AI OCR 
TaxTMI 
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TaxTMI 
2019 (9) TMI 250
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....and on facts in holding that decision of Hon'ble Supreme Court in Goetz (India) Ltd Vs Commissioner Of Income Tax (2006) 157 Taxman 1, where no scrutiny assessment was pending, was applicable to appellant's case without appreciating the fact that in the appellant's case scrutiny was pending before the assessing officer. 4. The learned CIT(A) failed to appreciate that u/s 143(3) of the Income Tax Act, 1961 it is the responsibility of the assessing officer to conclude an assessment after taking into account all the material produced by the Appellant and gathered by the assessing officer. It is incumbent on the assessing officer to consider the submissions of the Appellant on assessability of the capital gains on the sale of land as Long-Term Capital Gains. 5. The learned CIT(A) erred in upholding the assessment order which is against the CBDT Circular No. 14(XL-35) dated April 11, that has been judicially noted and approved. 6. The learned CIT(A) erred in law and on facts in holding that transfer of leasehold land along with the buildings on it leads to short-term capital gains u/s 50 of the Income Tax Act, 1961 without appreciating that Sec 50 of the I.T.Act,1961 i....
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....ehold rights over the land as well as the factory shed built over the land to a buyer. It entered into a Memorandum of Agreement dated 27th November 1991 with M/s Devas Engineering Pvt Ltd to transfer the leasehold interest in the land and ownership rights over the building thereon subject to approval from SIPCOT. Approval of SIPCOT was received vide Approval letter dated 06/02/2014 and the transfer of leasehold land and building was completed thereafter. Permission and approval were further subject to payment of dues and claims which prevented the assessee from commencing the procedure of Closing and Winding up of Business. 8. Also, due to pending claims of creditors, labour matter, sales tax demands and property tax dues, the assessee had to incur expenses towards Office Rent, Legal Professional Fees, Property Maintenance Charges, fees towards meeting compliance under Companies Act, Income Tax Act and other Statutory applicable laws. 9. In the return of income filed for A.Y. 2015-16 on 30/11/2005, the assessee returned Capital Gains on transfer of leasehold rights in land and buildings put up on it by the assessee as Short Term Capital Gains at Rs. 3,67,67,836 and after adjusti....
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....idered by the AO in the absence of a revised return. 13. The assessee is in appeal before this Tribunal against the order of the CIT(Appeals). 14. We have heard the rival submissions on the issue of disallowance of expenses of Rs. 1,08,54,687. The ld. counsel for the assessee relied on the decision of jurisdictional High Court in the case of CIT v. Lawrence D'Souza [2011] 15 taxmann.com 148 (Karnataka) rendered on very similar facts. In that case the assessee was engaged in running a hotel and he stopped his business from August 1994 onwards due to labour problem. The business premises was a leased premises and was sold along with furniture, fixtures, etc., during the previous year relevant to A.Y. 1996-97. In the return of income, the assessee claimed deductions for expenditure including for renovation of the buildings after the business was stopped, post operative rent and post operative interest. The Hon'ble Court rejected the contention that no deduction is to be allowed as the business was completely stopped and also that the expenditure claimed was also not substantiated. It held that the liabilities like paying rent etc., are not personal liabilities of the assesse....
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....l these expenses had to be incurred for proper liquidation of assets of the company. In identical circumstances, the Hon'ble High Court of Karnataka in the case of Lawrence D'Souza (supra) took the view that expenditure in question had to be allowed in AY 1996-97, though business came to a halt in the year 1994. Following the aforesaid decision of Hon'ble High Court of Karnataka, we are of the view that the expenses in question have to be allowed as a deduction. This issue is accordingly decided in favour of assessee. 19. As far as the other issue of capital gain on sale of land & building is concerned, the ld. counsel for the assessee submitted that the assessee had wrongly treated the entire capital gains as short term capital gain in its return of income and the same needs to be treated as short term capital gains for sale of building and long term capital gains for leasehold rights in land. He brought to our notice that the CIT(A) rejected the claim of assessee only for the reason that assessee has shown short term capital gains from sale of its capital assets in its return of income. The CIT(A) dismissed the claim of assessee holding as follows:- " ....... No revised re....
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.... Tribunal) by themselves, or on remand, by the Assessing Officer. In the instant case, the Tribunal, on perusal of the record, found that the relevant material qua the claim made by the assessee company under Section 80 IB (10) of the Act was placed on record by the assessee company during the assessment proceedings and therefore, it deemed it fit to direct its reexamination by the Assessing Officer. 18.1 In our opinion, the view taken by the Tribunal is unexceptionable and therefore, does not merit any interference." 21. He submitted that similar decisions have been rendered by the Hon'ble Bombay High Court in the cases: CIT v. Prabhu Steel Industries (P.) Ltd [1988] 171 ITR 530 (Bombay) and CIT v. Pruthvi Brokers & Shareholders [2012] 23 taxmann.com 23 (Born.). He pointed out that during the assessment proceedings and the proceedings before the CIT(A), the assessee submitted the details of the transfer of lease hold right in the land and building on the land along with the supporting documents and neither the AO nor the CIT(A) have commented adversely on them. It was submitted that the claim of the assessee for correct computation of the Capital gains should be considere....
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....as to be computed under the provisions of section 50 as Short Term Capital Gains. The observations of the CIT(Appeals) contrary to the aforesaid provisions are unsustainable and are hereby vacated. The ld. counsel for the assessee has in this regard rightly placed reliance on the decision of Hon'ble Rajasthan High Court in the case of CIT v. Vimal Chand Golecha [1993] 201 ITR 442 (RAJ.) wherein it was held that when price of two capital assets is charged at one consolidated price, where a gain from one of capital assets was a short-term capital gain while from other it was a long term capital gain, then the assessee is entitled to bifurcate the same and benefit to assessee could not be denied in respect of gain arising from sale of an asset which could be considered as long-term capital gain. 26. As far as the issue of set off of business loss and unabsorbed depreciation is concerned, a specific ground was raised by the assessee before the CIT(Appeals), but the CIT(A) has not rendered any decision specifically on this issue. It is a fact that during the assessment proceedings it was submitted to the AO that profit on transfer of a business depreciable asset (which is determine....