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Income Tax - Case Laws
Showing 461 to 480 of 10077 Records
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2019 (12) TMI 602
Deduction u/s 80IC - allocation of the cartage expenses and diesel and oil expenses among two units - determination of the eligible profit - HELD THAT:- CIT-A has considered all the aspects of the computation of the eligible income for deduction u/s 80IC of the act. The learned CIT – A has given the detailed reason with respect to the allocation of the cartage expenses and diesel and oil expenses towards the Badddi unit from the Noida unit. He also considered the allocation of the depreciation of the corporate office as common cost. He further examined the claim of the assessee with respect to the allocation of the manufacturing expenses between the 2 units with respect to the transfer of goods which resulted into reduction of the profits of the eligible unit. As Such he has considered all the arguments of the assessee with respect to the determination of the eligible profit. Thus, we do not find any infirmity with respect to any of the issues raised by assessee in the grounds of appeal. In view of the detail finding of the learned CIT – A, we do not find any infirmity in the order. Accordingly all the grounds of appeal are dismissed.
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2019 (12) TMI 601
Non deduction of TDS on such lease rental payment and interest to the Noida Authority - assessee-in-default - demand was raised under section 201(1) and interest under section 201(1A) - HELD THAT:- In the case of Rajesh projects (India) (P) Ltd [2017 (2) TMI 1109 - DELHI HIGH COURT] has directed not to take any coercive method for recovery of the amount or penalty once the basic liability (with interest to be paid by the GNOIDA) is satisfied.
It is clear that if the tax on the under dispute lease rental income along with the interest has been paid by the deductee, i.e., GNOIDA, no recovery can be made from the deductor. In the light of the ratio of the decision, in the instant case, the NOIDA authority is required to pay tax as well as interest if any corresponding to the lease rental paid the assessee. However, if such tax and interest are not paid by the NOIDA, the assessee cannot be exonerated from the liability under section 201(1) and 201(1A).
We find that in the instant case, CIT(A) has deleted liability under section 201(1) of the Act but retained the interest liability under section 201(1A) of the Act. The first appellate authority in assessment year 2011- 12, has deleted the interest liability as held that Noida Authorities are under an obligation to comply with the provision of the law relating to TDS and also for making all related payments. In our opinion, if the interest has already been paid by the NOIDA Authority on the lease rental income corresponding to payment of the assessee no liability can be raised on the assessee u/s 201(1A) of the Act. This is a matter of verification and cannot be presumed.
We feel it appropriate to restore this issue to the file of the AO for verifying the facts of interest paid on the tax liability by the Noida Authority, corresponding to lease rental paid by the assessee, and decide the issue in accordance with law. Grounds raised by the assessee are accordingly allowed for statistical purposes.
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2019 (12) TMI 600
Gain arising out of the sale of land - Assessee with an opening stock during the year under assessment purchased land for an integrated project - HELD THAT:- When assessee has categorically relied upon Board Resolution of the company to prove the fact that both the project at Gurgaon and Jaipur were integrated projects which certainly gets corroboration from the audited accounts, summarily dismissing the claim of assessee is certainly violation of rules of natural justice.
CIT (A) has not deliberated in any manner as to what would be the outcome of Board Resolutions relied upon by the assessee when examined in the light of the audited accounts. All these Board Resolutions are available and audited financials are available - CIT (A) was required to get the Board Resolutions examined in the light of the audited financials and the other circumstantial evidence during appellate proceedings but he has dismissed this argument of the assessee by merely recording the findings that no third party evidence has been brought on record by the assessee.
All these facts go to prove that the issue is required to be examined afresh by the AO in the light of the Board Resolutions and audited financials of the company and the evidence available on record by providing adequate opportunity of being heard to the assessee. Consequently, impugned order passed by the ld. CIT (A) is set aside and the file is remanded back to the AO to decide afresh after providing adequate opportunity of being heard to the assessee.
