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Frizair Pvt. Ltd. Versus Deputy Commissioner of Income Tax, Circle-1 (3) , Hyderabad

2015 (9) TMI 1342 - ITAT HYDERABAD

Revision u/s 263 - whether the capital gains can be taxed in AY 2009-10 or not? - Held that:- There is no prejudice caused to the Revenue in the entire transaction as the capital gains gets taxed in either of the years @ 20% only. Even though Ld.CIT considered that agreement of sale cum irrevocable G.O. was registered on 31-03-2009, he could have invoked the powers to bring the capital gains offered in later year to this assessment year, if assessee has given possession as contended by assessee .....

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efund 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 prejudicia .....

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essee's appeal against the order of the Commissioner of Income Tax-I, Hyderabad dt. 25-03-2013 u/s. 263 of the Income Tax Act [Act]. 2. Briefly stated, assessee who is in the business of manufacturing of air conditioners and refrigerators has filed return of income admitting total income of ₹ 36,076/-. In arriving at the above total income, assessee offered capital gains income of ₹ 1,74,84,408/- and set off loss from the business of ₹ 1,74,48,332/-, thereby total income be .....

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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. In .....

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ital gain offered in AY. 2008-09 should not be taxed in AY. 2009-10. 2.1 Assessee contended that the relevant details were furnished before the AO and AO has accepted the capital gains offered in AY. 2008-09 and the assessment was completed after due verification of the capital gains transactions. It was submitted that these two are separate transactions, even though with same buyer, as assessee sold a part of 800 sq. yds., in FY. 2007-08 and the same buyer wanted further land later, therefore, .....

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under: "From the above it can be clearly established that no possession of the property 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 assess .....

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08-09". 3. Ld. Counsel referring to the computations filed in this year and later year submitted that there is no dispute with reference to computation of capital gains nor there is dispute about the sale consideration received. It was further submitted that assessee has offered capital gains in the very first year on 800 sq. yds., sold for ₹ 1.75 Crores as that part of the transaction has concluded. Subsequently, the buyer M/s. Vijay Sai Organics Ltd., wanted some more land and accor .....

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h the transaction occurred. Therefore, assessee has rightly offered the capital gains in the respective assessment years. It was further contended that there was no prejudice caused to the Revenue as the capital gains was taxed @ 20% in either of the year and in fact by the order of CIT u/s. 263, prejudice is caused to the Revenue as the loss 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 inc .....

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lied on various case law including the jurisdictional High Court order in the case of Spectra Shares and Scrips Pvt. Ltd., Vs. CIT [354 ITR 35] (AP). 4. Ld. DR however, reiterated the facts as stated by the CIT to submit that exercise of jurisdiction is correct. 5. I have considered the issue and examined the records and documents placed on record. No doubt, assessee has sold a large chunk of land in its possession to one party. As seen from the Books of Accounts, the amount of ₹ 1.75 Cror .....

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gain in two assessment years, they being no difference in computation in either of the years and the tax rate being 20% on the Long Term Capital Gain, no prejudice is generally caused whether the capital gain is offered in AY. 2008-09 upon entering into an agreement or in AY. 2009-10 on conclusion of the agreement. 6. The issue whether the capital gains can be taxed in AY 2009-10 or not is not before me. What I am concerned here is whether the action of the CIT in exercising jurisdiction u/s. 2 .....

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able. 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 assessee offered the same in this assessment year. It may be noted that assessee s business loss during the year was set-off to the Long Term Capital Gain as per the pro .....

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e powers to bring the capital gains offered in later year to this assessment year, if assessee has given possession as contended by assessee to the extent of first part of transaction. The judgment of jurisdictional High Court in the case of Potla Nageswara Rao Vs. Dy. Commissioner of Income Tax in ITTA No. 245/2014 dated 09-04-2014 could have come to rescue of Ld.CIT. Instead Ld.CIT exercised jurisdiction to direct the AO to exclude the capital gain offered in this assessment year, thereby inco .....

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