2011 (8) TMI 1121 - AT - Income Tax

Summary

Issues involved:
1. Application of section 50C of the Income-tax Act on sale of plots.
2. Treatment of closing stock of diesel without maintenance of log book/stock book.

Issue 1: Application of section 50C of the Income-tax Act on sale of plots

The appeal was filed by the Revenue against the order of the ld. CIT(A) relating to assessment year 2006-07. The Assessing Officer added an amount u/s 50C of the IT Act due to the difference between the value adopted for stamp duty and the sale value of plots sold by the assessee. The assessee contended that the provisions of section 50C were not applicable as the plots were held as stock-in-trade. The ld. CIT(A) agreed with the assessee, stating that section 50C does not apply when the transfer of immovable property is due to the sale of stock-in-trade. The ITAT upheld the decision, noting that the plots were held as stock-in-trade, and the Assessing Officer had incorrectly applied section 50C. Therefore, ground No. 1 of the appeal was dismissed.

Issue 2: Treatment of closing stock of diesel without maintenance of log book/stock book

The Assessing Officer made an addition to the income of the assessee for the closing stock of diesel, as no log book/stock book was maintained. On appeal, the ld. CIT(A) reduced the addition after considering the bill for diesel purchase and lack of maintenance of log book/stock book. The ITAT found the reduction by the ld. CIT(A) to be fair and reasonable, as the estimation of closing stock without proper records was challenging. The Assessing Officer's addition without basis was deemed improper, and the ITAT upheld the decision of the ld. CIT(A) to reduce the addition. Therefore, ground No. 2 of the appeal was dismissed.