TaxTMI 
TaxTMI 
2018 (1) TMI 1735
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.... section 143(3) of the Income-tax Act, 1961 [hereinafter referred to as 'the Act' for short] at total income of Rs. 42,97,10,412/-. While doing so, the Assessing Officer made several disallowances. One of the disallowances relates to the sale of the building, plant and machinery, factory situated at Whitefield, Bangalore. The factory building was sold on 10/09/2008 for total consideration of Rs. 59,52,07,380/-. The Assessing Officer had computed the short term capital gains on sale of factory building and arrived at a figure of Rs. 97,87,164/- and in respect of land the Assessing Officer arrived at long term capital gains of Rs. 50,30,93,552/-. The Assessing Officer denied exemption of the claim u/s. 54G of the Act on the ground that the assessee-company has not shifted the factory building from specified urban area to non-urban area. The Assessing Officer had come to the conclusion based on the report submitted by the Inspector of the Department that the assessee-company had not set up any factory to carry on industrial activity. The facts on this issue are set out by the Assessing Officer from page 3 onwards and up to 10. The Assessing Officer also made addition based on ....
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....4. Being aggrieved, the assessee is in appeal in ITA No. 1628/2013 and the revenue is in appeal in ITA No. 1560/Bang/2013. 5. Now we shall take up the revenue up in ITA No. 1560/Bang/2013. The revenue raised the following grounds of appeal: 1. The order of the Learned CIT (Appeals is opposed to law and the facts and circumstances of the case. 2. The CIT(A) erred in holding that the AO was not justified in adding the sum of Rs. 1,83,00,000 without examining the claim of the assessee that the figure reflected on a sheet of paper impounded during the course of survey were estimates of production and not unexplained expenditure as held by the Assessing Officer. 3. The CIT(A) erred in allowing the assessee's claim of indexation of cost of improvement of Rs. 19,84,150/- with the cost of acquisition from the year in which the asset were purchased without appreciating the fact that the-indexation with respect to cost of improvement has to be allowed only from the year in which the cost of improvement was incurred. 4. The CIT(A) erred in allowing the deduction u/s. 54G without appreciating the fact that all the 4 conditions laid down in the section....
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....ns in loose sheets are not in the nature of income and reliance in this regard can be placed on the decision of the Hon'ble Supreme Court in the case of CIT vs. Mussadilal Ram Bharose (165 ITR 14). In the present case, the assessee merely denied it without tendering any credible explanation. In our considered opinion, this does not amount to due discharge of initial burden on the part of assessee and therefore the Assessing Officer was justified in drawing adverse inference and making addition of Rs. 183 lakhs. The ground appeal filed by the revenue is allowed. 8. Ground Nos. 3 and 4 challenge the finding of the ld. CIT(A) granting deduction under section 54G of the Act. It is the case of the assessee that it shifted the industrial unit situated in urban area i.e. Whitefield to non-urban area and investment of a sum of Rs. 19,84,150/- towards purchase of land was made. The capital gains arising on sale of undertaking was claimed as deduction u/s. 54G as the same was used for purchase of new land plant and machinery and the same was allowed as deduction by the ld. CIT(A) by holding that if the amount is utilised for the purpose of purchase of new plant and machinery and land ....
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.... of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its being purchased, acquired, constructed or transferred, as the case may be, the cost shall be reduced by the amount of the capital gain. Explanation.-In this sub-section, "urban area" means any such area within the limits of a municipal corporation or municipality as the Central Government may, having regard to the population, concentration of industries, need for proper planning of the area and other relevant factors, by general or special order, declare to be an urban area for the purposes of this sub-section. (2) The amount of capital gain which is not appropriated by the assessee towards the cost and expenses incurred in relation to all or any of the purposes mentioned in clauses (a) to (d) of sub-section (1) within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for all or any of the purposes aforesaid before the date of furnishing the return of income under section 139, shall be dep....
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....section 54G of the Income-tax Act, 1961 (43 of 1961), the Central Government, having regard to the population, concentration of industries, need for proper planning of the area and other relevant factors, hereby declares the areas falling within the limits of Municipal Corporation or municipality, as the case may be, mentioned in column (3) of the schedule hereto annexed and situated within the State shown in column (2) thereof, as urban areas for the purposes of sub-section (1) of section 54G of the Income-tax Act, 1961 (43 of 1961). 2. This notification shall come into force on the date of its publication in the Official Gazette." II. "In exercise of the powers conferred by the Explanation below sub-section (1) of section 54G of the Income-tax Act, 1961 (43 of 1961), the Central Government, having regard to the population, concentration of industries, need for proper planning of the area and other relevant factors, hereby declares the areas falling within the limits of Municipal Corporation or municipality, as the case may be, mentioned in column (3) of the Schedule hereto annexed and situated within the State shown in column (2) thereof, as urban areas for the ....
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.... 2. Ahmed Nagar 3. Ichalkaranji 4. Jalgaon 5. Kalyan 6. Nagpur City (3) 7. Nasik 8. Pimpri Chinchwad 9. Pune Municipal Corporation 10. Pune Cantonment Board 11. Thane 12. Ulhasnagar Document 2 S.No. Name of the State (1) 1. (2) Tamil Nadu 2. Gujarat 3. Delhi 1 2 SCHEDULE Name of the Municipal Corporation or Municipality situated in the State mentioned in Column (2) 1. Athur 2. Bhavani 3. Coimbatore 4. Coonoor 9. Madurai 10. Mettupalayam 11. Mamakkal 12. Pollachi (3) 5. Dharmapuri 6. Erode 7. Gobichettipalayam 8. Madras 13. Salem 14. Tiruchirapalli 15. Udumalpet 16. Uthagamandalam (Ootacamund)' 1. Ahmedabad Municipal Corporation 2. Baroda Municipal Corporation 3. Surat Municipal Corporation 4. Rajkot Municipal Corporation 5. Bhavnagar Municipal Corporation 6. Jamnagar Municipal Corporation. 1. Municipal Corporation of Delhi. 2. New Delhi Municipal Corporation². Notification No. 10056, dated 2-4-1996. Notification No. S.O. 3, dated 20-12-1999. Document 3 S. No. Name of State SCHEDULE Name of the Municipality or Mun....