TMI Blog2015 (9) TMI 1342X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the CIT as prejudicial to the interest of Revenue. Not only that, assessee also justified that the loss which was incurred during the year, would be eligible to set-off to the business profits earned in AY 2011-12 onwards, wherein assessee offered positive incomes, offering the tax at 30% of the total income + surcharge there on. Action of the CIT would result in refund of tax to assessee and is beneficial to assessee. Therefore, the second condition prescribed u/s. 263, that the order of AO is prejudicial to the interest of Revenue, does not satisfy either in this year or in the later years. As seen from the consequential order passed, even the small tax offered by assessee was to be refunded. Considering these facts, it cannot be st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer of 800 sq. yds., of land for an amount of ₹ 1.75 Crores and desired selling further plot of land of 1,800 sq. yds., to the same buyer for an amount of ₹ 3.80 Crores. The CIT was of the opinion that the sale of entire land of 2,600 sq. yds., was a single transaction and the total consideration agreed was about ₹ 5.75 Crores and the amount paid of ₹ 1.75 Crores on 12-03-2008 was shown as advance received in the Books of Accounts. He was of the opinion that entire transaction being a single transaction of sale of land admeasuring 2,600 sq. yds., resultant Capital Gain should have been offered in the AY. 2009-10. Instead, assessee offered in two assessment years i.e., ₹ 1.75 Crores sale proceeds in AY. 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y was given to the buyer during the financial year 2007-08 and the amount of ₹ 1.75 Crores was only an advance and as such the assessee company is not correct in admitting part of the capital gain during the asst. year 2008-09. The assessee should have offered the entire Capital Gain arising out of transfer of land admeasuring 2600 Sq. Yds. in the Asst. Year 2009-10. The method adopted by the assessee is only a colourable device to avoid payment of Capital Gains tax in the asst. year 2009- 10. As such, under the powers vested u/s. 263 of the I.T. Act, the assessment made Us 143(3) dated 16.12.2010 is modified by reducing the capital gains admitted of ₹ 1,74,84,408/-. The Capital Gains arising out of the sale of entire land of 26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss to be carried forward in 2008-09, instead of getting set-off to the Long Term Capital Gain in 2008-09, is being set-off in a later year to the business income being taxed at 30% of tax in AYs. 2011-12 and 2012-13. Assessee has furnished a chart indicating that for a period of seven assessment years i.e., upto 2014-15, the taxes paid are similar under both the situations i.e., before order u/s. 263 as filed by assessee in respective years and as consequence of order u/s. 263 if modified. Not only that, it was also submitted that Ld.CIT cannot hold that order is prejudicial to interest of Revenue to exclude the incomes offered during the year. He relied on various case law including the jurisdictional High Court order in the case of Spectr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise jurisdiction if he considers that any order passed there in by the AO is erroneous insofar as it is prejudicial to the interest of Revenue. Thus, there should be two conditions which require to be satisfied, (A.) that order of AO is erroneous and (B.) also is prejudicial to the interest of Revenue. If one examines the facts of the case, keeping in mind the above two conditions, the order of CIT is not justifiable. First of all, the AO's order cannot be considered as erroneous as he has examined the computation of income and accepted the capital gains computation as such. As already stated, there is no dispute with reference to the computation of capital gains. In fact, assessee gets more indexation benefit in the later year, but as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et-off to the business profits earned in AY 2011-12 onwards, wherein assessee offered positive incomes, offering the tax at 30% of the total income + surcharge there on. Action of the CIT would result in refund of tax to assessee and is beneficial to assessee. Therefore, the second condition prescribed u/s. 263, that the order of AO is prejudicial to the interest of Revenue, does not satisfy either in this year or in the later years. As seen from the consequential order passed, even the small tax offered by assessee was to be refunded. Considering these facts, it cannot be stated that the order of the AO is prejudicial to the interest of Revenue. It is in fact the order of CIT which is prejudicial to the interest of Revenue. In view of this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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