TaxTMI 
TaxTMI 
2026 (9) TMI 579
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....of the case are that the assessee is a company engaged in business and had filed its return of income declaring total income of Rs. 4,75,993/-. The assessee had transferred an immovable property admeasuring 17,329 sq. ft. through multiple sale deeds executed over different financial years, viz., FY 2012-13, FY 2013-14 and FY 2014-15. However, the assessee offered the entire long-term capital gains arising from such transfer in the assessment year 2014-15.During the course of scrutiny assessment for AY 2014-15, the Assessing Officer observed that the property was not transferred in a single year but in tranches over multiple years. Accordingly, the AO restricted the capital gains in AY 2014-15 only to the portion transferred during FY 2013-14.Subsequently, the AO reopened the assessment for AY 2013-14 u/s. 147 of the Act and brought to tax the long-term capital gains attributable to the portion of property transferred during FY 2012-13. The reassessment was completed determining long-term capital gains by invoking provisions of section 50C based on stamp duty value/DVO valuation. 3. The AO held that the assessee had executed five sale deeds during FY 2012-13 and, therefore, capit....
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....nst the order passed by the Assessing Officer u/s. 143(3) r.w.s. 263 of the Income-tax Act, 1961 dated 31.03.2022 for the assessment year 2014-15. 5.1 Brief Facts of the Case are that the assessee is a company and filed its return of income on 05.01.2015 declaring total income of Rs. 8,00,570/-. The case was selected for scrutiny and assessment was completed u/s. 143(3) on 30.06.2017.During the course of original assessment proceedings, the Assessing Officer noticed that the assessee had sold immovable property admeasuring 17,329 sq. ft. and computed long-term capital gains at NIL after claiming deduction u/s. 54D.The AO observed that the property was not sold in a single year but through multiple sale deeds executed across three financial years, i.e., FY 2012-13, FY 2013-14 and FY 2014-15. Accordingly, the AO restricted the capital gains for AY 2014-15 only to the portion of land measuring 2620 sq. ft. transferred during FY 2013-14 and recomputed the capital gains by invoking section 50C at Rs. 1,63,31,907/- and denied deduction u/s. 54D.Subsequently, the assessments for AY 2013-14 and AY 2015-16 were reopened and capital gains for respective portions were brought to tax. 5.....
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....osed by the assessee is significantly lower than the value adopted by the stamp valuation authorities. Therefore, provisions of section 50C are clearly attracted. The AO has rightly adopted the stamp duty value/DVO value as the full value of consideration. He also noted that the assessee adopted total sale consideration at Rs. 7.40 crore, whereas actual consideration as per sale deeds is Rs. 9.15 crore. No satisfactory explanation was furnished for such variation. The indexed cost of acquisition claimed by the assessee was not substantiated with evidence. The claim relating to existence and transfer of building is not supported by sale deeds, which indicate transfer of undivided share of land only. In view of the above, he hold that the capital gains for AY 2014-15 should be restricted only to the portion of land measuring 2620 sq. ft. transferred on 07.03.2014.Hence he directed the AO to compute capital gains only in respect of 2620 sq. ft. transferred during FY 2013-14 and to adopt full value of consideration as per section 50C read with DVO report and allow indexed cost of acquisition on proportionate basis.The capital gains relating to transfers in FY 2012-13 and FY 2014-15 sha....
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....d assessment. Therefore, the reopening u/s. 147 is valid and in accordance with law. 7.2 Regarding Year of Taxability he held that it is an undisputed fact that the assessee transferred the property through eight sale deeds executed over three financial years. As per section 45 of the Act, capital gains are chargeable to tax in the year in which the transfer takes place. Therefore, the gains arising from transfers executed during FY 2014-15 are liable to be taxed in AY 2015-16.The contention of the assessee that entire capital gains were offered in AY 2014-15 cannot override the statutory provisions. With respect to the applicability of Section 50C, he observed that the sale consideration declared by the assessee is lower than the value adopted by the stamp valuation authorities. Therefore, provisions of section 50C are clearly attracted. The AO has rightly adopted the stamp duty value, supported by DVO's report, as the full value of consideration. 7.3 Regarding assessee's contention that taxing the same income in multiple years would result in double taxation he held that income has to be assessed in the correct year of taxability. However, if the same income has been taxed ....
