GST Helpdesk   Subscription   Demo   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (8) TMI 261 - ITAT BANGALORE

2016 (8) TMI 261 - ITAT BANGALORE - TMI - Forfeiture of advance received against capital asset - whether the sum has to be reduced from the cost of asset and the same cannot be taxed as income on forfeiture - advance for sale of a capital asset v/s business asset - section 51 applicability - Held that:- As in respect of this project transferred by the partnership firm M/s HM Construction to the assessee, the assessee was declaring profit on sale of property of that project as income from busines .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

wn that this very property was held as a business asset. The revenue has not brought any evidence on record to even suggest that this property in question was also a business asset and the revenue has proceeded on this basis that since in respect of some property, the assessee is disclosing income as business income and showing the closing stock as business stock/ business asset, it cannot be inferred that each and every property owned by the assessee is a business asset and therefore, hold that .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s more than the cost of this asset ₹ 31,76,160/-, the excess amount of forfeiture i.e. ₹ 1,23,840/- has to be brought to tax in the present year in equal proportion in the case of both these assessees who were the owner of this asset in equal proportion and in the year of sale of that property, cost of acquisition should be taken at NIL to compute Capital Gain. - Decided partly in favour of assessee. - ITA Nos.5 & 6(B)/2014 - Dated:- 24-6-2016 - SHRI A.K.GARODIA, AM (SMC) For The Ass .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

The order of the Authorities below in so far as it is against the Appellant, is opposed to law, weight of evidence, natural justice, probabilities, facts and circumstances of the Appellant s case. 2. The Authorities below erred In assessing the sum of ₹ 16,50,000j - being the amount forfeited and deducted from the cost of the capital asset on the aborted sale u/s 51 of the Income- tax Act, 1961 by the Appellant, as business income for the impugned assessment year 1999-00 liable to be consi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

er the facts and circumstances of the Appellant s case. 5. The Authorities below are not justified In holding that the property at Ramagondanahalli was a business asset and not a capital asset as claimed by the Appellant and consequently disallowing the same and treating it as business income which is erroneous under the facts and circumstances of the Appellant s case 6. The Authorities failed to appreciate that the Appellant had not even set up the business of real estate let alone commenced th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

The Appellant denies his liability to be charged to interest u/s. 158BF A of the Income-Tax Act, 1961 under the facts and circumstances of the Appellant s case. 9. The Appellant craves leave to add, alter, delete or substitute any of the grounds urged above. 10. In the view of the above and other grounds that may be urged at the time of the hearing of the appeal, the Appellant prays that the appeal may be allowed in the interest of justice and equity . 3. Similarly, in ITA No.6(Bang)/2014 the as .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e for the impugned assessment year 1999-00 liable to be considered as undisclosed income in the block assessment year under the facts and circumstances of the Appellant s case. 3. Without prejudice to the above the said amount is not taxable as Business Income and the Authorities ought to have held the same as capital receipt under the facts and circumstances of the Appellant s case. 4. The Authorities below failed to appreciate that the Appellant has and continues to hold the property at Ramago .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

even set up the business of real estate let alone commenced the same and treat it as business income under the facts and circumstances of the Appellant s case. 7. The Authorities below failed to give an opportunity to the Appellant to prove the veracity of his claim of deduction of the forfeited amount from the advances u/ s 51 of the Act and the true nature of the property along with evidences which is against the principle of natural justice and consequently the order deserves to be cancelled .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

stice and equity . 4. At the very outset, it was submitted by the ld. AR of the assessee that this is second round of appeal before the Tribunal and he submitted a copy of the Tribunal order in the first round in ITA No.1,2,6 & 7/Bang/2005 dated 31-08-2006. He has drawn my attention to para 8.3 of this Tribunal order on pages 43 & 44 of the tribunal order book as per which the Tribunal restored back the issue regarding the taxability of forfeiture of advance of ₹ 33.00 lakhs shared .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

1 of the IT Act, forfeiture of advance received against capital asset has to be reduced from the cost of asset and the same cannot be taxed as income on forfeiture but this claim of the assessee is not accepted by the department on this basis that this is not an advance for sale of a capital asset but the asset in question is a business asset. He submitted that this allegation of department is not supported by any evidence or fact and therefore, there is no merit in the same. At this juncture, t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

resent year in equal proportion in the hands of both these assessees. In reply ld.AR of the assessee agreed to this proposition. 5. Ld.DR of the revenue supported the orders of the authorities below. He also submitted that a clear finding has been given by the ld.CIT(A) in para-5 of his order that the assessee is engaged in the real estate business and this is not an advance received against capital asset and therefore, Sec.51 of the IT Act is not applicable. He placed reliance on the judgment o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

comprised in the block period, were filed to substantiate this claim. It was pointed out that the appellant has offered capital gains from sale of property for the assessment year 1997-98 and 1999-2000 and the AO has assessed the same under the head Capital Gains. It is only for the AY 1998-99 that the appellant, in respect of a certain project Crystal Springs, sold certain lands and offered income under the head business. 4.1 Except for A Y 1998-99 the business income disclosed by the assessee .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f forfeiture) and it was explained that the appellant was still holding this property as a capital asset, thereby showing his intention to treat is as an investment and not a stock in trade for the purpose of business. 5. I have considered the appellant s submissions as above and gone through the evidences filed. While it is true that except for AY 1998-99 the appellant s business income in all other years, as per the statement of income has flown from his gaining business, it is also an undispu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ess of whether plots were sold in specific later years or not. As part of the real estate business the project at Ramagondanahalli was initiated for sale of developed plots carved out from the land purchased in FY 1997-98 for which advances were also received from prospective customers. In fact, the description of the investment in RG Halli in the balance sheet as on 31.03.1999 speaks of R.G Halli Project-I of ₹ 2,60,467 and R.G Halli Project-If for ₹ 79,98,126. The other lands menti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he appellant had not carried on any real estate business before AY 1998-99 the fact that he entered this line of business through the Crystal Spring land sale establishes a new business vertical for him. The investment in the R.G Halli project, therefore, where the purchasers of plots had also been identified and advances taken from them, represents the next link in this line of business The nomenclature of the investment in the balance sheet additionally testifies to this fact. The AO s argumen .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sclosed by the assessee each year was from running a video game parlour. It is also noted by the ld. CIT(A) that the partnership firm in which the assessee was a partner i.e. M/s HM Construction was engaged in the real estate business and it was the claim of the assessee that this fact alone cannot imply automatically that the assessee was also in the same business. In spite of this assertion of the assessee before the ld. CIT(A), it is held by the ld. CIT(A) in para-5 of his order as reproduced .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y so, then it will be amounting to saying that a person dealing in shares cannot hold any share as investment. This cannot be said and therefore, in the present case also, this fact alone that the assessee was doing some real estate business cannot lead to this conclusion that this property in dispute was also held by the assessee as a business asset and not as a capital asset unless it is shown that this very property was held as a business asset. The revenue has not brought any evidence on rec .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version