TMI Blog2011 (10) TMI 711X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing ground No.1: (i) For that the Id. CIT (A) should have held the impugned order dated 20.10.08 to be unlawful, as the amendment made by the Assessing Officer to the Intimation dated 13.11.06 issued by him u/s 143(1), was beyond the scope of Section 143(1) itself and, being so, the Assessing Officer was not entitled to do such amendment by way of rectification u/s 154 of the Income Tax Act, 1961. (ii) For that the ld. C.l.T.(A) should have held that the impugned order passed by the Assessing officer u/s 154 of the Income Tax Act was bad in law in as much as he resorted to the provisions of section 154 for taxing interest income of the appellant from money lending business activities as an income under the head Income from other sources instead of under the head Profits Gains of Business as returned by \the appellant, as he had no jurisdiction, whatsoever, under that section to alter the head of assessment of such interest income in the guise of rectification, that too, when the mistake alleged by him was not apparent but was a result of his long drawn process of reasoning given in the impugned order running into several pages. 3. We have heard rival sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cie adjustments of controversial nature in purported exercise of power under section 143(1)(a), it can be said that the Assessing Officer over-stepped his jurisdiction thereby determining the income much higher than what was returned by the assessee. This has obviously introduced an error which is apparent from the record. When such an error is pointed out to the Assessing Officer, he is duty bound to amend, under section 154(1)(b), the intimation under section 143(1)(a). This is a case where the illegality or mistake in the intimation under section 143(1)(a) arises for the reason that the said provision which ought not to have been invoked has been invoked and the income was wrongly determined by making unilateral adjustments which do not fall within the ambit of the said section. Thus, in such circumstances, if the Assessing Officer passes an order rejecting the assessee s application under section 154, it can be said that the Assessing Officer has failed to exercise the jurisdiction which he ought to have exercised under section 154 of the Act. But in the present case the assessee has assumed jurisdiction u/s.154 of the Act whereby he has changed the head of income , which is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing: a) The activities of advancing loans were carried on by the appellant as a part of its business activities. It was not a case that the appellant invested its temporary surplus fund to earn extra income. This fact evident from the amount of loans granted, number of parties involved, period for which the loans granted and the amount of Interest earned from advancing of loans. b) The assessing officer has stated that the appellant had no money lending license from RBI, like non-banking organization, whereas, no such license was actually required by the appellant for its money lending business activities. c) The assessing officer has stated that no separate books were maintained by the appellant for the purposes of money Lending, whereas, no such separate books of accounts were actually required under any law. d) The appellant being a partnership firm, had a cost for its funds, be it partners capital or the borrowed capital. As such, there was a direct nexus between the interest earned and interest incurred for earning such income. But the assessing officer failed to consider this fact and wrongly assessed the amount of interest earned as Income from other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s. 57 of the Act. The Assessing Officer will allow the claim of assessee of interest expenditure incurred by assessee qua the income of interest earned and declared as income from other sources. This issue of assessee s appeal is partly allowed as indicated above. 6. The next issue in this appeal of the assessee is against the order of CIT(A) in confirming the action of Assessing Officer in replacing the amount of sale consideration at ₹ 11,42,400/- as against the sale consideration of ₹ 3 lacs. For this, assessee has raised following ground no.3 For that, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the computation of capital gains made by the Assessing Officer on sale of an office space by the appellant by replacing actual amount of sale consideration of ₹ 3,00,000/- with the amount of valuation of ₹ 11,42,400/- obtained by him from the Additional Registrar of Assurance II, Kolkata, by wrongly applying the provisions of section 50C of the Income Tax Act, 1961, when, these provisions did not apply to the appellant as the relevant agreement was not the subject matter of registration. 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e deemed to be the full value of consideration received or accruing as a result of such transfer for computing capital gain. 23.3 Further, Explanation 2 has been inserted in the subsection (2) of the section 50C, so as to clarify the meaning of the term assessable . 23.4 Applicability These amendments have been made applicable with effect from 1st October, 2009 and will accordingly apply in relation to transactions undertaken on or after such date. In view of the above circular, we are of the view that with the insertion of Explanation 2 in sub-section 2 of section 50C was introduced w.e.f. 1-10-2009 so as to clarify the meaning term assessable and it was provided that mere consideration received or accruing as a result of transfer of a capital asset, being land or building or both is less than the value adopted or assessed or assessable by an authority of state government for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall be deemed to be the full value of consideration received or accruing as a result of such transfer for computation of capital gains. Accordingly, this issue of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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