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2019 (12) TMI 599
Disallowance of cost of construction cost of improvement of property while computing the Long Term Capital Gain - No documentary evidences in support of the construction work of boundary wall - HELD THAT:- The assessee has not produced any documentary evidences in support of the construction work of boundary wall except the receipts issued by these persons namely Shri Sharwan Lal Saini, Shri Arjun Lal Kumawat and Shri Sita Ram Verma, as well as affidavit of these persons. However, if the boundary wall which is a matter of fact and existence is found existed on the plot of land then the claim of the assessee cannot be rejected in toto.
Only dispute between the assessee and AO is with regard to correct cost of construction of boundary wall.
AO has not conducted any enquiry to contradict the claim of boundary wall on the plot of land. AO has denied the claim of cost of construction but has not denied that boundary is constructed. Therefore, once the existence of the assessee’s boundary wall is not denied by conducting any enquiry or verification of the fact by the AO then the claim of cost of construction made by the assessee cannot be denied in toto. The assessee has claimed the cost of construction at ₹ 3.83 lacs and filed the receipts as well as affidavits of three persons to whom payment was made for the work of cost of construction of boundary wall. Though the AO could not examine these persons for want of service of notice yet the cost of construction of boundary wall could have been otherwise estimated by the AO through expert being DVO. In the absence of carrying out such an exercise of ascertaining the correct cost of construction on the part of the AO, the evidences produced by the assessee cannot be rejected. Accordingly, in the facts and circumstances of the case, the claim of cost of construction of boundary wall deserves to be allowed.
It is clarified that since it is a case of construction of boundary wall, therefore, the non-mentioning of the same in the sale deed will not ipso fact lead to the conclusion that boundary wall was not in existence on the plot of land. Thus the appeal of the assessee is partly allowed.
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2019 (12) TMI 598
Disallowance of interest u/s 36(1)(iii) - excessive interest - AO allowed interst @14.75% against the claim @15% and 16% - addition by further invoking the provisions of section 40A(2)(a) - HELD THAT:- Unsecured loans were without any security and were continuing for the past more than 2-3 years and during the year there was no change of rate of interest, it was further submitted that the rate of interest was commensurate with the risk, need for funds, non-availability of bank loan, etc. It was also submitted that the bank loans were just one of the various options available to raise funds but taking loan from bank involves various factors such as lengthy application process, long list of pre-requisites to qualify for the loan and also involve collateral security whereas all the factors were not involved in the case of unsecured loans. CIT (Appeals) has ignored this submission of the assessee. Commissioner of Income-tax (Appeals), though noted the above submissions in his order but confirmed the addition by further invoking the provisions of section 40A(2)(a) of the Act. The action of the learned Commissioner of Income- tax (Appeals) is not as per law therefore, we allow ground No. 2 of the appeal
Ad hoc disallowance - Expenditure incurred in cash - HELD THAT:- AO has made the disallowance simply by holding that a perusal of bills and vouchers reveals that most of these expenses were incurred in cash and hence has disallowed 10 per cent. out of various expenses. AO has nowhere pointed out any specific discrepancy in the books of account nor has he rejected the same. In our opinion, the Assessing Officer cannot make ad hoc disallowance specifically in view of the case law relied on by the learned authorised representative. See ASHOK SURANA VERSUS COMMISSIONER OF INCOME-TAX [2016 (6) TMI 696 - CALCUTTA HIGH COURT]
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2019 (12) TMI 597
Revised return u/s 139(5) rejected - Revision in the sales figure - act of AO in proceeding to frame the assessment on the basis of the original return of income - The submissions of the assessee were not found acceptable to the AO. AO was of the view that assessee could not justify the revised return by adopting revised sales. - HELD THAT:- High Court in the case of CIT Vs. Arun Textile [1991 (6) TMI 66 - GUJARAT HIGH COURT] has held that once the revised return is filed u/s 139(5) of the Act, the original return is substituted by the revised return and it is not open to the AO to advert to the original return of income or the statement filed along with it.
Hon’ble Punjab and Haryana High Court in the case of Beco Engineering Co., Ltd., Vs. CIT [1984 (2) TMI 83 - PUNJAB AND HARYANA HIGH COURT] has held that in a case assessee files the revised return then it is to be taken into consideration for the purpose of making an assessment and the original return cannot be adverted. once the revised return has been filed by the assessee u/s 139(5) of the Act and the same has been accepted, then it is not open to the authorities to take into consideration the original return of income for determining the total income in the assessment proceedings. Set aside the order of AO and direct the AO to consider the total income declared by the assessee u/s 139(5) of the Act for determining the total income. Thus, the grounds of the assessee are allowed.
