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The Commissioner of Income Tax – 1 Versus M/s. BFIL Finance Ltd.

2015 (9) TMI 557 - BOMBAY HIGH COURT

Income on account of short term capital gains on sale of property - selection of assessment year for taxation - Tribunal accepting the additional evidences setting aside the entire issue of Short Term Capital Gain - Held that:- Even where an assessee has offered tax in the subject assessment year, it was open to the assessee before the Appellate Authority to raise additional grounds to the effect that same should not be included in the total income for the purposes of taxation. The entire issue .....

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gainst revenue.

Depreciation on leased assets - Tribunal restoring the issue - Held that:- CIT(A) while following the order for the Assessment Year 1995-96 has not followed the same in its entirety. The CIT(A) after holding that the assessee is not entitled to its claim for depreciation as the lease transactions under reference, were not genuine did not consider the alternative submission made with regard to Finance Transaction. Besides, the order passed by the CIT(A) for the Assessme .....

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ew that the impugned order of the Tribunal has restored the issue as raised in Question No.3 to the Assessing Officer for fresh consideration - No substantial questions of law. - Decided against revenue. - Income Tax Appeal No. 1745 of 2013 - Dated:- 31-8-2015 - M. S. Sanklecha And A. K. Menon, JJ. For the Petitioner : Mr Suresh Kumar For the Respondent : Mr F V Irani with Mr A K Jasani ORDER P. C. This Appeal under Section 260A of the Income Tax Act, 1961 (the Act), challenges the order dated 2 .....

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d set aside the entire issue without appreciating the ratio laid down by the Hon'ble Supreme Court in the case of M/s. Goetz (India) Ltd? (2) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in setting aside the entire issue of Short Term Capital Gain without directing the A.O. whether the advance of ₹ 35,00,000/- forfeited by cancellation of agreement should be treated as income of the assessee?" (3) Whether on the facts and in the .....

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eturn of Income that income on account of shortterm capital gains on sale of property should be taxed in the subject Assessment Year, can contend to the contrary before the Appellate Authority. This issue has been raised in the context of Question No.2 which is on merits with regard to the year of taxability of shortterm capital gains in respect of sale of property at Bandra Kurla Complex, Mumbai. The impugned order of the Tribunal has restored this issue viz. Question No.2 to the Assessing Offi .....

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f sale had failed. Therefore, before the Appellate Authority, the Respondent-Assessee claimed that the same should not be taxed as shortterm capital gains in the subject Assessment Year; (c) However we find that following observations in Goetz (India) Ltd. (supra) supports the case of the RespondentAssesee: ".... …. …. …. However, we make it clear that the issue in this case is limited to the power of the assessing authority and does not impinge on the power of the Inco .....

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ent to which our attention was invited by Mr. Mistri is the judgment of a Bench of three learned judges of the Supreme Court in National Thermal Power Co. Ltd. v CIT [1998] 229 ITR 383 (SC); [1997] 7 SCC 489. In that case, the assessee had deposited its funds not immediately required by it on shortterm deposits with banks. The interest received on such deposits was offered by the assessee itself for tax and the assessment was completed on that basis. Even before the Commissioner of Income Tax (A .....

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sion, no income can be included in the total income. It was further contended that the Income Tax Officer and the Commissioner of Income Tax (Appeals) had erred and failed in their duty in adjudicating the matter correctly and by mechanically including the amount in the total income. It is pertinent to note that the assessee contended that it was entitled to the deduction in view of two orders of the Special Benches of the Tribunal and the assessee further stated that it had raised these additio .....

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ideration. Therefore, the issue raised herein would also be a subject of consideration of the Assessing Officer while passing the order on remand. In fact, the chargeability to tax as shortterm capital gain is not in dispute, only the year of taxability is to be examined. The Assessee itself has offered the above amount to tax as shortterm capital gain; (f) In view of the above, Question Nos. 1 and 2 do not raise any substantial questions of law. Accordingly, Question Nos.1 and 2 are not enterta .....

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6 and 1996-97. In its common submission, Respondent-Assesssee pointed out that in case its contention that lease transactions are genuine is not acceptable then the alternate submissions that the transaction is a finance transactions as held by the Assessing Officer be accepted. Further, the lease rental may be reduced by the capital component embedded in it and the balance alone be taxed as income; (c) The CIT(A) by its order dated 17th July, 2003 for the Assessment Year 1995-96 accepted the al .....

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ternate plea of the appellant, in my view, the asssessing officer, having treated the lease transaction as a finance or a loan transaction in absence of conclusive proof of any genuine purchase or lease of assets, he ought not to have assessed to tax the income offered to tax as lease rent in its entirety. It stands to reason that, in a loan transaction, the equated installments paid by the borrower includes both the principal and interest and it is only the portion which is on account of intere .....

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without making reductions as laid down under Section 158bb in so far as lease rental income was concerned. We find that not doing so amounted to disallowance of depreciation as well as assessment of lease rental income. We, therefore, direct the Assessing Officer to reduce from the computation of undisclosed income of the block period lease rentals in so far as they do not represent any independent income of the Assessee but only return of socalled cost of acquisition of the assets which did no .....

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vour of the appellant. Ground 16 to 18 are not pressed do no arise for consideration. In the result, the appeal is partly allowed." (d) The impugned order records the fact for the present Assessment Year, the CIT(A) has followed his order for the Assessment Year 1995-96 by inter alia observing as under: "Looking to the facts and also the appellate decision given in the appellant's case in A. Y. 1995-96 as stated above, it is held that the A. O. has rightly disallowed the claim of t .....

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