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2016 (9) TMI 642 - AT - Income TaxDisallowance u/s 14A - Held that:- Disallowance u/s 14A was made without due deliberation and analysis by the Assessing Officer and the Ld. CIT(A) was also patently wrong in confirming the disallowance without testing the sustainability of the disallowance. Hence, we set aside the findings of the Ld. CIT (A) on this issue and restore the matter to the file of the AO for fresh adjudication after due verification of the claim of the assessee regarding no expenditure having been incurred. Needless to say, the AO shall afford a proper opportunity to the assessee to present its case. This ground of appeal is accordingly allowed for statistical purposes. Capital gains v/s business income - sale of rights - Held that:- The assessee has not shown the rights in the property as stock-in-trade. No opening and closing stock was shown by the assessee. Since the Registry of the ‘rights’ was not done, the assessee had shown the same under the head “loans and advances”. It is undisputed that the assessee has entered into only one transaction of sale. The rights were purchased in 2005 and were sold in 2008 after retaining the rights for more than three and a half years. It is also undisputed that the assessee has been in receipt of rental income from other properties in subsequent assessment years which have been duly mentioned in the respective assessment orders. Hence, we are of the concerned opinion that the surplus resulting from the sale of rights is assessable to tax only as capital gains and not as business income because the Department has not been able to demonstrate that purchase and sale of the rights was affected in the usual course of carrying on the business of the assessee. The frequency of the purchase and sale is isolated in the case of the assessee and, therefore, there is no reason to allege that this was only a device to pay lesser taxes. It is also seen from the records that the assessee company is in the practice of passing separate resolutions for making investment in properties/rights. In our considered view, the assessee has discharged its primary onus by showing that the sale of rights was not in the regular course of business or trade but rather an isolated transaction and now the onus was on the Revenue to show that the apparent was not real. No material whatsoever has been brought on record by the Revenue to show that the transaction was only a smoke screen to camouflage the trading receipts. Therefore, in absence of any material to the contrary and on appreciation of cumulative effect of several factors present we hold that the surplus is chargeable to capital gains only and not as business income. - Decided in favour of assessee
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