TaxTMI 
TaxTMI 
TaxTMI 
2022 (6) TMI 1193
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....d. A.O. after examining the relevant sale deed and computation of capital gain as arrived at by the assessee along with detailed submission filed in course of the assessment proceeding, had taken a plausible and judicious view, which did not suffer from lack of independent and adequate enquiry. 2. That, the Ld. Pr. C.I.T erred in holding the assessment order u/s. 143(3) of the Act erroneous and prejudicial to the interests of the revenue for alleged noncompliance of clause (a) of Explanation 2 to sec. 263(1) of the Act in spite of the fact that the impugned assessment was not a case of no enquiry and after thorough examination of the related documents, the Ld. A.O. took a judicious view in the matter and allowed the computation of capital gain as adopted by the assessee. 3. That, the Ld. Pr. C.I.T. has acted against the Explanation 2 to sec.263 of the Act, inasmuch as the assessment order was passed after making proper enquiries/verification which the A.O. was required to make with respect to the computation of capital gain on sale of building (12344 sq. ft, built in a land of 7380 sq. ft. previously), as adopted by the assessee and hence the order passed u/s.263 of the Act is ....
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....after claiming deduction u/s 80IA of the Income-tax Act, 1961 of Rs. 15,81,94,482/-. The return was assessed u/s 143(3) of the Income-tax Act, 1961 on 26.12.2019 at assessed income of Rs.16,21,98,753/- disallowing the deduction u/s 80IA of Rs.15,81,94,482/-. The assessment records has been gone through and found that the assessee company had purchased a building (12344 sq.ft.) built in a land of 7380 sq. ft. previously and sold the same for Rs.1216.12 lakh in F. Yr. 2016-17 but wrongly claimed the gain of Rs.27.32 lakh under short term capital gain and the same was wrongly set off against loss of earlier assessment year 2015-16. The assessee derived the gain at Rs.27.32 (Rs.1216.12 - Rs.1188.80) lakh by taking into account the building cost (WDV) for Rs.1188.80 lakh. However, the actual cost of building shown under disposal as per Gross Block value of the building account was Rs.322.45 lakh. Net block/WDV of the building block as on 1.04.2016 and April 2017 were Rs.1447.49 lakh and Rs. 1193.70 lakh respectively as per Companies Act whereas the same were as per Income-tax act at Rs. 1188.00 lakh and Rs. NIL respectively. It is further noticed that the land on which the building wa....
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.... by 13.08.2021 in this regard, elaborating and/or evidencing, your contentions/submissions. Considering the pandemic situations arising due to COVID-19, physical attendance is not considered necessary and you are requested to make written submissions with necessary details through Email ID: [email protected] and it will be treated as compliance to this notice u/s.263(1)." 4. In response to this notice the assessee filed detailed submissions stating that the issue of computation of short term capital gain on sale of land and building and furniture has been examined thoroughly by the AO during the course of assessment proceedings and the computation of the short term capital gain was accepted by the AO. It was also submitted that if the capital gain is computed in the manner as referred in the show cause notice u/s 263 of the Act it would not be beneficial for the Revenue as the income which would be computed in the manner stated in the show cause notice the same will be much lower or rather it will be a loss. Therefore, the assessment order is neither erroneous nor prejudicial to the interests of the Revenue. Ld. Counsel for the assessee also referred to the detailed w....
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....ase deed placed at page 55 to 64 of the paper book, the purchase price of the land is Rs.1,20,00,000/- and building is Rs.35,00,000/-. In the subsequent years the assessee invested in the building by doing construction work. The opening Written-Down Value (in short the "WDV") of land and building as on 01.04.2016 is Rs.11,88,80,047/-. In this building, opening WDV of furniture is Rs.23,88,143/-. During the year the assessee sold the said land and building along with the furniture for a consideration of 12.40 crore and after deducting the opening WDV of land, building and furniture computed short term capital gain of Rs.27,31,810/-. Ld. Pr. CIT on perusal of the assessment records observed that in Note-10 of the balance sheet as on 31.03.2017, the assessee company has shown disposal of land at Rupees NIL, building at Rs.3.22 crore whereas in the Tax Audit Report in Form No.- 3CD, the assessee has shown deduction for building at Rs.11.88 crore and furniture at Rs.28,53,143/-. In view of these details, ld. Pr. CIT observed that the assessee has not accounted for the sale consideration of land on which the building was constructed and was sold out by the assessee, instead it seems that....
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....y the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. (2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. (3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, National Tax Tribunal, the High Court or the Supreme Court. Explanation- In computing the period of limitation for the purposes of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded." 8.1. On a bare perusal of the sub section-1 would reveal....
