TaxTMI 
TaxTMI 
2023 (7) TMI 272
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....-18: (i) On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in upholding the action of the Assistant Commissioner of Income Tax, Central Circle -8(4), Mumbai ("the Ld. AO") assessing the capital gain from sale of investment property by the Appellant under the head "Profit and Gains of Business or Profession" instead of "Income from Capital Gain". (ii) The Appellant, therefore, prays that the action of the Ld. CIT (A) confirming action of the Ld. AO in treating the gain from sale of investment property as "Profit and Gain from Business or Profession" instead of "Income from Capital Gain" be held as ab inito or otherwise bad in law. For A.Y. 2018-19: (i) On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in upholding the action of the Assistant Commissioner of Income Tax, Central Circle -8(4), Mumbai ("the Ld. AO") assessing the capital gain from sale of investment property by the Appellant under the head "Profit and Gains of Business or Profession" instead of "Income from Capital Gain". (ii) The Appellant, therefore, prays that the action of the Ld. CIT(A) confirming action of th....
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....tal in nature and emanating from information unearthed by the investigation wing during the course of search on Aurum Group which are incriminating in nature. For A.Y. 2016-17: (i) On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals)-50, Mumbai, has erred in treating the proceeds received on sale of flats under consideration as capital gain, without appreciating the facts that the Investigation Wing has carried out thorough investigation to determine the actual object of the assessee company and the information unearthed by the Investigation Wing during the course search leads to the finding that intention of the assessee was never to lease out the property but merely work as a builder and developer. (ii) On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals)-50, Mumbai, has erred in not appreciating that on similar grounds in the assessee's own case, he has confirmed the action of the AO in treating the capital gain as business income and deleted the disallowance of interest u/s 36(1)(iii) in the order u/s 153A r.w.s. 143(3) dated 30.12.2019 for A.Y. 2017-18 and....
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....wn by assessee in its return of income. 07. Two more independent issues which arise out of the appeals are as under: (i) Addition of Rs. 20,00,000 u/s 69C of the Act on account of unexplained expenditure for A.Y. 2018-19. (ii) Restriction of disallowance u/s. 14A of the Act r.w.r. Rule 8D of the Income Tax Rules, 1962 to Rs. 18,25,272/- being the amount of exempt income earned by the assessee for A.Y. 2018-19. 08. Lead appeal is appeal filed by the ld AO in ITA No. 2300& 2301/MUM/2021 for A.Y. 2015-16 and A.Y. 2016-17 respectively for unabated years: ITA No. 2300/MUM/2021 [A.Y. 2015-16] [By the ld AO] 09. Brief facts of the case are that the assessee filed its return of income [ ROI] for AY 2015-16 on 30.10.2015 at income of Rs. 5,47,45,408/-. ROI was picked up for scrutiny and resulted in to assessment u/s 143(3) of the Income tax Act [The Act] on 23.12.2017 at returned income. 10. Search and seizure action u/s. 132(1) of the Act was carried out in case of the Aurum group and other related entities and persons on 22.03.2018 by The DDIT(Investigation) Unit-6(1), Mumbai. Consequently, notice u/s 153A of the Act was issued. In pursuance to the s....
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..... Receipt of Occupancy Certificate 05.09.2013 g. Units constructed by the assessee company are high end residential units intended to be leased out as a bare shell unit as each lessee may have different preferences and a standard furnishing would have restricted marketability and user preferences , thus, ability to target a larger segment. Common areas of the building were fully designed as per the good standards and the assessee company would furnish the common areas as per rational standards whereas the specific units would be furnished in accordance with the preferences of prospective lessees. h. Assessee started to look for the prospective tenants like High Net-worth Individuals (HNIs), Diplomats etc. to enter into a long-term lease agreement after the construction of building was substantially completed but before the receipt of completion certificate. For this purpose, the assessee appointed broker -'M/s. Reflex Realty' and availed its marketing services to invite prospective lessees. However, even after substantial amount of time and efforts, broker was unable to procure a single tenant which was informed by the broker to the assessee. To substantiate....
