project which is approved as residential cum commercial by local authority, rebate u/s.80IB (10) is available which is the case of appellant, I find that the issue is covered in the favour of the appellant by this decision. Thus if the project has been approved prior to 01.04.2005 amended sec.801B (10) is not applicable restricting the area of commercial portion to 5% of such project, I find this issue is covered in favour of the appellant by the said decision. 7.5 However, coming to the second aspect if rebate on profit of the part of the project can be claimed when appellant has not been able to compete remaining part of the project within the prescribed period of four years, I find that the same decision given by Hon'ble High Court does not allow grant of 80IB(10) on part profit of the project. It is not the case of appellant that he is offering profit on part completion method and then in any case four years of pe....
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....h approved project and not for the part project. It says that either the project is eligible or not eligible but in any case it cannot be the case that one part of the project is eligible and the other part is not eligible. In this case since the appellant has not contradicted the fact that construction of building 'D' has not yet commenced till 31.03.2008, it is clear that the Pimpri project consisting of buildings A-i, A-2, A-3, B-i, 8-2, C-i, C-2 & D, which commenced on 03.05.2003 remained incomplete as on 3 1.03.2008 and thus has not fulfilled the criteria of completion within four years from the date of commencement and hence is not eligible for rebate u/s.80IB(1O). In view of this the claim made by the appellant is not tenable and hence rejected. Ground No.5 is dismissed." Aggrieve now, assessee is in second appeal before us. 30. We have heard the rival contentions and gone through the facts and circumstances of the case. We find that the Revenue during the course of survey proceedings u/s 133A of the Act on assessee on 23-12-2008 noted that the assessee has commenced the construction for this project at Pimpri, Pune known as Manish Garden in the FY 2003-04 with....
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....ngs A-1, A-2, A-3, B-1, B-2, C-1 and C-2 for eligibility of deduction u/s 80IB(10) of the Act. Admittedly, the assessee has not submitted any plan for block 'D' which is a commercial building and not completed and for which no deduction was claimed by the assessee. We find that this issue is answered by the Hon'ble Bombay High Court in the case of CIT vs. Vandana Properties (2013) 353 ITR 36 (Bom) Wherein Hon'ble Bombay High Court has considered as under:- "25. The question, therefore, to be considered is, whether the Revenue is justified in reading the expression 'plot of land' in Section 80IB (10)(b) as 'vacant plot of land' ? 26. The object of Section 80IB (10) in granting deduction equal to one hundred per cent of the profits of an undertaking arising from developing and constructing a housing project is with a view to boost the stock of houses for lower and middle income groups subject to fulfilling the specified conditions. The fact that the maximum size of the residential unit in a housing project situated within the city of Mumbai and Delhi is restricted to 1000 square feet clearly shows that the intention of the legislature is to make avai....
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....tion 80IB and also to identify receipts and repayments of long term finances under the provisions of Section 10(23G), separately financing arrangements and also, if it separately fulfills all other statutory conditions listed in Sections 10(23G) and 80(B(10). With regard to your query regarding the definition of Housing Project, it is clarified that any project which has been approved by a local authority as a housing project should be considered adequate for the purpose of Section 10(23G) and 80IB (10)." 29. From the aforesaid letter of CBDT, it is clear that for the purposes of Section 80IB (10) it is not the mandate of the Section that the housing project must be on a vacant plot of land having minimum area of one acre and that where a new housing project is constructed on a plot of land having minimum area of one acre but with existing housing projects would qualify for Section 80IB (10) deduction. Even otherwise, the argument of the Revenue does not stand to reason because, in the city of Mumbai where there is acute space crunch, it is difficult to find a vacant plot having minimum area of one acre and even if few such plots are existing it cannot be said that Section....