2019 (7) TMI 1613

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....Ld. CIT has erred in invoking his powers U/s. 263 of the Act by treating the assessment order passed u/s 143(3) of the Act dated 16/12/2010 as erroneous and prejudicial to the interests of the Revenue and thereby set aside the order of the Ld.AO with directions to (i) treat the interest earned in respect of delayed receipt of sale consideration of the property located at Begumpet, Hyderabad amounting to Rs. 5,97,945/- as "income from other sources" and (ii) disallow the assessee's claim for exemption U/s. 54F of the Act. 3. The brief facts of the case are that the assessee is an individual earning income from Long Term Capital Gains and Income from Other Sources filed his Return of Income on 31/07/2008 declaring total income at Rs. 56,53,9....

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....art of the purchaser of the property cannot be treated as interest earned by the assessee. The Ld. AR further submitted that the entire amount received by the assessee was towards the sale of the property and any portion of the same cannot be attributed as interest. It was therefore argued by the Ld. AR that the order passed by the Ld. AO was not prejudicial to the interests of the Revenue in order to invoke the provisions of section 263 of the Act by the Ld. CIT. The Ld. AR further submitted that the entire capital gains earned by the assessee was paid to the developer towards purchase and construction of a residential house for the assessee and therefore, the assessee was entitled to the benefit of section 54F of the Act. It was further a....

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....t be controverted by the Ld. DR. 6. We have heard the rival submissions and carefully perused the materials on record. On perusing the facts of the case, we find merits in the submissions of the Ld. AR. As pointed out by the Ld.AR the enhanced sale consideration received by the assessee due to the delay in the sale transaction on account of the fault of the buyer of the property cannot be termed as 'interest'. Further it is pertinent to mention that there is no finding by the Ld. CIT as to what was the rate of interest charged by the assessee for the delayed payment. Considering these facts and circumstances of the case it can be only construed that the entire payment received by the assessee was only on account of 'sale consideration'. Th....