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....n treating capital gain on sale of flats under consideration as 'business income' and disallowance of interest expenses u/s 36(1)(iii) has not been made on the basis of "books of account or other documents not produced in the course of original assessment but found in the course of search relying up on decision of Honourable Bombay High court in CIT V Continental warehousing Corporation [ 58 taxman .com 78] and various other judicial precedents without going into the merits of the case. 15. At the time of hearing, the Ld. DR, to substantiate that the addition/disallowance made by the AO were on the basis of incriminating material found and seized during the course of search action filed an application on 04.10.2022 under Rule 27 of the ITAT Rules to admit 'Additional Evidence' citing the reason that due to a major fire incident at Level IV Scindia House on 01.06.2018 all the material/documents including digital data was destroyed and only certain copies of seized documents were handed over to AO. The documents submitted through this application comprised of Board Resolution passed by the Board of Directors of the assessee company, copy of escrow account agreement entered with an....
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.... course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. Thus, it is sufficiently clear that the additions made during the course of assessment proceedings u/s 153A can only be made on the basis of incriminating material found and seized during the course of search and the earlier proceeding which has attained finality cannot be disturbed. 18. In the present case, the assessment proceeding for the year under consideration, was completed vide order dated 23.12.2017 u/s 143(3) of the Act i.e. before the date on which search was conducted. The addition made by the AO by treating the proceeds from sale of flats as income under the head 'Profits and Gains from Business and Profession' and disallowance of interest expenditure u/s 36(1)(iii) was not based on any 'incriminating material' seized during the course of search proceedings. This is evident from the fact that there is absolutely no reference of any incriminating material by the Assessing Officer in his assessment order. The documents relied upon by the AO were part of re....
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....ese are, even if admitted, does not become incriminating material found during the course of search which has any impact on the taxability of unaccounted income of the assessee. 23. We find that additional evidence was part of regular records maintained by the assessee, more precisely it is statutory record under the companies act such as Minutes of meetings etc., and its holding company, and did not relate to any undisclosed income earned by the assessee. Even if such documents are admitted as additional evidence, it did not have any bearing on the issue since these documents were executed during the period after which the assessee had decided to sell the apartments as there was no prospective tenant in sight. Thus, these documents cannot be a deciding factor to determine whether the intention of the assessee was to sell the apartments or hold it as an investment from the time of its incorporation. 24. Thus, we do not find any infirmity in the order of the LD CIT (A) in holding that there is no incriminating material found during the course of search to treat the income offered as capital gain on sale of flats as business income of the assessee. In our view, such additions m....
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....tax under the head capital gain as contended by assessee or under the head income from Business or profession as claimed by revenue. This is the concurrent finding of ld AO and Ld CIT (A) . Since the facts of the case with respect to the said issue are already discussed in detail while adjudicating the appeal in ITA No. 2300/MUM/2021, we proceed to record findings and contentions. 30. The main contention of the Ld. AR is that i. The primary objects of the assessee company was 'to own and let out' apartments in the building at the specified location and 'earn rental income' out of the said activity which is evident from the main object clause of the company enunciated in its Memorandum of Association. ii. That the assessee made conscious efforts to LEASE the flats by invoking services of a broker which is evident from the correspondence made with the broker. However, due to non-availability of the tenant the assessee could not lease out the apartments and had to sell the flats to recoup a part of the huge investment made by it in the project. iii. as evident from facts on record, the assessee company did not sell the apartments within a period of one or....