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....Y 2013-14.The assessee, however, offered the entire capital gains in AY 2014-15, which is not in accordance with law. The AO has rightly brought the income to tax in the correct year by invoking section 147.Merely because income has been offered in an incorrect year does not absolve the assessee from penalty where income chargeable to tax has not been offered in the correct assessment year. Therefore, we do not find merit in the contention of the assessee. With regard to issue relating to applicability of penalty on additions u/s. 50C, he appreciated the contention of the assessee that no penalty is leviable on additions arising due to deeming provisions u/s. 50C. He held that in the present case, part of the addition to capital gains arises due to substitution of sale consideration by stamp duty value u/s. 50C, which is a deeming fiction. It is well settled that where addition is made purely on account of deeming provisions without any independent evidence of concealment, penalty u/s. 271(1)(c) is not fully justified. Accordingly, he directed the AO to restrict the levy of penalty only to the extent of capital gains computed based on actual sale consideration as per sale deeds. No....
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.... books of account, thereby contradicting the stand taken in reassessment proceedings for AYs 2013-14 and 2015-16.It was thus argued that such inconsistent and contradictory stand by the Department vitiates the "reason to believe" required under section 147 and demonstrates lack of application of mind. 11. Further, for AY 2013-14, the reopening being beyond four years from the end of the relevant assessment year is invalid in the absence of any allegation or finding regarding failure on the part of the assessee to disclose fully and truly all material facts, as required under the proviso to section 147. 11.1 On merits, the assessee submitted that the adoption of stamp duty value under section 50C and recomputation of capital gains is erroneous and requires reconsideration, particularly in light of the composite nature of the property and actual consideration received. Accordingly, the assessee prayed for quashing of reassessment proceedings for AYs 2013-14 and 2015- 16 as being without jurisdiction and deletion of consequential additions and penalty orders. In the alternative he prayed for, remand of the issue for AY 2014-15 for proper recomputation of capital gains after gran....
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.... under section 143(3) read with section 263 for AY 2014-15, wherein the Assessing Officer himself observed that the correct course would be to assess the entire capital gains in AY 2014-15 in consonance with the books of account. It was argued that this contradictory stand taken by the Department clearly demonstrates lack of application of mind and vitiates the "reason to believe" required for reopening under section 147.It was also contended that in so far as AY 2013-14 is concerned, the reopening was beyond four years from the end of the relevant assessment year and in the absence of any allegation regarding failure on the part of the assessee to disclose fully and truly all material facts, the reassessment is liable to be quashed in view of the proviso to section 147. 14. On the issue of year of taxability, the ld. AR submitted that the property was transferred through eight sale deeds executed under two Power of Attorney arrangements. Though the documents bear different execution dates, the assessee, based on its bona fide understanding, considered that the transfer was effectively completed only during the previous year relevant to AY 2014-15.It was submitted that out of th....
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....in AY 2014-15, the cost of acquisition requires to be recomputed on a consistent basis. Accordingly, the issue was prayed to be restored to the file of the Assessing Officer. The ld. AR submitted that though the assessee had originally claimed deduction under section 54D, a revised claim under section 54G was made before the appellate authority. The rejection of such claim solely on the ground of non-filing of revised return was challenged. It was contended that appellate authorities are empowered to entertain new claims and adjudicate the same on merits. Accordingly, it was prayed that the issue be remanded to the Assessing Officer for fresh consideration. It was submitted that the computation of book profits under section 115JB is consequential to determination of capital gains. Therefore, it was prayed that the issue be remanded for fresh adjudication in line with recomputation of capital gains. 16. On the issue of penalty, the ld. AR submitted that the penalty levied under section 271(1)(c) for AYs 2013-14 and 2015-16 is unsustainable. It was contended that the assessee had adopted a bona fide view that the transfer occurred in AY 2014-15 and had duly disclosed....
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..... The assessee has raised objections regarding correctness of valuation and lack of proper opportunity. Considering the submissions and facts on record, we are of the view that the issue requires fresh examination. Accordingly, the issue relating to computation of capital gains and applicability of section 50C is set aside to the file of the Assessing Officer. The Assessing Officer is directed to re-adjudicate the issue after affording reasonable opportunity of being heard to the assessee. 18. ITA No. 2282/Chny/2024 - A.Y. 2014-15 (Order u/s.263) The Principal Commissioner of Income Tax invoked jurisdiction under section 263 directing recomputation of capital gains. The CIT(A) has restricted the computation only to the portion of property transferred during the relevant year.This approach is in consonance with the provisions of section 45.We find no infirmity in the order of the ld.CIT(A) on this issue. However, since the computation of capital gains has been restored in earlier paragraphs, this issue is also restored to the file of the Assessing Officer for limited purpose of recomputation. Deduction u/s.54D / 54F / 54G The assessee raised claims of deduction which wer....