TaxTMI 
TaxTMI 
2023 (4) TMI 130
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.... the deduction u/s 54 of the Act." 2. Brief facts, as discernible from the orders of lower authorities are that assessee filed his return of income for the assessment year 2013-14 on 30.03.2016 declaring total income at Rs.34,91,530/-, comprising profit from trading in land /plots u/s 44AD, share of profit from two firms treated as exempt income from business consisting of export commission, income from house property, capital gains and income from other sources. The scrutiny assessment in the assessee's case for AY 2013-14 was finalized, vide order u/s143(3) dated 14.03.2016, by accepting the returned income of Rs.34,91,530/-. 4.Subsequently, Ld. PCIT exercised his jurisdictional power u/s 263 of the Act. The Ld.PCIT, on perusal of the scrutiny assessment, observed that the conditions relating to investment in new asset within the prescribed time frame, for allowance of deduction u/s 54 of the Act were not satisfied by the assessee and therefore there was wrong allowance made by assessing officer on the claim of deduction u/s 54 of the Act. 5. The ld PCIT also noted that assessee has claimed various expenses which were not apparently necessary for earning interest income but t....
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....8.11 Cheque No.65753 HDFC Bank 21,50,000 Nitin Chandulal Vasa and 26.07.11 Cheque No.65428 HDFC Bank 21,50,000 Nitin Chandulal Vasa and 02.08.11 Cheque No.302543 HDFC Bank 7,16,667 Nitin Chandulal Vasa and 02.08.11 Cheque No.65754 HDFC Bank 7,16,667 Nitin Chandulal Vasa and 02.08.11 Cheque No.65429 HDFC Bank 7,16,666 Nitin Chandulal Vasa and 28.10.11 Cheque HDFC Bank 75,000 Nitin Chandulal Vasa and 28.10.11 Cheque HDFC Bank 75,000 Nitin Chandulal Vasa 28.10.11 Cheque No.65756 HDFC Bank 75,000 Nitin Chandulal Vasa 28.10.11 Cheque No.65757 HDFC Bank 75,000 Nitin Chandulal Vasa and 28.10.11 Cheque No.65431 HDFC Bank 75,000 Nitin Chandulal Vasa and The assessee made investment in residential property as under: YEAR ON SALE CONSIDERATION RECD. FLAT No. AMOUNT RECIVED LAND PURCHASED DEVELOPMENT EXPENSES OF 20 PLOTS CONSTRUCTION F.Y 2010-11 ADVANCE RECD 601 21,50,000 13,02,408 12,25,037 62,325 701 21,50,000 TOTAL 43,00,000 13,02,408 12,25,037 62,325 701 69,00,000 TOTAL 1,22,62,500  ....
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....the interest of the revenue. Allahabad High Court in the case of CIT vs. H K Kapoor 150 CTR 128 (All) 1998 has also observed that "Exemption on capital gains under section 54 cannot be refused merely on the ground that construction of new house had begun before the sale of old house. TS-51 ITAT-2015 (HYD)-O has also held that "Date of completion of construction and not date of commencement of construction relevant for purpose of Sec.54 when investment in new property made prior to date of earning of capital gain-ITAT allows capital gain exemption u/s 54 to the assessee for investment made in construction of a residential house started much before earning of capital gains by assessee. Here in the case of there is no dispute that the assessee has invested the amount towards plot of land, and incurred expense for development of land and construction of property. Intention of the assessee to invest money in a residential unit to avail exemption u/s 54 Delhi High Court has observed in the case of CIT vs. Smt. Brinda Kumari (2002) 253 ITR 343 that "Giving advance to Builder for construction is equivalent to construction" The Assessing Officer has duly considered the explanation ....