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....ce or without application of mind. The phrase 'prejudicial to the interests of the revenue' has to be read in conjunction with an 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 example, when an ITO adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the ITO has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the ITO is unsustainable in law. It has been held by this Court that where a sum not earned by a person is assessed as income in his hands on his so offering, the order passed by the Assessing Officer accepting the same as such will be erroneous and prejudicial to the interests of the revenue - Rampyari Devi Saraogi v. CIT [1968] 67 ITR 84 (SC) and in Smt. Tara Devi Aggarwal v. CIT [1973] 88 ITR 323 (SC)".[Emphasis Supplied] 8.3. Hon'ble Apex Court in the case of CIT vs. Max India Limited as reported in 295 ITR 0282 has held that: " 2. ....
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....hus of the opinion that the provisions of s. 263 of the Act, when read as a composite whole make it incumbent upon the CIT before exercising revisional powers to: (i) call for and examine the record, and (ii) give the assessee an opportunity of being heard and thereafter to make or cause to be made such enquiry as he deems necessary. It is only on fulfillment of these twin conditions that the CIT may pass an order exercising his power of revision. Minutely examined, the provisions of the section envisage that the CIT may call for the records and if he prima facie considers that any order passed therein by the AO is erroneous insofar as it is prejudicial to the interests of the Revenue, he may after giving the assessee an opportunity of being heard and after making or causing to be made such enquiry as he deems necessary, pass such order thereon as the circumstances of the case justify. The twin requirements of the section are manifestly for a purpose. Merely because the CIT considers on examination of the record that the order has been erroneously passed so as to prejudice the interests of the Revenue will not suffice. The assessee must be called, his explanation sought for and exa....
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....ive pronouncements including the decision of Hon'ble Supreme Court in the case of Malabar Industries 243 ITR 83 and has propounded the following broader principle to judge the action of CIT taken under section 263: "(i) The CIT must record satisfaction that the order of the AO is erroneous and prejudicial to the interests of the Revenue. Both the conditions must be fulfilled. (ii) Sec. 263 cannot be invoked to correct each and every type of mistake or error committed by the AO and it was only when an order is erroneous that the section will be attracted. (iii) An incorrect assumption of facts or an incorrect application of law will suffice the requirement of order being erroneous. (iv) If the order is passed without application of mind, such order will fall under the category of erroneous order. (v) Every loss of revenue cannot be treated as prejudicial to the interestss of the Revenue and if the AO has adopted one of the courses permissible under law or where two views are possible and the AO has taken one view with which the CIT does not agree. If cannot be treated as an erroneous order, unless the view taken by the AO is unsustainable under law (vi) If while maki....
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....of details/evidences in respect of sale and purchase of relevant asset. This question was asked in point no.-12 of the notice issued u/s 142(1) of the Act. In reply dated 18.11.2019 the assessee filed details of capital gain arising out of sale of fixed assets along with copy of relevant sale deed and calculation which is placed at page 31 to 34 of the paper book. Again on 25.11.2019 the assessee filed a reply to the show cause notice dated 30.10.2019 on various issues which also included the issue of capital gain on sale of building. In this reply dated 25.11.2019 at point no.-7 placed at page 43 to 54 of the paper book following submissions with necessary details were made: "7. State of building shown in return of Rs.12,16,11,857/- instead of Rs.12,40,00,000/-. Why the full value of consideration shall not be considered for computation of capital gain. The assessee during the year had sold building along with furniture to M/s. Tech Precision Solutions for Rs.12,40,00,000/-. Copy of sale agreement and cheque is enclosed here with. As per schedule A and schedule B at page 10 of the agreement, it was mentioned that the sales includes transfer of building along with certain furni....
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....r as observed by ld. Pr. CIT in the impugned order, the computation of the capital gain will be made in the following manner: Cost of the land as on 26/04/1995 [As per purchase deed enclosed at pages 55-64 of the Paperbook] Amount (Rs.) % Land 1,20,00,000 77.42 Building 35,00,000 22.58 Total consideration paid by the assessee at the time of purchase 1,55,00,000 F.M.V of land as on 01/04/2001 [as per Valuation Report enclosed at pages 65-70 of the Paperbook] 1,90,06,153 Total sale consideration as on 08/03/2017 12,40,00,000 % of land 9,60,00,080 % of building 2,79,99,920 Computation of Long term Capital Gain on sale of land Proportionate sale consideration 9,60,00,080 Less: Indexed cost [19006153 x 264/100] 5,01,76,244 Long term capital gain 4,58,23,836 Loss of earlier A.Ys [as shown in Return of Income for AY 2017-18 enclosed at pages 71-72 of the Paperbook] B/f Long term capital loss of earlier years 4,70,10,675 Less: Adjustment with Long term capital gain of Current year 4,58,23,836 Total loss c/f to future years 11,86,83....