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2012 (11) TMI 580 - ITAT CHENNAICapital Gain – Agricultural land purchase for commercial use and sold without use, constitute capital asset or not - Assessee purchase land for setting up the power plant – Later on due to some constraints assessee sold part of land and incurred loss - AO argued that the concerned agricultural land not being a capital asset - Loss on the sale of the same would not result in any long term capital loss - No such loss would be permitted to be carried forward for purposes of set off in future years – Held that:- As the assessee purchased this land with no intention to use it for carrying out any agricultural operations, but to set up a power plant. Right from its acquisition and upto the date of its sale, no agricultural operations were carried out on this land by the assessee or by any person on behalf of the assessee. Consequently, as on the date of sale, the concerned land cannot be treated as an agricultural land. It was definitely a business asset held as such in the books of the assessee hence, loss on sale of such land would constitute a long term capital loss and would be eligible for carry forward for set off to future years. In favour of assessee Interest u/s 234D – Interest on excess refund - Assessee contended that the provisions of Sec. 234D came into force in June 2003 and cannot have the application in respect of the A.Y. 2003-04 – Held that:- Following the decision in case of Infrastructure Development Finance Co. Ltd. (2011 (9) TMI 591 - MADRAS HIGH COURT) that since the regular assessment had been completed on March 30, 2004 and section 234D came into operation on and from June 1, 2003, which was prior to the completion of the regular assessment, the assessee was liable to pay interest on the excess refund amount received as contemplated u/s 234D. It is not the year of assessment that falls for consideration in such circumstances, but the date on which the regular assessment order has been passed. In favour of revenue Recognition of income - Whether in case where receipt is uncertain and is subject to the outcome of the events in future, can be treated as accrued during the relevant period – Held that:- If a receipt is uncertain and is subject to the outcome of the events in future, it cannot be treated as having accrued during the relevant period. Since TNEB has refused to accept as its liability the start up fuel cost incurred by the assessee the income in respect of start up fuel cost based on the invoices raise by the assessee cannot be treated as having accrued to the company even it has been following mercantile system of accounting. In favour of assessee
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