2014 (2) TMI 417

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..... me and not as capital gain, hence the provision of Section 50C is not applicable in contrary to the sale agreement wherein the property held by the assessee is nothing but their investments forming the capital assets of the assessee that are nothing to do with the regular business of the assessee      2. Whether on the facts and circumstances of the case and in law, the ld. CIT(A) was justified in directing the AO to delete the addition of Rs.26,18,410/-without appreciating that the AO has not applied the provisions of section 50C of the IT Act but only utilized the same as basis for sale consideration price?" 2. The assessee-company is carrying on the business of development of residential building known as Inder Towe .....

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..... d. CIT(A). 4. Before the ld. CIT(A), the assessee stated that the AO erred in applying the provisions of 50C of the Income Tax Act, 1961(the Act). The assessee stated that section 50C is applicable only for computation of capital gain as indicated by its placement in Chapter IV of the Act. Computation of income from capital gains and the said section 50C of the Act cannot be invoked while computing business income earned from sale of flats in the hands of the builders developer. In support of this submission the assessee relied on the decision of the Mumbai Bench of the Tribunal in its own case in ITA No.6034/Mum/2009 (AY-2006-07) and ITA No.5428/Mum/2010 (AY-2007-08) dated 31.05.2010 and 23.09.2011 respectively. The assessee also relied o .....

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..... tained in this case, as neither there is any investigation whatsoever made by the assessing officer nor was any evidence gathered by him. Merely because the market value as per the stamp valuation authorities and the said price are at variance, no addition can be made to the business income. The AO ought to have adduced evidence to prove that the sale consideration was, in fact, greater than that which was mentioned in the registered documents. The AO neither found any defects in the books of account nor has rejected the same. As already held, provisions of section 50C are not applicable to cases where income is computed under the heads "Profits and Gains under business or Profession". In view of these discussions, we allow the grounds rais .....

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