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....purchased by the assessee till date. ix. No changes or deviation has been made in relation to treatment and classification of apartments at any point in time. x. Assessee never incurred any expenditure in relation to advertisement or promotion of the project in order to sell the apartments which are a very common practice in case of a person engaged in the business of builder and developer where most of the flats are already booked and sold even before the construction activity is completed. xi. Assessee sold its first apartment 10 months after receipt of the occupancy certificate and 4 years and 5 months from date of commencement of construction and it still continues to hold the 7th flat which is leased out and against which it is earning rental income. xii. It did not have any booking advances from the parties at all after start of construction or on completion thereof. xiii. Assessee also did not enter in any other similar venture with a view to make profits by engaging in the activity of trading of properties. xiv. Act of selling the apartments by the assessee did not have the essential elements of 'adventure in the nature ....
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.... consecutive assessment years. xvii. No incriminating material was found by the department during the course of search in case of the assessee group which could contradict the above settled and accepted position. xviii. The addition/disallowance made by the Assessing Officer is in contradiction to the earlier accepted position which is just a change of opinion since there is no incriminating material on record to justify such contradictory action. 31. The Ld. CIT DR relied on the order passed by the Commissioner (Appeals)-50, Mumbai and also on the additional evidences submitted during the course of proceedings before us. The Ld. DR contended that A.O. has given specific findings in his assessment order and has justified the addition made by him by treating the income from sale of apartments as business income. She categorically summarized findings of the lower authorities and supported them : i. That the assessee company had in its 'other objects' activity of carrying on business of construction of buildings, houses etc. ii. That the assessee company has sold the flats in '7, Marine Drive' without basic furnishing which meant that there was n....
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....se out the flats in building constructed at 'C. S. No. 406, Part-I bearing D ward no. 2574(3), Street No. 58-70, 6A, Chowpatty Road of Malabar Hill Division at Pandita Ramabai Road, Babulnath Cross Lane, Mumbai - 400007'. During the years under consideration i.e. A.Y. 2017-18 and A.Y. 2018-19 as well as in the previous and subsequent years the assessee had carried out only the main object and no action was taken by it to carry out any other object which is evident from the fact that no other property was ever purchased by the assessee to construct a building or no flats in any other project were ever sold by the assessee. The other object of business of construction, etc. was kept as a part of Memorandum of Association so as to keep an avenue open for the assessee company to enter into such business if at all such opportunity presents itself in the future which has not been done by the assessee till date. The inclusion of the business of construction as 'other object' in the MOA does not in any way undermine or overshadow the 'main object' of the assessee company. In fact, the specific purpose of formation of the assessee company which is included in its main object will a....
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....a. Thus, an assessee could be trader as well as investor in land to deal in land and vice versa. Thus, an assessee could be trader as well as investor in land simultaneously depending upon what his intention is and how he treats the asset in question. In the instant case, the land was purchased and shown as asset in the balance sheet. The land was used for agricultural purposes. It was held for a long period of time. There is no evidence that borrowed capital was used for the purchase. Therefore, the facts on record lead to an inference that the land was held as an asset. Hence, the gain arising on sale of the land has to be taxed under the head 'capital gain'. Therefore, the order of the Commissioner (Appeals) deserved to be upheld." B. Submission with respect to the point of basic furnishing of the flats in the building: It is alleged by the department that the flats could not be leased out since the basic furnishing of the flats was not provided. It is submitted that, as already explained in Para 23 and 24 above, the flats constructed by the assessee were high end residential units intended to be leased out bare shell. Since each lessee may have differe....
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....d at Page Nos. 114-126 of the Paper book-I). Based on this declaration, the ld. A.O. concluded that these concessions can hardly be afforded to the lessee's of the flats and because of this declaration the assessee was precluded from the possibility of leasing out the flats. In this regard it is submitted that the above mentioned declaration was filed on 10.06.2014 i.e. just a month prior to the date of registration of sale deed of the first apartment. If the intention of the assessee was to sell the flats, this declaration would have been filed by the assessee very well in advance and it would not have waited till last moment to do the same. It is only when there were no prospective lessees available and the buyer of the flat who had already paid the advance was pressurizing the assessee for registration, the assessee filed the declaration. The conduct of the assessee clearly proves that it had acted as an investor right from the beginning and accordingly gains arising on sale of flats was correctly offered to tax under the head 'Capital Gains'. Further, it is submitted that the declaration filed by the assessee under the Maharashtra Apartment Ownership Act, 1970....
