TMI Blog2017 (9) TMI 810X X X X Extracts X X X X X X X X Extracts X X X X ..... lder had to be taxed under the head capital gains and not under the head income from other sources. Considering the period of holding of the asset he assessee is entitled to benefit of indexation and the disputed amount is to be taxed as long-term capital gain. See CIT Versus Vijay Kumar Ajit Kumar Vijay Flexible Containers [1989 (9) TMI 16 - BOMBAY High Court]. Second effective ground of appeal is decided in favour of the assessee. - I.T.A./4202/Mum/2015 - - - Dated:- 1-9-2017 - Sh. Rajendra, Accountant Member And Amarjit Singh,Judicial Member For The Revenue : Ms. Vidisha Kalra-CIT-DR For The Assessee : Shri Subodh Ratnaparkhi-AR PER RAJENDRA, AM Challenging the order, dated 25/03/2013, of the CIT(A)-2, Thane, the assessee has filed the present appeal. Assessee, an individual, deriving income from share of profit from partnership - firms, interest from FDRs and short-term capital gains, filed her return of income on 23/05/ 2007, declaring total income of ₹ 18.02 lakhs. The Assessing Officer(AO)completed the assess -ment u/s.143(3)of the Act, on 31/10/2008, determining the income of the assessee at ₹ 18, 02,940/-. During the course of hearing befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 2,89, 80,000/-as a compensation against the cancellation of the said transaction, that she had not offered the amount for taxation for the year under appeal. The AO completed the assessment u/s.143(3)r.w.s.153A, on 25/03/2013, determining the income of the assessee at ₹ 3.07 crores, after making an addition of ₹ 2.89 crores on account of compensation received from the builder on termination of allotment of flats booked with RCC. 3. Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authority(FAA)and raised various grounds of appeal including not complying with the principles of natural justice in making the addition on account of compensation received and not sharing the information collected from RCC. It was argued that no incriminating material was found and seized relating to the issue of investment in flats with RCC either by the assessee or any other member of her family or their subsequent cancellation, that the original assessment for the year under consideration was completed on 31/10/2008 i.e. before the search was carried out in the month of March,2011, that nothing was spending on the date of such as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 153A/153C did not contain the words or phrases incriminating material or undisclosed income, that had the legislature intended to restrict the scope of assessment u/s.153A only to material found during the search it would have been indicated so as was done under the erstwhile provisions of section 158 BC or section 158 BD of the Act, that the withdrawal of restriction as contained under those section clearly suggested that legislature intentionally did not restrict the scope of addition u/s.153A to the finding of some incriminating material during the search, that the mandate of section 153A was assessment of total income, that computation of income could not be restricted to detection of incriminating evidences alone. He referred to the case of Chetandass Lachman Dass (211 taxman 61) and held that addition to be made in assessment u/s. 153A or 153C of the Act were not required to be restricted to incriminating material found during the search, that as per the letter of the assessee dated 20/03/2013 income arising out of compensation received over and above the advance on cancellation of the transaction with RCC was not admitted in the original return of income, that the und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n record any agreement entered into by her with the builder, that she had received only refund of advance paid with interest, that the assessee and builder had not come to an agreement or understanding under which assessee assigned rights, title and interest to third party and received consideration hat by paying advance money she did not get any right which could be termed as capital asset, that the amount in question was paid by way of compensation on account of failure of the builder to fulfill the terms of agreement and not for relinquishment/extinguishment of any right of the assessee, that the AO was justified in assessing the sum received from the builder under the head income from other sources. 3.3. With regard to the quantum addition, the FAA held that the assessee had received ₹ 1.77 crores from RCC as compensation, that ₹ 1.12 crores (55.40 lakhs +54 lakhs) were received by her on behalf of her daughters, that RCC had not paid any compensation to her daughters, that she had invested in the names of her minor daughters in the year 2001, that she received back the amount invested in the year 2005, that the claim made by her was correct. He directed the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of booking of flat hat the assessee had not shown the said income in her original return that was filed in the regular course hat in the appellate proceedings he FAA reduced the addition and granted part relief hat he rejected the jurisdictional issue raised by the assessee. 5.1. Searches and seizures are n any jurisprudence n aspect of the overriding power of the State exercised in public interests either for ensuring social security or for protecting some public interests. It is said that searches nder the Act re necessitated for avoiding tax evasion as well as facilitating the assessment proceedings. Therefore narrow construction section 132 of the Act in never advised by the Hon ble Courts. Search and seizure s one of the tools hough the harshest one o collect due taxes from the assessees. Such actions may lead to unearth undisclosed incomes. Assessment of searched persons is part of the overall exercise to determine their tax liabilities. A notice u/s.153A of the Act can be issued in the cases where action u/s.132 is carried out. As far as additions are concerned same can be made on the basis of some seized material. But he case before us s unique s the assessee her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition. He relied upon the cases of Madhu Kaul(363 ITR 54) ijay Flexible Containers (186 ITR 693), Hilla J B Wadia(216 ITR 376) raveen Gupta(137TTJ 307)and CBDT circular No.471 ated 15/ 10/ 1986. The DR supported the order of the FAA. 6.2 . We have heard the rival submissions and perused the material before us. We find that the AO and FAA had rejected the claim of the assessee on the ground that by paying token advance she did not get any right which could be termed as capital assets within the definition of section 2(14) and which could be transferred as per the provisions of section 2(47) of the Act. It is a fact that the assessee had not signed any formal agreement with RCC. But CC had admitted to have received money from her and returning the same on cancellation of booking of the flat hat the assessee has argued that the disputed transaction resulted in capital gains. Here e would like to refer to case of Madhu Kaul (supra). In that matter the flat was allotted to the assessee in the month of June, 1986. Payment of first instalments by the assessee on 04/07/1986, conferred a right upon the assessee to hold a flat. The AO held that amount received by the assessee on sale of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed specific performance of the said agreement for sale by conveyance to him of the immovable property and, only in the alternative, damages for breach of the agreement. A settlement was arrived at when the suit reached hearing at which point of time the assessee gave up his right to claim specific performance and took only damages. His giving up of the right to claim specific performance by conveyance to him of immovable property was a relinquishment of the capital asset. There was, therefore, a transfer of a capital asset within the meaning of the Income-tax Act. The capital asset had been acquired for the cost of ₹ 17,500 paid as and by way of earnest money. The Income-tax Officer had deducted from out of the total sum of ₹ 1,17,500 received by the assessee under the consent terms the amount of ₹ 17,500 as being the cost of acquisition of the asset and the sum of ₹ 17,904 on account of expenses and legal charges. The assessment was made by him rightly on the basis that the capital gains amounted to ₹ 82,086. Considering the above and respectfully following the judgment of Vijay Flexible Containers (supra) e hold that the income arising ou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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