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2019 (12) TMI 596
Disallowance u/s 40A(3) - payments in cash as specified in Rule 6DD - HELD THAT:- Nature of expenditure incurred by the assessee under the car hire charges, which is disallowed by the Assessing Officer u/s 40A(3) and sustained by the CIT(Appeals) to the extent of ₹ 1,03,500/- is such that the same is covered by the proviso to section 40A(3) being payment made for plying, hiring or leasing goods carriages and since the payments of such expenditure was made by the assessee in cash not exceeding a sum of ₹ 35,000/-, the disallowance confirmed by the ld. CIT(Appeals) is not sustainable. Delete the said disallowance sustained by the CIT(Appeals) to the extent and allow Ground No. 1 of the assessee’s appeal.
Disallowance of electricity, power and fuel - as contended that the actual nature of the expenditure is to be seen keeping in view the underlying purpose of incurring such expenditure and not the treatment given in the books of account while booking the said expenditure - HELD THAT:- We are unable to accept this contention of the ld. Counsel for the assessee. The relevant proviso to section 40A(3) is applicable only in the case of payment made for plying, hiring or leasing goods carriages and the benefit of the same, in my opinion, cannot be extended to cover the expenditure incurred on power and fuel irrespective of the nature of such expenditure or the nature of the assessee’s business. Therefore, find no merit in Ground No. 2 raised by the assessee in this appeal and dismiss the same.
Addition u/s 40A(3) - HELD THAT:- What is relevant for the purpose of applicability of section 40A(3) is a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a Bank or account payee Bank Draft against any expenditure incurred by the assessee exceeding the specified limit of ₹ 20,000/- as applicable to the year under consideration. In the present case, such payments in cash were made by the assessee in respect of certain expenditure incurred as enumerated by the CIT(Appeals) in his impugned order exceeding the specified limit of ₹ 20,000/- and since the disallowance made by the AO u/s 40A(3) only to the extent of such payment/payments was sustained by the CIT(Appeals), I find no infirmity in the same calling for any interference. - Decided against assessee.
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2019 (12) TMI 595
Deduction u/s 54F denied - investment made by the assessee in construction of new house - AO has allowed the deduction for which the assessee purchased the residential plot but denied the claim of deduction towards the cost of construction of new house on the ground that the assessee has not produced any supporting evidence to show that the house was completed within the stipulated period provided under section 54F - HELD THAT:- Though the assessee has not filed any valuation report, however, the assessee produced the bank account statement showing the withdrawal of money from time to time as well as various bills and vouchers towards purchase of construction material. All these evidences go to prove that the expenditure was incurred by the assessee within the stipulated period as provided under section 54F of the Income-tax Act. Further, the Assessing Officer has not disputed the fact that the house was finally constructed by the assessee by incurring the cost of construction. There may be a dispute of correct cost of construction but it cannot be denied that the assessee has not constructed the residen- tial house after sale of the existing asset. Thus the rejection of the claim of the assessee without conducting any enquiry to verify the fact about the actual cost of construction as well as the time period of the construction of the house is not warranted and justified.
Hence, once the assessee has produced the evidence in support of his claim of construction of new residential house and house was actually constructed as existed at the plot of land, then the claim of the assessee cannot be denied on mere suspicion or doubt. Hence the claim of the assessee under section 54F is allowed. - Decided in favour of assessee.
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2019 (12) TMI 594
Assessment u/s.153C - Addition based on seized material - connection or corroboration between the seized Materials / documents - HELD THAT:- Undisputedly, seized documents do not belong to the assessee and no incriminating documents/materials have been seized from other persons, which are being assessed u/s.153C r.w.s. 143(3), then no sustainable addition can be made in the hands of other persons in such assessment year.
Our view also gets a strong support from the decision of Hon’ble Supreme Court in the case of Sinhgad Technical Education Society [2017 (8) TMI 1298 - SUPREME COURT] vehemently relied by ld Sr. counsel for the assessee. Therefore, we have no hesitation to hold that the addition made by the AO and confirmed by the CIT(A) have no legs to stand on the premises of relevant legal provisions of section 153C of the Act and thus, same are not sustainable and, hence, we hold so.