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....laration and Deed of Apartment made in respect of every apartment contained in the building forming part of the property together with a memorandum containing such particulars as the State Government may prescribe. (5) The Sub-Registrar, or as the case may be, the Registrar shall register the Declaration along with floor plans of the building and the Deed of Apartment in the Register of Declarations and Deeds of Apartments under the Maharashtra Apartment Ownership Act, 1970 and shall also enter particulars in the Index kept under subsection (3). Any person acquiring any apartment of any apartment owner shall be deemed to have notice of the Declaration and of the Deed of Apartment as from the date of its registration under this section. (6) Except as provided in this section, the provisions of the [Registration Act, 1908], shall mutatis mutandis apply to the registration of such Declaration and Deeds of Apartments and the words and expressions used in this section but not defined in this Act, shall have the meanings assigned to them in the [Registration Act, 1908]." Section 11 of the Maharashtra Apartment Ownership Act, 1970 - Contents of Declaration. ....
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....he relevant extract of the said Para is reproduced below for ready reference: "The Grantor can sell either all the duplex residential apartments or may sell some of them and retain the others with itself either for lease or for sale in future." Therefore, based on above facts it is submitted that the assessee was still well within its rights to lease the apartments and was not precluded from doing the same. Consequently, the conclusion drawn by the Ld. A.O. is erroneous and factually incorrect and cannot form the basis for making addition in the case of the assessee. D. Submission with respect to the Installation of lifts and fixing of aluminum windows after the receipt of occupancy certificate: Further, it has been argued by the Department that the information was called from Mitsubishi Elevators India Pvt Ltd., it was tasked with installation of two elevator units (P1 & P2) in the building and Alfa Façade Systems Pvt Ltd was tasked with providing and fixing of aluminum windows in the building. It was also stated by the Ld. AO that from the details submitted by Mitsubishi Elevators Pvt Ltd, P1 elevator was completed in 2013 itself whereas....
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....ertificate and thus no addition can be sustained based on such erroneous finding. E. Submission with respect to the payment made to contractors after the receipt of occupancy certificate: In Para 6.8 of the assessment order the Ld. A.O. has tabulated the amount paid to contractors by the assessee over the years. The said table is reproduced below for ready reference: F.Y. Amount paid to contractors 2010-11 1,87,23,391 2012-13 2,69,08,777 2013-14 6,32,06,754 2014-15 3,96,31,517 2015-16 2,31,76,652 2016-17 59,45,201 Total 17,75,92,292 On the basis of above table prepared by the Ld. A.O., he concluded that the flats were not ready for renting out as on the date of issue of occupancy certificate i.e. 05.09.2013 since according to him assessee had made payments of Rs. 6.87 crores after F.Y. 2013-14 which is approximately 40% of the total payments shown above. In this regard firstly, it is submitted that the Ld. A.O. did not provide any basis or did not give any reference to the source from where such figures were collated by him. Further, the Ld. A.O. chose to conveniently ignore the figures for F.Y. 200....
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....pertinent to mention that out of the expenditure of Rs. 7,73,60,830/- incurred in F.Y. 2014-15, the expenditure of Rs. 3,10,59,361/- was incurred on purchase of material and construction work of aluminum windows which was done for the purpose of upgradation of the apartments. This expenditure being not a part of the regular construction cost has to be removed from the construction cost. If the said expenditure if deducted from the regular construction cost the revised percentage of expenditure incurred after the receipt of occupancy certificate in F.Y. 2014-15 can be worked out as follows: From the above facts it is evident that only 11.31% of total construction cost was actually incurred in F.Y. 2014-15 which is an insignificant amount as compared to the cost of construction incurred before the occupancy certificate was received by the assessee. Therefore, it is submitted that the contention of the department is based on erroneous and incomplete set of facts and thus cannot be used against the assessee for alleging that the sale of flats were adventure in the nature of trade and not a capital gain transaction. F. Submission with respect to the applicatio....
