TMI Blog2013 (3) TMI 719X X X X Extracts X X X X X X X X Extracts X X X X ..... sues had been examined by the Assessing Officer in detail before finalising the assessment for the A.Y. 2007-08. 4. The Ld. CIT erred in not appreciating the fact that even on merits, the concluding of the Assessing Officer on the aforesaid issues was perfectly in order and in accordance with law. 5. The Ld. CIT erred in ignoring all the legal precedents cited by the appellant in support of the stand that in the facts and circumstances prevailing in the case of the appellant, no action under section 263 of the Act, was called for. 6. The Ld. CIT erred in setting aside the original assessment order for the A.Y. 2007-08 and directing the Assessing Officer to complete the assessment afresh on the aforesaid issues. 2. The assessee is a builders and developers engaged in the construction and development of residential and commercial properties. There was a survey action against the assessee u/s. 133A of the Income-tax Act on 24- 01-2007 and 25-01-2007. The assessee filed the return of income for A.Y. 2007-08 declaring total income of ₹ 19,97,62,184/- on 10-04-2008. The assessee's case was selected for scrutiny and the assessment of the assessee has been completed u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assets and also computed short term capital loss and claimed set off against the said gain. The company is not eligible to claim set off of such short term loss as per the provision of Sec. 94(7] of the I.T. Act 1961 because this loss arises out of stripping of dividend. Thus, order passed for A.Y. 07-08 is erroneous and prejudicial to the interest of revenue. The order passed by the Assessing Officer for A.Y.2007-08 on 29.12.2009 is therefore, not only erroneous but also prejudicial to the interests of the revenue for the reason mentioned above. It is therefore proposed to revise the assessment order passed on 29.12.2009 u/s of the I.T. Act. 3. The assessee resisted the action of the Ld. CIT. The assessee filed a detailed reply to the questions raised by the Ld. CIT dt. 09-03-2011. The reply was precisely on the following 3 points: 1. Transfer of development right - Incorrect taxation thereof. 2. Warranty expenses of ₹ 68,24,150/- 3. Set-off of short-term capital loss without applying provisions of Section 94(7) of the Act. 4. The Ld. CIT was not impressed with the reply filed by the assessee to the show cause notice issued u/s.263 of Act. So far as fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r as third issue of set off of short term capital loss in the opinion of the Ld. CIT the provisions of Section 94(7) are clearly attracted as the assessee has received dividend of ₹ 30,92,140/- and has claimed short term capital loss of ₹ 4,91,176/-. The Ld.CIT therefore concluded that the assessee is not eligible to claim set off of such short term loss as per the provisions of Section 94(7) of the Act as the said loss arises out of stripping of dividend. The Ld.CIT held that the order passed for A.Y. 2007-08 is erroneous and prejudicial to the interest of revenue and he accordingly set aside the assessment order and directed the Assessing Officer to complete the assessment proceedings in accordance with the law as discussed in the order. Being aggrieved assessee is in appeal before us. 8. We have heard the rival submissions of the parties and perused the record. The Ld. Counsel submits that the stand of the Ld. CIT is different in the show cause notice and in the final order passed u/s.263 of the Act. He refers to copy of show cause notice placed at Page No. 1 of the P/B. He submits that in respect of all the points on which the Ld. CIT has raised queries were c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... points which is as under: 6. During the survey action u/s. 133A of the Act, it was observed that the assessee company has received non-refundable deposit of ₹ 41 Cr in the transaction and will also receives the another money as sale fees by performing the duties assigned to the GDPL by virtue of agreement dated 05.09.2006 as a promoter. As far as consideration of ₹ 41 Cr. is concerned it is a simple sale of transfer of stock-in-trade. In this transaction the GDPL has transferred the land to CRIPL, the possession was handed over and the consideration were also received by GDPL and invested in order to earn income, though it was stated as non-refundable deposit it is indeed a consideration received in term of the money and since the transaction is completed the income is realized according to the accounting standard. 7. With regard to the transaction of ₹ 41 Cr. the assessee company was asked to file the details. On verification the details of transaction and the evidences filed by the assessee during the course of assessment proceedings for the year under consideration it is seen that the company has received a deposit of ₹ 41 Cr. from CPI Gera Realty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer is not acceptable to the Ld. CIT that per se cannot be ground to treat the order as erroneous on that issue. 14. Let us examine the next issue i.e. in respect of the provisions of warranty expenses. We find that on merit itself the issue is covered in favour of the assessee by the decision of the Hon'ble Supreme Court in the case of Rotork Controls India Pvt. Ltd. Vs. 314 ITR 62. We further find that Assessing Officer has raised the specific query on this issue vide notice u/s.142(1) of the Income-Tax Act dt. 27-11-2009 (Copy of Notice placed at Page Nos. 55 to 57 of the P/B). We find that Assessing Officer has called for the details of the warranty expenses with justification note in nature of the warranty. It is also seen that assessee has filed reply on the said issue before the Assessing Officer (Page No. 100 of the P/B) justifying the claim. 15. So far as the third issue is concerned which is one of the reason for considering the assessment order as erroneous one i.e. a set-off of the short term capital loss and applicability of the provisions of Section 94 (7) of the Income-Tax Act, we find that to that extent order of the Ld. CIT has to be sustaine ..... X X X X Extracts X X X X X X X X Extracts X X X X
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