TMI Blog2014 (2) TMI 646X X X X Extracts X X X X X X X X Extracts X X X X ..... gain, there is no reason why the sum received over and above the sum received under the joint development agreement at the time of sale on the very same property should be treated as income from business - sale consideration received on sale of property cannot be bifurcated as partly giving rise to income from business and partly giving rise to income from capital gain - there is nothing on record to indicate the basis on which the CIT comes to the conclusion in the order u/s. 263 of the Act that the sum is to be assessed as income from business - The order of the AO was therefore was not erroneous. Jurisdiction u/s. 263 of the Act cannot be sustained on the basis that there was no enquiry made by the AO on the issue considered in the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .17,00,33,992. The computation of total income filed by the assessee is at pages 36 to 38 of the assessee s paperbook. 3. The property was sold by the assessee to M/s. Prestige Estates Projects Pvt. Ltd. [ Prestige for short]. Originally, the assessee had entered into a joint development agreement dated 22.09.2004 with Prestige, whereby the assessee was to get 27.5% and Prestige was to get 72.5% of the constructions to be put up over the property, besides the interest free refundable deposit of Rs.24 crores. Under the Sale Deed dated 08.06.2005, the parties cancelled the earlier joint development agreement and the assessee sold the property to Prestige instead of Joint development. The assessee had, prior to the sale of property, receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e receipt in the hands of the assessee. According to him, the sum of Rs.One crore ought to have been assessed as business receipt. He therefore proposed to revise the order of the AO u/s. 263 of the Act. 7. The assessee in its reply dated 21.03.2011 to the show cause notice u/s. 263 of the Act, pointed out that the sum of Rs.One crore received under Sale Deed dated 8.6.2005 is duly reflected in the long term capital gain declared by the assessee. The assessee also pointed out that the copy of Sale Deed was furnished to the AO before completion of the assessment. The assessee also submitted that the property in question was held by the assessee as a capital asset and therefore any income arising on transfer of capital asset ought to be ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and directed the AO to make a fresh assessment on the issue considered in the order u/s. 263 afresh, after giving opportunity of being heard to the assessee. 9. Aggrieved by the order of the CIT, the assessee has preferred the present appeal before the Tribunal. 10. We have heard the submissions of the ld. counsel for the assessee, who drew our attention to the factual position that the sum of Rs.One crore has been duly included in the computation of capital gain filed by the assessee along with the return of income. According to him, in the light of the letter filed by the assessee before the AO dated 16.12.08 giving a copy of the Sale Deed which contains all the details with regard to the consideration received on the sale of property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there was no proper application of mind on the part of the AO and the CIT had rightly invoked the jurisdiction u/s. 263 of the Act. According to him, the question as to whether the sum of Rs.One crore has to be assessed as capital gain or business income, ought to have been investigated by the AO and his failure to do so has resulted in a prejudice to the interest of revenue and therefore jurisdiction u/s. 263 of the Act was rightly invoked. For the proposition that failure to make enquiry will given right to CIT to invoke powers u/s. 263, the ld. DR relied on the decision of the Hon ble Supreme Court in the case of Ram Pyari Devi Saroagi v. CIT, 67 ITR 84 (SC). 12. We have considered the rival submissions. As narrated in the earlier part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving rise to income from business and partly giving rise to income from capital gain. As we have already observed, there is nothing on record to indicate the basis on which the CIT comes to the conclusion in the order u/s. 263 of the Act that the sum of Rs.One crore is to be assessed as income from business. The order of the AO was therefore was not erroneous. 13. We are also of the view that jurisdiction u/s. 263 of the Act cannot be sustained on the basis that there was no enquiry made by the AO on the issue considered in the order u/s. 263 of the Act. In this regard, we have already seen that in the course of assessment proceedings necessary details had been furnished by the assessee. It is a case where the CIT is of the view that an e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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