TaxTMI 
TaxTMI 
2018 (1) TMI 1354
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....nd sale of land. During the assessment proceedings it was found that assessee has sold two properties amounting to Rs. 30,00,000/- and Rs. 23,00,000/- on 28/12/2010 total amounting to Rs. 53,00,000/- out of his business stock of Rs. 57,51,720/-. The Assessing Officer during the assessment proceedings accepted the returned income as declared by assessee is and assessed the income of assessee u/s 143(3) of the Income Tax Act, 1961, at Rs. 27,93,750/-. 4. The property was never shown in stock in trade and it was never shown in the capital account. The Assessing Officer passed an order dated 24.03.2014 wherein it has been observed as under:- "2) Assessee is engaged in the business of real estate i.e. purchase and sale of land. Apart from the above assessee has also shown income from job work. 3) During assessment proceedings it is found that during the year assessee has sold two properties amounting to Rs. 30,00,000/- and Rs. 23,00,000/- on 28/12/2010 total amounting of Rs. 53,00,000/- out of his business of Rs. 57,51,720/-." 5. Taking into consideration, he further contended that the CIT(A) while considering the matter held as under:- "4. I have gone through the written submis....
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....he land was disclosed as opening stock for F.Y. 2009-10 i.e. relevant to AY 2010- 11. The issue before us is for AY 2011-12. Thus in the previous year relevant to the assessment year before us the subject land was business asset of the assessee. The ld. Pr.CIT-1 has also ignored this fact. This issue has been examined by the AO and assessee had made submission during the course of assessment proceedings. These details are available in the paper book. The AO after examining these details and after going through these financial statements proceeded to complete the assessment by accepting the business profit declared by the assessee. The assessee has been able to demonstrate that the land sold during the assessment year was the business asset (stock in trade) in the financial statements and duly appearing in the return of income filed. The AO accepted the contentions of the assessee and adopted a view. Now Pr. CIT does not agree with the view adopted by the AO then the law does not permit him to replace the view. Thus in our considered view the ld. Pr.CIT-1 is not justified to set aside the order of the AO. We set aside the revision order passed by the ld. Pr.CIT-1 and direct to res....
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....ax vs. Gokuldas Exports, [2011] 333 ITR 214, (KARHC) : wherein it has been held as under:- 28. Further the Delhi High Court in the matter of CIT v. Shri Ram Honda Power Equip : [2007] 289 ITR 475 has taken a contra view after elaborately discussing the judgments of various High Courts and the Supreme Court on the point In the aforesaid case it has been held as under (headnote): The idea of section 80HHC is to ensure that the exporter gets the benefit of the profits derived from export and not to depress the profit further. Therefore, it can only be the net interest which can be included in the profits. If netting were not to be permitted the result would be that the profits of the exporter would be depressed by an item that is expenditure incurred on earning interest, which does not form part of the profit at all. This could not have been the intention of the Legislature. Explanation (baa) is relatable only to clause (a) of section 80HHC(3) and not to clause (b) thereof. These operate in distinct areas and no inter-mixing is contemplated. Hence the word 'interest' in clause (baa) to the Explanation in section 80HHC is indicative of 'net interest', i.e., gross ....
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....: (a) 90 per cent., of any sum referred to in clauses (iiia), (iiib) and (iiic) of section 28, i.e., export incentives; (b) 90 per cent., of any receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature included in such profits; and (c) profits of any branch, office, warehouse or any other establishment of the assessee situate outside India. (viii) The word 'interest' in clause (baa) of the Explanation connotes 'net interest' and not 'gross interest'. Therefore, in deducting such interest, the Assessing Officer will take into account the net interest, i.e., gross interest as reduced by expenditure incurred for earning such interest. (ix) Where, as a result of the computation of profits and gains of business and profession, the Assessing Officer treats the interest receipt as business income, then deduction should be permissible, in terms of Explanation (baa) of the net interest i.e., the gross interest less the expenditure incurred for the purposes of earning such interest. The nexus between obtaining the loan and paying interest thereon (laying out the expenditure by way of interest) for the purpose of earnin....
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....ned Counsel for the appellant. Firstly, it is not in dispute that when the order of the Commissioner was passed there were two views on the word "profits" in that section and different views existed on the day when the Commissioner passed the above order. Moreover, the mechanics of the section have become so complicated over the years that two views were inherently possible. Therefore, the subsequent amendment in 2005 even though retrospective, will not attract the provisions of Section 263 of the Act, particularly when as stated above we have to take into account the position of law as it stood on the date when the Commissioner passed the order dated 18-2-1998, in purported exercise of powers under Section 263 of the Act. 11. In the case of Malabar Industrial Co. Ltd. v. CIT : (2000) 243 ITR 83, the Hon'ble Apex Court has taken the view that the phrase "prejudicial to the interests of the revenue" under Section 263 of the Act has to be read in conjunction with the expression "erroneous" order passed by the assessing officer. Every loss of revenue as a consequence of an order of the assessing officer cannot be treated as prejudicial to the interests of the revenue. For exam....