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.... it is submitted that irrespective of the fact whether an apartment is sold or given on lease it would require a water connection since it is a bare minimum requirement for an accommodation to be habitable. No prudent person would ever enter into an agreement with the owner of an immovable property, either to purchase the flat or to take it on lease unless the very basic amenity of water supply is provided in the accommodation. The timing of making application and getting permission of water connection is immaterial since in every case i.e. sale or lease of flat it is a necessity and does not have any bearing on the intention of the assessee to lease the apartments. Therefore, if the Ld. A.O. alleges that apartment cannot be leased out without water connection, then in that case the apartment cannot be sold without a working water connection. This fact was not at all considered by the Ld. A.O. while passing the assessment order and he conveniently chose to ignore this crucial aspect in an immovable property transaction. In fact, if the apartment could be sold without a water connection then it could have also been leased and water connection could have been put by the time....
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....ing among the Real Estate professionals which is evident from the correspondence submitted by the assessee before the A.O. Therefore, it is submitted that the allegation made by the Ld. A.O. that no efforts were made to lease the flats is factually incorrect and no addition can be made based on such false allegation. Apart from the above mentioned contentions of the assessee, it is submitted that whether a transaction will be considered as an adventure in the nature of trade has been a matter of judicial review. The tests laid down by decisions of various courts indicate that, in each case, it is the total effect of all relevant factors and circumstances that determine the character of the transaction. No one rule of thumb or yardstick can be established to determine the nature of transaction. Each case has to be determined on the total impression created by all the facts and circumstances of a particular case. One of the principal tests is the intention of the assessee and the conduct of the assessee over the period for which the asset is held by the assessee. If the asset is sold since an enhanced price could be obtained, that by itself is not enough to infer th....
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.... a. First Test - Initial Acquisition of the subject matter: It is an undisputed fact that the assessee had acquired land for the purpose of constructing flats, holding them and then leasing out for earning rental income which is clear from the Main object clause set out in the MOU. The said clause is reiterated and reproduced below for ready reference: "To own and let out apartments in the building situated at C. S. No. 406, Part-I bearing D ward no. 2574(3), Street No. 58-70, 6A, Chowpatty Road of Malabar Hill Division at Pandita Ramabai Road, Babulnath Cross Lane, Mumbai - 400007 also known as Aurum Platz for rent." Therefore, it is clear that at the time of acquisition, the intent of the assessee with respect to utilization of land was to hold it as an investment and earn rental income out of the same once the building was constructed. Therefore, the assessee has satisfied the criteria laid down in this test. b. Second Test- Subsequent Sale: As explained earlier, the assessee had sold its first flat on 11.07.2014 i.e. after 10 months from the date of receipt of occupation certificate. This was done by the assessee with a view to reco....
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.... submitted that the main object clause itself stated the treatment and utilization of land and building held by the assessee. Thus, the assessee has satisfied the criteria laid down in this test. f. Sixth Test: Volume, frequency, continuity and regularity of purchase and sale transaction: It is submitted that, the assessee had purchased a solitary piece of land and constructed a single project/ building on the said land with multiple flats. The time gap between the purchase of land (31.01.2008) and receipt of occupancy certificate (05.09.2013) was a substantial period of 5.5 years during which the funds of the assessee were blocked as an investment in the said project. Even after receipt of occupancy certificate, the assessee made efforts to lease out the apartments which is evident from the communication letters with broker as referred to in Para 24 above. The first apartment was sold by the assessee vide agreement dated 11.07.2014 which is after a long gap of 6.5 years from the date of acquisition of land which was done because there was no option left with the assessee as there was no prospective tenant in sight for leasing the flat and this was the on....
