2018 (2) TMI 973 - AT - Income Tax

Computation of LTCG - invoking of the provisions of section 50C - Identification of property - Held that - A perusal of description of properties clearly indicate that the survey numbers giving description of property in development agreement dated 17-01-2004 are different from survey numbers of land which are subject matter of agreement dated 19-01-2004. Even the total area of land is different in both the agreements. Both the authorities below have failed to examine that the land which is subject matter of development agreement dated 19-01-2004 is different from the land which was mentioned in development agreement dated 17-01-2004. Thus, in the first instance the land which is subject matter of Long Term Capital Gain needs to be identified. Contention of the assessee that the transaction which has been subjected to tax in the present proceedings has already been offered to tax in proceedings arising from search operations u/s. 153A of the Act has been raised by assessee for the first time before the Tribunal. During the assessment proceedings the assessee never appeared before the Assessing Officer and apparently no such ground was raised by assessee before the First Appellate Authority. Therefore, we deem it necessary to remit this appeal back to the file of Assessing Officer for necessary verification and identification of the land before proceedings with the assessment of any gain arising from sale of land. - Decided in favour of assessee for statistical purposes.

Summary

Issues involved:
1. Computation of Long Term Capital Gain
2. Applicability of section 50C of the Income Tax Act, 1961

Computation of Long Term Capital Gain:
The case involves an appeal against the order of the Commissioner of Income Tax (Appeals) regarding the assessment year 2004-05. The assessee executed a development agreement for the sale of development rights, but did not disclose the income from this transaction. The Assessing Officer computed Long Term Capital Gain by invoking section 50C of the Act. The assessee contended that the land was acquired for business purposes and not as an investment, hence section 50C should not apply. Additionally, the assessee argued that the income from the transaction had already been taxed under the head "Income from Other Sources," leading to potential double taxation. The Tribunal noted discrepancies in the description of properties in the agreements and remitted the issue back to the Assessing Officer for proper identification of the land before proceeding with the assessment of any gain arising from the sale.

Applicability of section 50C of the Income Tax Act, 1961:
The assessee challenged the application of section 50C of the Income Tax Act, 1961, by the Commissioner of Income Tax (Appeals). The Tribunal observed differences in the properties mentioned in the development agreements dated 17-01-2004 and 19-01-2004. The descriptions and total areas of the lands in the agreements did not match, indicating a need for proper identification of the land subject to Long Term Capital Gain. The Tribunal directed the Assessing Officer to verify whether the gain from the sale had already been offered for taxation in previous proceedings under section 153A of the Act. The issue was remitted back to the Assessing Officer for de-novo adjudication, granting the assessee a reasonable opportunity of hearing in accordance with the law.

In conclusion, the Tribunal partially allowed the appeal for statistical purposes, remitting the issues back to the Assessing Officer for proper verification and identification of the land before proceeding with the assessment of Long Term Capital Gain. The Tribunal emphasized the need for a fair opportunity for the assessee during the reassessment process.