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2015 (1) TMI 50 - AT - Income TaxAssessability of profit on sale of development rights in land - Business income or capital gain – Applicability of section 50C - Whether while assessing the income under the head ‘income from short term capital gain’, the provisions of section 50C of the Act are applicable - Held that:- The assessee was a civil contractor and was also earning income as commission agent - assessee had entered into an agreement for the development of the property - the assessee had some rights in the property and the extinguishment of the said rights give rise to the transfer of the asset in the hands of the assessee and such transfer is assessable as income from capital gain in the hands of the assessee - However, the provisions of section 50C of the Act are not applicable as the same are to be applied only where there is transfer of land or building or both - there were only development rights in the said land available to the assessee and such transfer of development rights does not establish the case of the Revenue that it amounts of transfer of land or building or both - The provisions of section 50C of the Act are attracted in specific cases and are not applicable - the income arising in the hands of the assessee on sale of development rights by adopting the sale price at ₹ 1,05,00,000/- and adopting cost price of ₹ 44,00,000/- is to be computed in the hands of the assessee to the proportion of his shareholding – the AO is directed to compute and include the same in the hands of the assessee under the head ‘income from short term capital gain’. CIT(A) failed to include the income from business in the hands of the assessee - the expenses claimed by the assessee i.e. office establishment expenses, provision for compensation to litigation are not to be allowed as expenses - the provision for compensation to litigants have not been allowed by the CIT(A) - assessee rightly admitted that there is an error in the order of CIT(A) while computing the income in the hands of the assessee – the AO is directed to re-compute the income – Decided partly in favour of revenue.
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