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....vidence on record had recorded a finding that assessee had rightly disclosed income from property as long-term capital gains instead of business income. It was also held that transaction was a capital transaction and had to be treated as long-term capital gain and not as business income. "9 ...... The Division Bench of this Court in the case of Commissioner of Income Tax and another supra has laid down criteria for determining whether or not an income from the property is a business income or is a long term capital gain, which is reproduced below for the facility of reference: (1) "There was a large time-gap between the dates of acquisition of the shares and the sale thereof. (2) Thus, the intention to sell cannot be inferred at the point of time of the purchase. (3) That merely because the sale had resulted in a profit did not mean that when the assessee purchased the shares, it was with an intention to sell them at a profit. (4) That an investor may sell the shares when he gets a good price for the shares. (5) That the assessee had shares in 25 to 30 companies and the value of the total holding was between Rs. 57,000 ....
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....d thus it is humbly prayed that relief in this regard be granted to the assessee and order of Ld. CIT-(A) be set aside." 33. We have heard the rival contentions, perused the orders of the lower authorities, written submissions and application made by the parties and judicial precedents relied upon. The only issue involved here is whether gain or profit on sale of 6 out of 7 flats sold by the assessee is chargeable to tax under the head capital gain or Business income. Honourable supreme court in CIT V Glow shine Builder and Developers Ltd 332 CTR 489 (SC) has categorically held that in order to examine whether a particular transaction is sale of capital assets or business income. , multiple factors like frequency of trade, volume of trade, nature of transaction over the years are required to be examined. Merely on the basis of recording of the inventory in the books of accounts transaction could not become stock in trade. Thus in the present case no doubt assessee has shown the constructed property as investment but that is not determinative at all whether the income from sale of such asset is chargeable to tax as capital gain or business income. All surrounding facts need to be....
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....hen he gets a good price for the shares. (5) That the assessee had shares in 25 to 30 companies and the value of the total holding was between Rs. 57,000 and Rs. 63,000, which was very small amount considering the number of companies in which the shares were held, thus, denoting that the assessee was a small investor. (6) That number of transactions are not many every year and the assessee could not be said to indulge in several transactions of purchase and sale every year. 10. The tests laid down by various decisions of the Apex Court indicate that, in each case, it is the total effect of all relevant factors and circumstances that determine the character of the transaction. Each case has to be determined on the total impression created on the mind of the Court by all the facts and circumstances disclosed in a particular case. One of the principal tests is whether the transaction is related to the business normally carried on by an assessee. The nature of the commodity was made with the intention to re-sell, if an enhanced price could be obtained, that by itself is not enough to infer that an assessee is carrying on business. However, though profit motiv....
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....ing sequence of events are important :- i Company was formed on 25/09/2003 ii Land was purchased on 31/1/2008 iii Commencement of construction on 25/2/2010 iv Change in MOA to let out the property as the main object 17/2/2011, In other ancillary object business as real estate developers was also v Occupancy certificate received on 5/9/2013 vi Appointed broker for tenancy in FY 2012-13 vii MOA was for the earning of leasing of property and earn lease rent as per main object viii In other ancillary object business as real estate developers was also ix Brokers unable to find out the tenant x First sale deed of one flat was executed in 11/7/2014 xi Three flats were sold in Financial year 15-16 xii One flat is sold in FY 2016-17 xiii One flat is sold in 2017-18 xiv One flat is still lying unsold xv One lift was already installed in 2013 xvi Second Lift was installed in 2015 xvii Assessee did not purchase any property other than the impugned property xviii For water connection it is mandatory to have building occupation certific....
