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Shri Koganti Venkata Ramaiah Versus ACIT, Circle 2 (1) Vijayawada

2015 (9) TMI 428 - ITAT VISAKHAPATNAM

Commission/royalty estimated at 2% on accrued basis on the sub contracted work - revision u/s 263 by CIT(A) as AO without properly examining the material on record has estimated the profit at 2% on work given on sub contract basis as claimed by the assessee and has not examined the assessee’s claim of exemption under section 54F for an amount of ₹ 11.00 lakhs against the capital gain arising out of sale of agricultural land - Held that:- As far as the first issue relating to CIT’s directio .....

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f agricultural land, then the assessee is eligible for exemption. Similarly section 54F provides that if the capital gain arising from transfer of long term capital asset, not being a residential house is utilized for purchase of a residential house, within a period of two years, then assessee will be eligible for exemption under section 54F. On a reading of the aforesaid provisions, we do not find any restriction/conditions imposed therein that if an assessee claims exemption under section 54B .....

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HRI J. SUDHAKAR REDDY AND SHRI SAKTIJIT DEY, JJ. For The Assessee : Shri C.Subrahmaniam, CA For The Department : Shri R.K. Singh, DR ORDER Per Saktijit Dey. This is an appeal by the assessee against the order dated 27.03.2014 passed by the learned CIT Vijayawada under section 263 of the Act for the assessment year 2009-10. 2. Briefly the facts are assessee an individual derives income from execution of civil contracts. In the assessment year under consideration, assessee filed his return of inco .....

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d that the assessee has sub contracted a portion of work to the tune of ₹ 2,05,64,308 to third parties. However, assessee has not offered any commission/royalty on the works sub contracted to third parties. As observed by the Assessing Officer commission/royalty estimated at 2% on accrued basis on the sub contracted work amounting to ₹ 4,11,286 was added to the returned income. Accordingly assessment was completed under section 143(3) of the Act vide assessment order dated 7.4.2011 o .....

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ated the profit at 2% on work given on sub contract basis as claimed by the assessee. The 2nd reason is Assessing Officer has not examined the assessee s claim of exemption under section 54F for an amount of ₹ 11.00 lakhs as the assessee has availed exemption under section 54B of the Act against the capital gain arising out of sale of agricultural land. Though the assessee objected to the initiation of the proceedings under section 263 by submitting that there is no error in the assessment .....

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nd 54F, assessee s claim cannot be rejected. 4. The learned CIT however, did not find merit in the submissions of the assessee. As far as the issue of estimation of profit on contract work is concerned, the learned CIT while setting aside the assessment order directed the Assessing Officer to examine the issue and passed the assessment order de novo. So far as the claim of exemption under section 54F is concerned, the learned CIT observed that since the sale proceedings of agricultural land was .....

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issue relating to estimation of profit on subcontracted work is concerned, Assessing Officer has not made any variation to the income determined in the original assessment order. In other words, though separate addition has been made as far as estimation of profit from works contract is concerned. However, learned Authorised Representative submitted that as far as rejection of assessee s claim under section 54F is concerned referring to the provisions contained under section 54B and 54F, the le .....

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he order of the learned CIT. 7. We have considered the submissions of the parties and perused the orders of the Revenue authorities as well as the materials placed on record. As far as the first issue relating to CIT s directions on estimation of profit from work contract business, as agreed by both the parties, it is of mere academic interest as in the consequential order passed by the Assessing Officer in pursuance to the directions of the CIT under section 263 the Assessing Officer has not ma .....

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der section 54B of the Act. However, in purchasing agricultural land, an amount of ₹ 11.00 lakhs was deposited in capital gain account scheme with Syndicate Bank, Vijayawada within the prescribed time limit and subsequently the said amount was utilized for purchase of an apartment within a period of two years from the date of sale of original asset. Therefore, the assessee also claimed exemption under section 54F of the Act in so far as investment of ₹ 11.00 lakhs in purchase of flat .....

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ltural land is invested in purchase of agricultural land, then the assessee is eligible for exemption. Similarly section 54F provides that if the capital gain arising from transfer of long term capital asset, not being a residential house is utilized for purchase of a residential house, within a period of two years, then assessee will be eligible for exemption under section 54F. On a reading of the aforesaid provisions, we do not find any restriction/conditions imposed therein that if an assesse .....

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