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2017 (6) TMI 232 - AT - Income TaxValidity of revision order passed u/s 263 - taxability of capital gain arising on transfer of land upon entering into the development agreement - Principal CIT has taken the view that the two events resulting in generation of capital gains, viz., (a) conversion of capital asset into stock in trade and (b) transfer of such asset has been completed as per the provisions of sec. 2(47)(v)have been completed during the instant year - Held that:- Ld Principal CIT has failed to show that the tax which was lawfully exigible has not been imposed, since we are of the view that there is merit in the contention of the assessee that the provisions of sec. 2(47)(v) will not apply to an asset held as “Stock in trade”, since the said provision very clearly states that it would apply only to “Capital assets”, i.e., the asset should have been held as Capital asset. Further it is the submission of the assessee that the possession of the asset has not been given to the developer, which is the main condition for applying the provisions of sec. 2(47)(v). We notice that the Ld Principal CIT has failed disprove the said claim of the assessee. Hence, in our view, the AO has taken a possible view in this matter and further the Ld Principal CIT has failed to show that the tax which was lawfully exigible has not been imposed. It cannot also be said that the AO has applied the provisions on an incorrect way or there was incomplete interpretation of the provisions, since the view taken by the AO is a possible view. Hence CIT has assumed jurisdiction u/s 263 on this issue without properly complying with the mandate of the section, i.e., he has failed to show that the assessment order was erroneous on this issue causing prejudice to the revenue. Weighted deduction u/s 35(1)(ii)- Held that:- We notice that the assessing officer has failed to examine the same at all. Further the Ld Principal CIT has also observed that the weighted deduction is allowed upon compliance of certain conditions, which require examination. Under these set of facts, we are of the view that the Ld Principal CIT was justified in invoking revision provisions on this issue. Appeal decided partly in favour of assessee.
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