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2019 (12) TMI 593
Bogus purchases - AO has made addition towards 12.50% profit on alleged bogus purchases, on the ground that the assessee is one of the beneficiary of accommodation entries of bogus purchase bills issued by Hawala dealers - CIT(A) has scaled down addition to 8.80% profit on total alleged bogus purchase - HELD THAT:- In this case, the assessee is in the business of manufacturing and trading in playwood and other wood products. The assessee had declared 3.70% gross profit in regular books of accounts including on alleged bogus purchases. Further, the assessee claims that the ITAT, Mumbai Bench in case of Vaishali Prakash Muni vs. ITO [2018 (4) TMI 1202 - ITAT MUMBAI] had considerd an identical issue and considering facts has directed the AO to estimate 2% profit on alleged bogus purchases.
The assessee further claims that fact of its case is identical to facts of case considered by the Tribunal in case of Vaishali Prakash Muni vs. ITO(Supra) and hence requested to estimate 2% profit on alleged bogus purchases. We, therefore, considering facts and circumstances of this case and consistent with view taken by the Coordinate Bench in number of cases, including in the case of Vaishali Prakash Muni vs. ITO (Supra) direct the Ld.AO to estimate 2% profit on alleged bogus purchases. Accordingly, we direct the AO to reduce additions to 2% profit on alleged bogus purchases. - Decided partly in favour of assessee.
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2019 (12) TMI 592
Revised return - withdrawing the claim of TDS and reduction in corresponding professional income - credit for the TDS claim - as assessee is maintaining books of account on cash basis, though said to be deducted as tax at source by his client, since, it is not remitted to the Government account and not reflected in 26AS, it is clear that the assessee has not received the same - HELD THAT:- Since the assessee is accounting his professional (actor) income on cash basis, the entire receipt including TDS has to be assessed in the respective assessment year. Therefore, the addition made in assessment year 2009-10 and 2014-15 are in accordance with law. However, since the assessee is claiming that the producers by name ‘Silver Screen Movies’ and M/s. Maragadam Pictures have deducted the tax from the respective receipts, while determining the tax payable by the assessee, the AO is directed not to call upon the assessee to pay the corresponding taxes himself to the extent on which the tax has been deducted from the income of the respective assessment year, in accordance with Section 205 of the Income Tax Act, provided, that the assessee is able to furnish the TDS certificate issued by the respective deductor, supra, to that extent.
Carry forward and set-off of unabsorbed depreciation against income from other sources and income from house property in the revised return of income / revised working of the statement of income - It is seen that the ld.CIT(A) has not taken cognizance of the fact that the assessee has admitted income from business and profession at ₹ 38,32,052/-. Therefore, the assessee is entitled to set-off the brought forward loss against such income. The AO shall verify the fact of income admitted from business and profession, as indicated above, and if it is the fact, then he shall allow the brought forward depreciation claim to the extent of availability of income under that head. To this extent, the assessee’s appeal is allowed.
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2019 (12) TMI 591
Revision u/s 263 - Addition u/s 40(a)(ia) - amount paid or payable during year - HELD THAT:- In the present case, the assessee is covered by jurisdiction of Hon'ble Allahabad High Court and in the case of Vector Shipping Services Hon'ble Allahabad High Court [2013 (9) TMI 1073 - ALLAHABAD HIGH COURT] had held that tax is required to be deducted only on the amounts payable and assessee is not required to deduct tax on the amounts paid during the year. In the present case, the assessee had credited the interest amount to the credit of the parties and to examine as to whether such credit to the account of a party amounts to payment or not, the definition of word ‘paid’ as per section 43(2) has to be analyzed.
