TaxTMI 
TaxTMI 
2017 (11) TMI 325
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....2014 passed by the Ld. Commissioner of Income Tax (Appeals) is bad in law and wrong on facts. 2. That the Ld. Commissioner of Income Tax (Appeals), erred in law, in upholding the order of the Assessing Officer in disallowing the claim of loss of Rs. 1,64,286 under the head "Profits and Gains of Business or Profession'. 2.1 That the Commissioner of Income Tax (Appeals), erred in law, in upholding the Order of the Assessing Officer, that the appellant has not carried on any business activity during the year and in assessing the interest income of Rs. 32,710/- received by the appellant company through money lending business under the head 'Income from Other Sources' and restricting the claim of expenditure at Rs. 35,744/-. ....
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....he 143(3) proceedings AO noticed that the assessee acquired undivided right in respect of 4.431% of 8 grounds and 843 sq. ft of land in New R.S. No. 543/14 (part) and New R.S. No. 543/15 (part) on 19.01.2001 for a total consideration of Rs. 22,20,387.50/- and by way of an agreement with M/s Chaitanya Builders and Leasing Private Limited, they agreed to pay Rs. 30,29,612.50 for construction of their office space. After completion of the building, according to the assessee, they incurred an extra expense of Rs. 2,99,683/- towards cost of Genset and Air conditioner, but since the assessee found the said accommodation as insufficient for their office, they sold the same to one M/s Vaishnavi Associates for a consideration of Rs. 60,46,840/- duri....
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.... adding value of construction of Rs. 30,29,612/- to it, AO reached the total sum realizable by the assessee at 84,28,375/- out of which he deducted the cost of Rs. 55,49,683/- and calculated the gains at Rs. 28,78,693/- as short term capital gains. Assessee is challenging the disallowance of the business expenses to an extent of Rs. 1,64,286/- and also the method of calculation of gains as well as the treatment given to the gains as short term capital gains instead of long term capital gains, in view of the fact that the property was acquired on 19.01.2001 and was sold on 27.03.2004 i.e. after holding the same for more than 36 months. Ld. CIT (A) dismissed the appeal of the assessee and confirmed the additions made by the AO. Hence, this ap....
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....be acquired for the purpose of office space of the assessee and this fact is evident that the assessee held the same for more than three years after getting the office space constructed by entering into the agreement dated 19.01.2001 and 27.01.2002, and by spending Rs. 30,29,612/- for construction. Spending Rs. 2,99,683/- for Genset and Air conditioner establishes that they wanted to use it as their office, but because the space was not sufficient they sold it away to M/s Vaishnavi Associates for a total consideration of Rs. 60,46,840/-. Grievance of the assessee is three fold now. Firstly, the liquidated damages in respect of the delay occurred in delivering a capital asset which reduced the cost of acquisition is not a revenue receipt, se....
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....reat it as long term capital gains. 5. We have gone through the record, and the decisions in Rita Sunil Manaktala vs. Income Tax Officer (Mumbai) (In ITA No. 255/Mum/2013) and Delhi Development Authority vs. Income Tax Officer (1995) 53 ITD 19 (Delhi), wherein it is held that the composition paid on account of delay in construction of a building would represent a non taxable capital receipt. In the decisions cited by the assessee the coordinate benches of this Tribunal held that the compensation paid on account of construction is a non taxable capital receipt. We have also perused the agreements dated 19.01.2001 and 27.01.2002, and sale deed dated 27.03.2004. It is clearly mentioned therein that out of 48,31,250/- the assessee received o....