Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2014 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (12) TMI 433 - AT - Income TaxPrior paid expenses deleted – Expenses set off by prior paid income - Mercantile system of accounting followed – Held that:- CIT(A) rightly was of the view that as per the details furnished by the assessee, the assessee has claimed deduction on account of prior period expenses of ₹ 15.38 lakhs and at the same time, the assessee has offered previous year income to the extent of ₹ 18.78 lakhs - income offered on account of previous years is more than the claim of the assessee relating to previous year expenses - Since the AO has already assessed previous year income in the present year, there is no reason to disallow the claim of the assessee regarding previous year expenses since there expenses are lesser than such incomes, but at the same time, this has to be seen as to whether such previous year expenses are otherwise allowable or not because we have noted that some of the expenses are on account of penalty and some of the expenses are infrastructure expenses which may not to be found otherwise allowable - normally prior period expenses cannot be allowed but if there is some income in the prior period then definitely the expenses can be set off against such income – Decided against revenue. Deletion of STCG – Held that:- The assessee has originally purchased an industrial plot bearing NO. B-77, Ph VII, IA, Mohali through auction - The auction was conducted by sale committee appointed by Court on winding upon of Punwire - The sale was challenged before the Company judge by Sun Group - what has happened is that by setting aside the same the Hon'ble Supreme Court has cancelled the original sale made to the assessee-company - sale in favour of WINSOME in respect of item No. 17, 19 & 20 shall stand set aside and sale of said items No. 17 (plot no. B-77 and structure thereon has been confirmed in favour of SUNGROUP) – also in Smt. C. Kamala Versus Commissioner Of Income-Tax, Bangalore [1978 (4) TMI 80 - KARNATAKA High Court] the similar matter has been decided - if sale itself is set aside by a Court then it can be said that the assessee never acquired any interest in such property - sale has been set aside by the Hon'ble Supreme Court and therefore it cannot be said that the assessee ever acquired any interest in the property - No doubt extinguishment is also covered in the definition of transfer u/s 2(47)(II) - extinguishment would normally connote a situation where an asset goes out of existence – thus, surplus arising on account of compensation received by the assessee cannot be assessed under the head "capital gain" because no asset came into existence with the assessee. Taxability of the amount as compensation – Held that:- In Kettlewell Bullen And Company Limited Versus Commissioner Of Income-Tax, Calcutta [1964 (5) TMI 4 - SUPREME Court]it has been held that if amount is received as compensation in relation to surrender of profit making structure then such compensation is to be treated as capital receipt - the assessee has acquired an industrial shed for running a manufacturing business and sale was set aside by the Hon'ble Supreme Court and therefore the assessee is clearly deprived of making future profits by surrendering this profit making structure or capital asset and therefore compensation received against such surrender is to be treated as capital receipt - the compensation cannot be brought to tax as revenue receipt – the order of the CIT(A) is upheld – Decided against revenue.
|