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M/s. General Machinery Spares Corporation Versus Income Tax Officer Ward- III (4) Chennai

Revision u/s 263 - examination of sale of property and genuineness of long term capital gains - Held that:- The details called for by the Assessing Officer were furnished by the assessee and such details were accepted by the Assessing Officer and in such circumstances, it cannot be said that there is a lack of enquiry. There was an enquiry, though it is inadequate and in such circumstances, in view of the above decisions, the Commissioner of Income Tax lacks jurisdiction under section 263 of the .....

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ORDER Per Challa Nagendra Prasad, JM: This appeal is filed by the assessee against the order of the Commissioner of Income Tax, Chennai-X, dated 26.03.2014 passed under section 263 of the Act for the assessment year 2009-10. The assessee in its appeal challenging the order of the Commissioner of Income Tax in holding that assessment made under section 143(3) of the Act is erroneous and prejudicial to the interests of the Revenue for the reason that Assessing Officer did not call for any details .....

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roper enquiry by the Assessing Officer in respect of indexed cost of acquisition applied by the assessee while computing long term capital gains. The Commissioner of Income Tax was of the view that Assessing Officer without calling for necessary documentary evidences and causing necessary enquiries to arrive at the correct amount of cost acquisition accepted the working of the assessee. In reply to the show cause notice issued by the Commissioner of Income Tax, assessee submitted that entire det .....

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sing Officer while passing the assessment order, no error had occurred in the order of the Assessing Officer which renders it erroneous and prejudicial to the interests of the Revenue. However, Commissioner of Income Tax without appreciating the submissions of the assessee passed order under section 263 of the Act holding that assessment order passed by the Assessing Officer under section 143(3) of the Act is erroneous and prejudicial to the interests of the Revenue as the Assessing Officer, acc .....

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is the finding of the Assessing Officer that bank statements and other documents called for including capital gain working has been filed by the assessee. The details of investments and expenditure made by the assessee were also called for and filed by the assessee and after due verification of all these details furnished, the Assessing Officer accepted the working of capital gain returned by the assessee. He further invited our attention to page 5 of the paper book which is a letter addressed t .....

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ch is a statement showing cost of acquisition and computation of indexed cost of acquisition explaining how the assessee arrived at the indexed cost of acquisition was also placed before the Assessing Officer. Therefore, counsel submits that all the details were placed before the Assessing Officer as called for and on examination of all these details, assessment was completed by the Assessing Officer accepting the indexed cost of acquisition for arriving at the capital gains. Therefore, such ord .....

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iry by the Assessing Officer, though the Commissioner has a different opinion in the matter is not justified in invoking the provisions of section 263 of the Act. Counsel for the assessee places reliance on the decision of the Hon ble Bombay High Court in the case of CIT Vs. Development Credit Bank Ltd. (323 ITR 206) and submits that when the materials called for by the Assessing Officer were placed before him even though there is lack of proper enquiry, the Commissioner of Income Tax has no jur .....

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5. Heard both the parties. Perused orders of lower authorities and the decisions relied on. In this case, assessment was selected for scrutiny for examination of sale of property and genuineness of long term capital gains information as appearing in the AIR . This is also evident from the assessment order. The Assessing Officer in the course of assessment proceedings called for details regarding computation of long term capital gains, details of sale of property, indexed cost of acquisition, co .....

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d all these details. The Assessing Officer completed the assessment on 22.10.2011 accepting the long term capital gain reported by the assessee. The Commissioner of Income Tax passed order under section 263 of the Act directing the Assessing Officer to call for necessary evidence and details in support of the indexed cost of acquisition of building for factory shed and look into the issues afresh, as according to him, there is no proper enquiry. 6. The Hon ble Delhi High Court in the case of CIT .....

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ad not applied his mind on the issue. The AO in the assessing order is not required to give detailed reason in respect of each and every item of deduction, etc. Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. The counsel for the assessee is right in his submission that one has to keep in mind the. distinction between "lack of inquiry" and "inadequate inquiry". If there wa .....

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hows that the AO had undertaken the exercise of examining as to whether the expenditure incurred by the assessee in the replacement of dyes arid tools is to be . treated as revenue expenditure or not. It appears that since the AO was satisfied-with the aforesaid explanation, he accepted the same. The CIT in his impugned order even accepts this. Thus, even the CIT conceded the. position that the AO made the inquiries, elicited replies and thereafter- passed the assessment order. The grievance of .....

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rder of the AO was an alleged failure of the AO to examine; firstly whether the capital gain of ₹ 1.26 crores has been earned by the assessee on transactions relating to investments 'held to maturity', and secondly whether the depreciation of ₹ 622.39 lakhs was claimed on investments which were held as stock-in-trade. Now from the , material on record before the Court it is evident that the assessee, in response to a specific query ' of the AO dt. 20th Sept., 2004 supplie .....

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pursuance of, the order passed by the CIT under s. 263, an assessment order came to be passed on 28th Dec., 2007. During the course of the assessment order, the AO noted that the assessee has explained depreciation claimed against the investments held and classified as stock-in-trade. The explanation of the assessee in this connection was accepted and the AO came to the conclusion that depreciation of ₹ 622.39 lakhs has been. claimed towards investments held and classified as stock-intrade .....

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