Definition of amount paid, clearly demonstrates that in case the assessee is following the mercantile system of accounting, which system records revenues and expenses when they are incurred, regardless of when cash is exchanged, therefore, the amount credited to the payee account will also amount to payment. Since the assessee was following the mercantile system of accounting, the entries of interest credited by him to the payees’ accounts were entries of accrual in the absence of cash transactions, which amounted to payment and, therefore, the Assessing Officer had rightly not made the disallowance as per the judgment of the jurisdictional Hon'ble Allahabad High Court and as per the Board Circular, which was binding on him. In view of the above, the order passed by the AO is neither erroneous nor prejudicial to the interest of the Revenue, as the AO had rightly not made the disallowance. In view of the above, the appeal of the assessee is allowed and the order passed by learned CIT u/s 263 is quashed. - Decided in favour of assessee.
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2019 (12) TMI 589
Disallowance of the interest u/s 36(1)(iii) - investment made on Capital Work in Progress (CWIP) - HELD THAT:- A perusal of the balance sheet of the assessee reveals that the assessee during the year had taken unsecured loans / interest bearing loan of ₹ 84170175.58 from the banks. The loan and advances made by the assessee at the end of the year were of ₹ 85591716.58. The own capital of the assessee is not sufficient either to meet the loan and advances or to meet the capital work in progress. It is admit ted case of the assessee that the term loan was used for acquisition of the capital assets.
Assessing Officer rightly calculated the proportional disallowance of the amount of CWIP. There is no justification to distribute the entire term loan amount over the total assets.
Addition u/s 68 - unexplained cash credits - HELD THAT:- Assessee apart from filing the confirmation from the investor company has also produced on file the Income-tax returns and PAN numbers of the investor and statement of the financials of the Investor to prove the identity and financial capacity of the Investor. To prove the genuineness of the transactions, the assessee also filed conformation from the Investor regarding the investment made by it in the assessee company.
During the appellate proceedings before the CIT(A), the assessee also furnished bank statement of ‘M/s Reliable Realtech P Ltd. ’ depicting that the funds were paid by the said company out of its available business limit . The assessee also proved from the financials of the investor that it was possessed of sufficient funds to make investment in the assessee company. Assessee also placed on file the bank statement of the assessee to show that the payments were repaid to the Investor in the next year. In our view, the aforesaid documents were sufficient to prove the identity, financial capacity as well as the genuineness of the transactions. CIT(A) has confirmed the addition on just assumption and presumption basis without pointing out any suspicious circumstance or rebuttal to the evidence furnished by the assessee - Decided in favour of assessee.
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2019 (12) TMI 584
TDS u/s 194J - Channel Placement fees - Whether was not in the nature of Royalty as defined u/s.9(1) (vi) and so the tax is not required to be deducted u/s.194J despite insertion of clarification by virtue of Explanation 6 in Section 9(1)(vi) w.e.f. 01.06.1976? - HELD THAT:- We find no reason to interfere with the judgment/ order impugned.
Accordingly, the Special Leave Petition is dismissed. However, question of law kept open.
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2019 (12) TMI 583
Eligibility of deduction u/s 80IB(10) - ITAT allowed the claim - as per revenue assessee has not completed the project due to failure attributable to assessee itself within stipulated time prescribed u/s. 80IB(10) - HC allowed the claim - HELD THAT:- SLP dismissed.
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2019 (12) TMI 582
Benefit of exemptions u/s. 11 - Charitable activity u/s 2(15) - Tribunal has merely applied the decision of this court in the case of Ahmedabad Urban Development Authority v. Assistant Commissioner of Income Tax (Exemptions) [2017 (5) TMI 1468 - GUJARAT HIGH COURT] to the facts of the present case - HELD THAT:- It is not the case of the appellant that the Tribunal has wrongly applied the decision to the facts of the present case. The sole ground put forth is that the Special Leave Petition filed by the revenue against the said decision is pending before the Supreme Court. In the aforesaid premises, it is not necessary to set out the facts and contentions in detail.
For the reasons recorded in the decision of this court in the case of Ahmedabad Urban Development Authority v. Assistant Commissioner of Income Tax (Exemptions) (supra), this court does not find any infirmity in the impugned order passed by the Tribunal so as to give rise to any question of law, much less, a substantial question of law, warranting interference.