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....from the initial acquisition, has consistently shown the asset under consideration as an investment in its audited financial statements and there has been no change in such treatment till date, which is evident from the said financial statements filed before us. 41. If the LD AO has any doubt about the statement made by the broker about not getting any client for taking apartment on rent, he should have examined that broker and also should have enquired about the enquiry made by broker, his capability in renting of apartment etc. 42. It is an undisputed fact that the income from sale of apartments has been offered to tax under the head 'Income from Capital Gains' by the assessee in its return of income filed for all the years after initial acquisition and there has been no change with respect to such treatment. Further, even the department has accepted this position in the assessment proceedings completed u/s 143(3) of the Act for AY 2014-15 and AY 2015-16 as discussed above. The current dispute has only arisen as a result of search proceedings conducted in case of Aurum Group, during the course of which no incriminating material was found by the department which has already ....
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....nvestment made in the project. The documents submitted as additional evidence in the shape of Board Resolution, Escrow Account Agreement, communication with the lender etc. were all executed after the above-mentioned communication received from broker i.e. in the month of November and December, 2013, showcasing his inability to find the tenants. We find that intention of the assessee of leasing the apartments and subsequently selling them due to non-availability of suitable tenants is duly supported by the sequence of events and documents executed by the assessee. These events and documents show the intention of the assessee of leasing the apartments from the very beginning i.e. right from the date of its incorporation. Thus, we hold that the assessee had intention of renting out the apartments from the very beginning. If the assessee had the intention of selling the flats from the very beginning, it would have executed such documents well in advance i.e. around the time of commencement of construction of property so that apartments could be sold even before the occupancy certificate was received which is a normal practice in case of builders and developers. As against this, the as....
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....tly, after acquisition of land in F.Y. 2007-08 for the construction of the building and after commencement of such construction in w.e.f. 25.02.2010 the assessee altered its MOA to make specific changes in the main object clause to bring it in line with the activities of the assessee company. These changes were made vide Board Resolution dated 17.02.2011. Even after altering the MOA, the assessee continued to hold the apartments for a period of approximately 3.5 years before making first sale i.e. vide agreement dated 11.07.2014. A rational builder will sale property to make quick profits and would never hold such property for such a long period of time , project if considered as business has spread over 13 years from the date of acquisition which is unusual in case of business , this period of 13 years can be summarized as under: Sr. No. Events Date of such event Period of Holding of apartments from the date of acquisition of land 1. Date of Purchase of Land 31.01.2008 - 2. Date of Commencement of Construction 25.02.2010 - 3. Receipt of Occupancy Certificate 05.09.2013 5 years, 8 months 4. Sale of First apartment 11.07.2014 ....
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....ne assessment year cannot be allowed to be changed in a subsequent assessment year where the parties have allowed that position to be sustained by not challenging the order. Further Honourable Bombay High court in case of CIT V Mahindra Life space Developers Ltd [2013] 34 taxmann.com 83 (Bombay) has held that "3. So far as question (c) and (d) are concerned, the Assessing Officer has recorded a finding of fact that on a similar issue for earlier assessment year 2003-04 the income earned from the sale of land has been assessed to capital gain. The revenue has accepted the order of the Assessing Officer for assessment year 2003-04. The Tribunal by impugned order while applying rule of consistency held that it is not permissible for the revenue to agitate the same issue when in the earlier assessment year 2003-04 the same being taxable as capital gains has been accepted by the revenue. In that view of the matter, we see no reason to entertain the questions (c) and (d)." 48. In Assistant Commissioner of Income-tax v. Shree Ami Office Owner's Association [2023] 148 taxmann.com 130 (Ahmedabad - Trib) coordinate bench on identical facts and circumstances has held as under :- ....