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....y records and it was seen from the computation of long term capital gains from sale of flat No.601 and flat No.701 of Sahas Building, Mumbai on 28/09/2012, that, against the sale value of the original asset at Rs.1,27,56,000/- the assessee had claimed indexed cost of acquisition at Rs.6,38,002/-, indexed cost of improvement at Rs.39,24,676/-, LTCG exempt u/s 54 of Rs.54,35,981/- and the net taxable LTCG at Rs.27,57,341/-. 9. Further from the details and documents relating to the new asset comprising purchase of land and construction thereon, on the basis of which exemption u/s 54 has been claimed, it was observed by ld PCIT that land at village Ghaludi on which construction was carried out, was purchased during 2010 for cost of Rs.27,35,000/-. The said land was converted into non-agricultural land in January 2011. In respect of the said land, the assessee has obtained permission from 42 residential plots, out of which 20 plots were kept by the assessee for own residential purpose under the head Bungalow land at Ghaludi and the remaining 22 plots were transferred by the assessee to his proprietary concern M/s Balaji Corporation, as stock-in-trade. 10 The ld PCIT observed, vide ass....
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....original asset to avail exemption u/s 54. As discussed above, the assessee has neither purchased nor constructed any residential unit during the allowable period of one year before or two/three years after the sale of the original asset. What is evidenced, is only the purchase of land and that too not within the allowable period. The LTCG exemption claimed is also explained by the assessee, vide his letter dated 11.12.2015 before the assessing officer as cost of development of land and subsequently vide letter dated 27.01.2016, as mainly expenditure on development of land and to a lesser extent on construction through neither of these expense claims are duly substantiated. Therefore, the claim of exemption u/s 54 is not allowable. The case laws relied upon by the assessee are of no help to him since this is not a case of actual construction where only the date of construction is in dispute. The Court decisions relied upon by the assessee are of cases where there was actual construction and only the date of construction was in dispute. 13.The ld PCIT noted that in the computation of income the assessee had claimed exemption u/s 54, but in the assessee's letter dated 11.12.2015, fil....
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....s far as the interest income is concerned, the assessee has not been able to establish that the said expenses were incurred to earn the interest income. Therefore, ld PCIT held that assessment order u/s 143(3) dated 14.03.2016, passed in the case of the assessee for AY 2013-14 is therefore erroneous and prejudicial to the interest of Revenue. 16. Aggrieved by the order of the Ld. PCIT, the assessee is in appeal before us. 17. At the outset, Learned Counsel for the assessee, states that assessee does not wish to press the issue raised by Ld.PCIT, in last para of his order relating to claim of various expenses, like fuel expenses, car depreciation, professional tax etc, against interest income earned by the assessee from partnership firm M/s Sahil Satr. Since, this issue has not been pressed by assessee, therefore we do not adjudicate it. 18. About the claim of exemption u/s 54 of the Act to the tune of Rs.54,35,981/- ,the Ld. Counsel submits that during the assessment stage, the Assessing Officer made adequate enquiries in respect of the said issue raised by the ld PCIT. The assessee submitted its reply before the assessing officer, in response to notice under section 142(1) of t....
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.... the order of the AO can be held to be erroneous order, that is (i) if the Assessing Officer's order was passed on incorrect assumption of fact; or (ii) incorrect application of law; or (iii) Assessing Officer's order is in violation of the principle of natural justice; or (iv) if the order is passed by the Assessing Officer without application of mind; (v) if the AO has not investigated the issue before him; then the order passed by the Assessing Officer can be termed as erroneous order. Coming next to the second limb, which is required to be examined as to whether the actions of the AO can be termed as prejudicial to the interest of Revenue. When this aspect is examined, one has to understand what is prejudicial to the interest of the revenue. The Hon'ble Supreme Court in the case of Malabar Industries (supra) held that this phrase i.e. "prejudicial to the interest of the revenue'' has to be read in conjunction with an erroneous order passed by the Assessing Officer. Their Lordship held that it has to be remembered that every loss of revenue as a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interest of the revenue. When the Assessing Office....