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2016 (8) TMI 221 - GUJARAT HIGH COURT

2016 (8) TMI 221 - GUJARAT HIGH COURT - TMI - Reopening of assessment - Claim of deduction under section 54EC not to be allowable - Held that:- The Assessing Officer has gone a step beyond. He not only accepted the claim of the assessee in the order of assessment, he gave brief reasons for the same. He recorded that he was convinced about the classification adopted by the assessee and that the respective incomes were correctly classified. There is no scope for the Revenue to argue at this stage .....

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Dated:- 27-7-2016 - MR. AKIL KURESHI AND MR. A.J. SHASTRI, JJ. FOR THE PETITIONER : MR RK PATEL, ADVOCATE FOR THE RESPONDENT : MR PRANAV G DESAI, ADVOCATE ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. Petitioner has challenged a notice dated 25.03.2015 issued by the respondent Assessing Officer to reopen the petitioner's assessment for the assessment year 2010-11. 2. Brief facts are as under: 3. Petitioner is an individual and is engaged in the business of sale and purchase of .....

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he assessee filed the return of income on 15.10.2010 showing total income at ₹ 1,41,95,110/. An order u/s. 143(3) of the IT Act passed on 18.01.2013 determining total income at ₹ 1,41,95,110/. Subsequently, on verification of details it is noticed that the assessee has claimed deduction u/s. 54EC of the IT Act at ₹ 1,00,00,000/for investment made in Bonds of Rural Electrification Board. The deduction was claimed against long term capital gain arising on sale of plots for ₹ .....

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nce of accounts also shows that the assessee is doing the business of purchase and sale of land. Therefore the net result of sale/purchase of land requires to be taxed as business income as against offered by the assessee, as long term capital gain. The deduction claimed by the assessee u/s. 54EC is also not allowable as the income is to be treated as business income. The total sale value of land sold is ₹ 1,67,48,181/and the post of acquisition of such land was ₹ 7,83,848/. Therefor .....

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ssing Officer, the petitioner raised objections under a communication dated 07.05.2015. Such objections were followed by further objections dated 30.07.2015. These objections were however rejected by the Assessing Officer by an order dated 19.02.2016. At that stage, the petitioner filed the present petition. 5. Learned counsel Shri R.K.Patel for the petitioner drawing our attention to the materials on record contended that in the reasons recorded, the sole ground pressed in service by the Assess .....

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t proceedings. Any attempt on his part to revisit the claim would be based on mere change of opinion. 6. On the other hand, learned counsel Shri Desai for the department opposed the petition contending that the Assessing Officer has not formed any opinion on this aspect during the original assessment. The assessee was engaged in the business of buying and selling land. Any receipt upon sale of plot of land would therefore form his business income, on which the Assessing Officer wrongly allowed d .....

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m a plots of land. The assessee thus, claimed such receipt as a long term capital gain and claimed deduction under section 54EC of the Act concerning the specified investment. The Assessing Officer however believed that this income was business income and no deduction under section 54EC of the Act was therefore allowable. 8. With this background, we may peruse the original assessment proceedings, in which, the Assessing Officer had under a letter dated 30.07.2012, raised various queries, relevan .....

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are partnership interest, capital gains as well as interest from banks and private parties as declared in my return of income filed. ... 12. The details regarding LTCG on sale of land is given in the computation of income submitted/attached with return. The copy of the same alongwith audit report has already been filed by me on 11012012. The copies of the documents of purchase and sale are enclosed. (Please refer reply No.7 as mentioned herein above. 9. Later on, under a letter dated 05.12.2012, .....

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assessment also describes the nature of assessee's business as that of sale and purchase of land. Further the Assessing Officer was also aware about the details regarding the petitioner's claim of long term capital gain and sale of land when the petitioner supplied the computation of income alongwith audit report and documents of purchase and sale of the land in question. During the scrutiny assessment also, the Assessing Officer specifically examined the question of petitioner's cl .....

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er the head Income from Profit/Gains of Business/Profession . Various aspects of the transactions so carried out by the assessee have been verified and it is found that the assessee has shown the profits earned thereon under the proper heads of income. 3. The assessee has claimed deduction u/s.54EC in respect of Long Term Capital Gain earned on the sale of land at village Vavdi, Survey No.21, Plot No.16 to 18 and 5, consisting of land admeasuring 1946.14 sq.meters. It is seen that the assessee h .....

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e were test checked. He case was also discussed with the AR of the assessee. 11. In the order of assessment also thus, the Assessing Officer referred to the fact that the assessee had sold various plots of land, receipts of which were shown either as long term capital gain or business profit. In this context, the Assessing Officer noted that he had verified various aspects of the transactions so carried out by the assessee. He concluded the assessee had shown the profit earned under proper heads .....

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. The Assessing Officer raised the queries which were answered by the assessee. In the order of the assessment, the Assessing Officer passed a reasoned order why he accepted assessee's classification of the sale proceeds of the land under the separate heads of business income and long term capital gain. He also accepted the assessee's claim under section 54EC of the Act. Any attempt on his part now to reopen the issue by doubting whether the sale proceeds would qualify as capital gain or .....

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me chargeable to tax has escaped assessment. 13. In case of Gujarat Power Corporation Ltd. v. Assistant Commissioner of Incometax, reported in Division Bench of this Court held that once the Assessing Officer examines a particular claim under scrutiny assessment, but makes no disallowance in the final order of assessment, mere fact that he did not give reasons for doing so would be of no consequence. The Court observed as under: 42. Bearing in mind these conflicting interests, if we revert back .....

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partially allows and partially rejects the claim, are all options available with the Assessing Officer, over which the assessee beyond trying to persuade the Assessing Officer, would have no control whatsoever. Therefore, while framing the assessment, allowing the claim fully or partially, in what manner the assessment order should be framed, is totally beyond the control of the assessee. If the Assessing Officer, therefore, after scrutinizing the claim minutely during the assessment proceeding .....

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otherwise cast an unreasonable expectation which within the short frame of time available under law would be too much to expect him to carry. Irrespective of this, in a given case, if the Assessing Officer on his own for reasons best known to him, chooses not to assign reasons for not rejecting the claim of an assessee after thorough scrutiny, it can hardly be stated by the revenue that the Assessing Officer can not be seen to have formed any opinion on such a claim. Such a contention, in our o .....

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