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2013 (6) TMI 461 - AT - Income TaxJurisdiction power u/s 263 by CIT(A) - doctrine of merger - specific direction to AO to consider the entire sale consideration for determining the long term capital gain in the assessment year under dispute - Held that:- As decided in CIT V/s. Shri Arbuda Mills Ltd. [1996 (1) TMI 11 - SUPREME Court] the power u/s 263 shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in an appeal. Following the aforesaid decision supra the Hon'ble AP High Court in case of CIT V/s. New Srinivasa Construction Co. [1998 (8) TMI 71 - ANDHRA PRADESH High Court] has laid down the principle that only the untouched parts of the assessment order, which did not fall for consideration before the CIT(A) are still open to the CIT to revise u/s 263. Thus, considered in the light of the ratio laid down as aforesaid, the assessment order so far as relating to the capital gain arising out of the sale consideration having merged with the order passed by the first appellate authority is no longer available to be subjected to the proceeding u/s 263. In the aforesaid view of the matter, the order passed u/s 263 is legally unsustainable and therefore liable to be set aside. So far as the merits of the issue is concerned, it is very much clear from the facts on record that the assessee has only transferred 50% of the land to the developer under the development agreement in-lieu of 50% of the constructed area to be received by her. Therefore, the assessee retained 50% share in the land. At the time of sale of flats the assessee not only transferred the constructed are but along with it her undivided share in the land. Therefore, the CIT was completely wrong in considering the entire amount of Rs. 1,79,00,000/- as sale consideration of flats only without reducing the cost of land there from while computing the 'short term capital gain'. Thus order passed u/s 263 cannot be sustained.In favour of assessee.
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