Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2014 (1) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (1) TMI 236 - AT - Income TaxValidity of revision order u/s 263 - Whether sale of immovable properties constitute business income - Held that:- The Ld CIT appears to be under the impression that if the gains are assessed as "Business income", the assessee would be disclosing the value of "Closing stock" of immovable properties and it will increase the profit amount declared by the assessee – Whether the gain arising on sale of immovable properties is assessed as "Business income" or as "Short term Capital gain", what is required to be deducted is the cost relatable to the portion of land sold by the assessee - The closing stock is credited to the Profit and Loss account only for the purpose of matching the "cost relatable to sales" under Revenue - Cost matching Principle - The closing stock value will not increase the profit from business as presumed by the Ld CIT - Since no prejudice is caused to the revenue on assessing the gain arising on sale of immovable properties, one of the twin conditions does not get satisfied, in which case, the revision order passed by Ld CIT on this issue shall fail – The order was set aside on this issue. Peak fund Deficiency - Held that:- For A.Y. 2008-09 - The amount of deficiency assessed by the AO was ₹ 12,48,040 for this year, whereas the Ld CIT has worked out the deficiency at ₹ 20,85,111 - There is difference between the two figures, which needs to be reconciled. For A.Y. 2007-08 - The Ld CIT has worked out the peak fund deficiency at ₹ 37,92,295/-, where as the AO has made addition to the extent of about ₹ 20.00 lakhs - The reasons for the difference were not spotted by both Ld CIT and the assessee - The excess portion of the cash outflow requires examination at the end of the AO - The order of Ld CIT was justified on this issue to the extent of items of cash outflow, which were not considered by the AO - The issue was restored to AO with a direction that the AO should examine the above said issue in both the years independently without being influenced by the observations or workings made by the Ld CIT.
|