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2020 (5) TMI 282 - ITAT AHMEDABADRevision u/s 263 - purchase agreements executed with vendors in relinquishment of their rights in land produced before AO to justify the cost associated with acquisition of land - HELD THAT:- Profit on sale of land can be deduced only after subtraction of corresponding purchase costs. It is not the case of the Revisional Commissioner that purchase cost has been separately claimed. Claim made on behalf of the assessee that relevant facts towards cost associated with the acquisition were placed before the AO in the course of assessment. It would be reasonable to infer that AO has applied his mind to such aspect. The confusion resulted from improper accounting method whereby the sale receipts have been netted of with purchase costs and net sale consideration was wrongly shown instead of reflecting gross sale consideration and corresponding purchase cost separately, has not ultimately resulted in any under reporting of income. Therefore, no manifest prejudice has resulted to the interest of the Revenue - conditions for exercise of power u/s 263 of the Act are not satisfied in respect of this aspect. We accordingly set aside the action of the Pr.CIT and restore the assessment order to this extent. Expenditure incurred on payments to sister concerns u/s 40A(2)(b) - consultancy charges and development charges paid to parties - HELD THAT:- We are constraint to observe that AO failed to carry out the duty assigned to him on such vital aspect. Same is the case for payment made towards so called development expenses paid to Chetan Builders. No cogent evidence was shown to have been produced before the AO in justification of such expenses. The nature of services rendered with some degrees of objectivity ought to have been examined by the AO. Inaction on the part of the AO has caused prejudice to the Revenue as contemplated u/s 263 - The plea of the assessee that the payment incurred towards services rendered by sister concern to be revenue neutral is also without any supporting evidence. It is not the tax rate but the tax amount in absolute figures which matters. It was for the assessee to demonstrate that the amount of tax saved on account of such expenses has been corresponding paid by the sister concern. In the absence of such demonstration, the plea of the assessee towards tax neutrality cannot be appreciated in perspective. No error in the action of the Revisional CIT in setting aside the order of the AO for a direction to re-determine the issue in accordance with law. We thus decline to interfere on the second limb of direction connected to the expenses incurred which are susceptible to provisions of Section 40A(2)(b) - Appeal filed by the assessee is partly allowed.
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