2013 (12) TMI 1421 - HC - Income Tax

Whether question of law raised first time before Tribunal be entertained - Held that - On transfer of flats by the assessee the AO treated the capital gain as short term whereas the CIT(A) treated it as long term term capital gain - The issue was of gain being either short term or long term - The Revenue neither before the Assessing Authority nor before the First Appellate Authority claimed it as business income - For the first time, before the Tribunal without any factual foundation, the said contention could not have been raised - The Tribunal is justified in declining to entertain the appeal on that ground - Decided against Revenue.

Summary

Issues:
1. Determination of income as capital gains or income from business under Section 2(13) of the Income Tax Act.

Analysis:
The case involved the acquisition of a plot of land with an old house by the assessee, who then entered into a Joint Development Agreement with a partnership firm. The agreement entitled the assessee to 30% of the super built-up area in exchange for 14 flats. The developer handed over the flats, and the assessee sold 13 of them along with receiving compensation for construction delays. The Assessing Authority initially treated the income as short-term capital gain, which the assessee contested as long-term capital gain before the Appellate Authority. The Commissioner of Income Tax agreed with the assessee's claim but required the assessee to offer trading amount for the land transfer. The Revenue then appealed to the Tribunal, arguing for the income to be assessed as "income from business." However, the Tribunal rejected this argument, noting that it was not raised by the Revenue before the lower authorities. The High Court upheld the Tribunal's decision, stating that since the Revenue did not assert the income as business income earlier, it could not introduce this argument before the Tribunal without factual basis. Therefore, the appeal was dismissed as the substantial question of law did not arise at the lower levels of assessment.

In summary, the High Court clarified that the Revenue's attempt to argue for the income to be treated as "income from business" before the Tribunal was not valid since this contention was not raised before the Assessing Authority or the First Appellate Authority. The court emphasized that issues not presented at earlier stages of assessment cannot be introduced at later stages without factual foundation. Consequently, the High Court upheld the Tribunal's decision to dismiss the appeal, as the substantial question of law did not arise during the initial assessments.