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.... as income from 'Capital Gains'. Therefore, it follows that the remaining unsold flat which is still held by the assessee and also generating rental income for it, cannot be treated as stock in trade of the assessee. Accordingly, this direction given by ld CIT [A] is not valid and is hereby quashed. ITA No. 2005/MUM/2021 [A.Y. 2018-19]: 51. This appeal was also filed by the assessee challenging the order of Commissioner (Appeals)-50, Mumbai dated 30.08.2021. The Grounds of Appeal raised by the assessee, the facts of case and the law applicable in the present appeal are identical to the Grounds raised, facts of the case and the law applicable in ITA No. 2004/MUM/2021 for A.Y. 2017-18 with the only exception of quantum of addition/ disallowances made. Therefore, the decision rendered in relation to ITA No. 2005/MUM/2021 for A.Y. 2017-18 shall apply mutatis mutandis to the appeal filed by the assessee for A.Y. 2018-19. Accordingly, the present appeal bearing ITA No. 2005/MUM/2021 for A.Y. 2018-19 is hereby allowed and we direct the AO to treat the income from sale of property as income under the head 'Capital Gains'. Addition of Rs. 20,00,000/- u/s 69C of the Act [ITA No. ....
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....ure as alleged by the Department and that the statement being relied upon by the department of Shri Vishal Singh has been retracted by an affidavit as it was taken under duress. This affidavit retracting the statement was submitted before the Assessing Officer during the course of assessment proceedings itself. It was also submitted that the statement of Mr. Vishal Singh is not in line with the contents of the word document and is contradictory in as much as the declaration found in the word document stated that the payment was for purchases whereas as per the statement recorded u/s 132(4), the said amount was allegedly paid to one Mr. Nazir for electrical works. It was also submitted that the said document was unsigned, undated and it there was nothing in the said document which could conclusively prove that such expenditure was incurred by the assessee. Further, the department also failed to identify any person by the name Nazir to whom such payment was allegedly made. This being the case, the statement cannot be relied upon for making any addition especially when no corroborative evidence was placed by the department to prove that any such payment was actually made. In support o....
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....e case, are supported by the decisions of Hon'ble Apex Court in case of V.C. Shukla (supra) and Common Cause (A registered society) wherein the Hon'ble Court had categorically held that even the entries made in regular books of accounts without independent evidence, fix a liability upon a person. In the case at hand, the document relied upon by the department was not even a part of regular books of account but merely a loose document which did not even have a date of such transaction which are essential features of an authentic document. No doubt it is a computer document so there is no question of any signature or handwriting , to that extent the argument of the ld AR is rejected. But no doubt same also needs to be corroborated. Decision of Hon'ble Bombay High Court in case of Lavanya Land Pvt. Ltd. (supra) is also directly applicable to the facts of the case at hand. In that particular case, the Hon'ble Court had observed that the department had not placed on record any evidence to prove that huge amounts of cash had actually exchanged hands. In the present case also, there is no material on record to show that payment of Rs. 20,00,000/- was actually made to a person named 'Nazir....
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....no valid satisfaction was recorded by the AO before invoking the provisions of Rule 8D. To support this contention the Ld. AR relied upon the decision of Hon'ble Supreme Court in case of Maxopp Investment Ltd. (2018) 402 ITR 640 (SC) wherein the Hon'ble Court held that AO is bound to record satisfaction that suo motu disallowance made by the assessee is not correct before invoking the provisions of Rule 8D. Further, the Ld. AR also submitted that the assessee made a suo motu disallowance even though it did not incur any substantial expenditure to earn the exempt income. Moreover, it was also contended that the AO overlooked the fact that the assessee had sufficient amount of own funds to make investment in mutual funds which yielded exempt income. In this regard, the Ld. AR submitted a comparative chart showing the position of own funds and investments both at the beginning and at the end of the year. The said chart is reproduced below: Assessment Year Position of the shareholders fund as on 31st March, 2017 (Rs.) Position of the shareholders fund as on 31st March, 2018 (Rs.) Opening Balance of Investment in Exempt Income Yielding 'Mutual Funds' as on 1st April, 2017 ....