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2017 (6) TMI 516 - AT - Income TaxEligibility for exemption u/s. 54EC - part payment receipt - Held that - The period of six months for making deposit u/s. 54EC of the Act should be reckoned from the dates of actual receipt of the consideration, because in the present case the assessee has received part payment after six months at the time of registration of sale deed or even after that in few of instances. If the period is reckoned from the date of agreement and receipt of part payment at the first instance, then it would lead to an impossible situation by asking assessee to invest money in specified asset before actual receipt of the same. Admittedly assessee received part payments after execution of agreement to sale and handing over of possession thereby completing the transaction in terms of section 53A of Transfer of Property Act but invested in specified bonds i.e. NABARD bonds within one month of the receipt of sale consideration being part payment. Hence, we are of the considered view that the assessee is eligible for exemption u/s. 54EC of the Act on part payment received after completion of transaction on 02.07.2004. Penalty under section 271(1)(c) - sale of plot of land chargeable to tax under the head of capital gains or under the head of business income - Held that - The issue in respect of the items of sale of land (development rights) to M/s Saytam Builders & sale of land (development rights) of M/s Brahma builders and an amount received as compensation from M/s Wagmare i.e. the surplus of ₹ 49,03,620/- is covered in favour of assessee by Hon ble Bombay High Court decision in assessee s own case for 2004-05. Respectfully following the same, we confirm the order CIT(A) deleting the penalty. In respect to the business expenses disallowance we are of the view that mere on confirmation of disallowance of expenses and that also on estimate basis, the penalty for concealment of income u/s 271(1)(c) of the Act cannot be levied and hence, we confirm the order of CIT(A) deleting the penalty. This appeal of revenue is dismissed. Revision u/s 263 - sale of land as business income as against the assessee s claim accepted by AO as income chargeable as capital gains - Held that - Admitted facts are that in this year the AO has discussed the facts while framing the assessment under section 143(3) and finally assessed the income arising out of the sale of plot of land by entering into development agreement with Kubix Realities Pvt. Ltd. on 27-04-2006 as long term capital gain. Similarly, in assessee s own case sale of plot of land was assessed as business income. But, Tribunal finally held that the same should be assessed as long term capital gain for AY 2004-05. However, in AY 2005-06, the Tribunal took a different view in assessee s own case and held that the profit on sale of plot of land is to be assessee as business income. It means there are two view possible and once there are two views possible, the revision under section 263 of the Act is not possible Entitlement for deduction under section 80IB (10) - assessee had sanctioned lay out plan of eight buildings. But finally obtain completion certificate in respect to seven buildings - Held that - As in the case of CIT vs. Vandana Properties Section 80IB(10) 2012 (4) TMI 54 - BOMBAY HIGH COURT held that the deduction is held to be allowable where a new housing project is constructed on a plot of land having minimum area of 1 acre but with existing housing project and entitlement to construction and additional building E on the plot of land. Hon ble Bombay High Court allowed the claim of the assessee. We are of the view that the facts in the present case are similar and hence, respectfully following the same we allow the claim of the assessee.
Issues Involved:
1. Taxability of surplus on sale of land as capital gains vs. business income. 2. Eligibility for exemption under section 54EC of the Income Tax Act. 3. Deletion of penalty under section 271(1)(c) for furnishing inaccurate particulars of income. 4. Revision of assessment under section 263 by CIT. 5. Disallowance of deduction under section 80IB for housing project profits. Detailed Analysis: 1. Taxability of Surplus on Sale of Land as Capital Gains vs. Business Income: The first issue pertains to whether the surplus from the sale of land should be taxed as capital gains or as business income. The CIT(A) held that the surplus is taxable as capital gains, despite the Revenue's argument that the assessee's business involves the purchase and sale of land/buildings, which should be treated as business transactions. The Tribunal had previously ruled in favor of the assessee for the same assessment year, stating that the land was held as an investment and not as stock-in-trade. The CIT(A) reiterated this position, noting that the matter was under appeal before the Bombay High Court. The Tribunal dismissed the Revenue's appeal, finding no infirmity in the CIT(A)'s order. 2. Eligibility for Exemption under Section 54EC: The next issue is the assessee's entitlement to exemption under section 54EC. The Revenue contended that the investment in NABARD Bonds was not made within six months from the date of transfer of the capital asset. The CIT(A) found that the assessee had invested the sale proceeds in NABARD Bonds within six months from the receipt of installments, not from the date of transfer. The Tribunal upheld this view, citing the decision in Chanchal Kumar Sircar vs. Income Tax, which allowed for the period to be reckoned from the date of actual receipt of consideration. The Tribunal confirmed the CIT(A)'s order, dismissing the Revenue's appeal. 3. Deletion of Penalty under Section 271(1)(c): The Revenue appealed against the CIT(A)'s deletion of the penalty under section 271(1)(c) for furnishing inaccurate particulars of income. The penalty was initially levied due to the change in the head of income from capital gains to business income and the disallowance of bogus expenses. The CIT(A) found that the change in the head of income was a matter of opinion and did not constitute concealment of income or furnishing inaccurate particulars. The Tribunal upheld this decision, referencing the Bombay High Court's ruling in the assessee's favor for a similar issue in a previous year, which stated that mere rejection of a claim does not lead to penalty imposition. 4. Revision of Assessment under Section 263 by CIT: The CIT revised the assessment under section 263, directing the AO to reframe the assessment, treating the income from the sale of land as business income instead of capital gains. The assessee argued that the Tribunal had previously ruled in favor of treating such income as capital gains. The Tribunal noted that there were two possible views on the matter and that the AO had adopted one permissible view. Citing the Supreme Court's decision in Malabar Industrial Co. Ltd. vs. CIT, the Tribunal quashed the CIT's revision order, stating that revision under section 263 is not permissible when two views are possible. 5. Disallowance of Deduction under Section 80IB: The final issue involved the disallowance of the deduction under section 80IB for profits earned from a housing project. The AO disallowed the deduction, noting that the project included a commercial building that was incomplete and that the commercial area exceeded the permissible limit. The CIT(A) confirmed the disallowance, but the Tribunal found that the project was sanctioned before the restriction on commercial area came into force and that the assessee had obtained completion certificates for the residential buildings. Citing the Bombay High Court's decision in CIT vs. Vandana Properties, the Tribunal allowed the deduction, stating that the assessee was entitled to the deduction for the completed residential buildings. Conclusion: The Tribunal dismissed the Revenue's appeals and allowed the assessee's appeals, confirming the tax treatment of the surplus as capital gains, the eligibility for exemption under section 54EC, the deletion of the penalty under section 271(1)(c), and the deduction under section 80IB. The revision order under section 263 was quashed.
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