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2019 (12) TMI 581
Deduction u/s 80IC - substantial expansion - exemption at the same rate of 100% beyond the period of five years on the ground that the assessee has now carried out substantial expansion in its manufacturing unit - HELD THAT:- This appeal is covered by judgment titled Pr. Commissioner of Income Tax versus M/s. Aarham Softronics [2019 (2) TMI 1285 - SUPREME COURT]
An undertaking or an enterprise which had set up a new unit between 7th January, 2003 and 1st April, 2012 in State of Himachal Pradesh of the nature mentioned in clause (ii) of subsection (2) of Section 80IC, would be entitled to deduction at the rate of 100% of the profits and gains for five assessment years commencing with the 'initial assessment year'. For the next five years, the admissible deduction would be 25% (or 30% where the assessee is a company) of the profits and gains.
In case substantial expansion is carried out as defined in clause (ix) of subsection (8) of Section 80IC by such an undertaking or enterprise, within the aforesaid period of 10 years, the said previous year in which the substantial expansion is undertaken would become 'initial assessment year', and from that assessment year the assessee shall be entitled to 100% deductions of the profits and gains.
(d) Such deduction, however, would be for a total period of 10 years, as provided in subsection (6). For example, if the expansion is carried out immediately, on the completion of first five years, the assessee would be entitled to 100% deduction again for the next five years. On the other hand, if substantial expansion is undertaken, say, in 8th year by an assessee such an assessee would be entitled to 100% deduction for the first five years, deduction @ 25% of the profits and gains for the next two years and @ 100% again from 8th year as this year becomes 'initial assessment year' once again. However, this 100% deduction would be for remaining three years, i.e. 8th, 9th and 10th assessment years.
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2019 (12) TMI 580
Reopening of assessment u/s 147 - HELD THAT:- As initiated for the same reasons, is factually correct, but the same does not render the proceedings to be illegal. Since the proceedings are for different assessment years, the argument so zealously advanced, is untenable.
So far as the satisfaction of the concerned Ao and the Commissioner, Income Tax is concerned, a perusal of the pages Nos.65 to 69 available on record clearly suggests that both the authorities have applied their mind objectively and to the fullest extent required under the law.
No other argument was advanced by the learned counsel for the petitioner.
This Court does not find the impugned notice to be void or without jurisdiction in any manner. The writ petition, therefore, fails.
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2019 (12) TMI 579
Exemption u/s 11 - Whether assessee is right in law and fact in holding that the assessee is a religious and charitable institution and carried on kuri business for utilizing the income therefrom also for the charitable purpose such as medical relief, education etc. ? - Tribunal is right in holding that the interest claimed cannot be taxed in the hands of the assessee trust as it is exempt from taxation? - HELD THAT:- In view of the remand made by the hon'ble Supreme Court in Dharmodayam Co. case, the matter requires reconsideration by the Tribunal. Of course, we take note of the fact that in the case of Dharmodayam Co. [2000 (11) TMI 10 - SC ORDER] the Tribunal had ultimately found the issue in favour of the assessee therein. But question as to whether a similar situation prevails in the instant case which would satisfy the different conditions stipulated under sub-section (4A), is a matter which requires examination. Since some of the reference cases are of the year 2005, we do not think it appropriate to dismiss them on the basis of the litigation policy of the Government. Instead we leave it open to the respondent to take up such contention before the Tribunal, at the time when the matter is considered afresh.
Instead of specifically answering question of law referred, we think it only appropriate to remit the income tax appeals for fresh consideration
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2019 (12) TMI 578
Taxing the capital gain arising at the hands of the assessee for transfer of a long term capital asset - HELD THAT:- Tribunal found the facts of the present case akin to those arising in the decision of Chaturbhuj Dwarkadas Kapadia [2003 (2) TMI 62 - BOMBAY HIGH COURT] in facts of the case, the consequential directions for taxing the income in the assessment year 2003-04 outhg to have been granted.
In absence of any such specific direction, there is a risk of the assessee arguing that the assessing officer cannot reopen the assessment, since there is no directions issued by the Tribunal for taxing the income for the said year. To put the entire issue beyond the possibility of doubt or debate, we issue such directions. We are informed that subsequent to the Tribunal passing the impugned judgment, the Assessing Officer has already passed a fresh order of the assessment for the assessment year 2003-04 taxing the capital gain in the said year.
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