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2021 (11) TMI 33 - AT - Income TaxValidity of revisionary jurisdiction u/s.263 - No enquiries were carried out on certain expenditure with regard to application which includes application on account of education - Whether relevant and sufficient enquiries were indeed carried out by the ld. AO in the original assessment proceedings? - HELD THAT - Detailed examination has been carried out by the ld. AO with regard to entire expenditure incurred on the objects of the trust (charity expenses). We find that the ld. AO on examination of various details filed from time to time together with the supporting evidences, was indeed satisfied with the replies given thereon and had taken a plausible view in the matter and assessment completed accordingly u/s.143(3) of the Act. While this is so, in our considered opinion, it is incorrect on the part of the ld. PCIT to conclude that no enquiries were carried out by the ld. AO with regard to the impugned issue. In these facts and circumstances, we have no hesitation in quashing the revision order passed u/s.263 of the Act by the ld. PCIT on the issue of expenditure incurred for objects of the trust. Transfer of two plots of land and alleged capital gains resulting thereon - We find that in the original assessment, the case was selected under limited scrutiny . One such point of examination under limited scrutiny was mismatch in income / capital gain on sale of land or building . The ld. AO had duly questioned the assessee in the original assessment proceedings regarding the same vide notice u/s.142(1). As specifically pointed to the ld. AO by the assessee that, as assessee has received only advance against sale of land, the advance receipt of ₹ 71 Crores has been shown as liability in balance sheet as on 31/03/2015. It was also pointed out that the purchasers of the said property had deducted tax at source u/s.194IA while making payment of advance. Accordingly, the said amount is reflected in Form 26AS of the assessee. By this process, the assessee had explained the mismatch between the entry in Form 26AS and the income of the assessee. Later, vide letter dated 23/05/2017, the assessee enclosed a detailed note exclusively on receipt of advance pursuant to a specific query raised by the ld. AO during the course of personal hearing. As explained by the assessee before the ld. AO that since the approval of the Charity Commissioner was obtained by the assessee trust only on 22/06/2016, the conveyance deed has been executed by the assessee thereafter and accordingly, there was no taxable capital gain that arises in A.Y.2015-16. Based on this explanation, the ld. AO on due examination of the documents, took a plausible view and the correct view that capital gains does not arise in A.Y.2015-16 to the assessee. Hence, we hold that the order of the ld. AO in this regard cannot be termed as erroneous so as to invoke revision jurisdiction u/s.263. Though the remaining property is in possession of 41 Lessees/sub-lessees/their purported assignees, the purchase of the reversionary rights in respect of the Remaining Property is only by the said 6 Defendants. Since the sanction of the Charity Commissioner in the instant case was obtained only on 22/06/2016, there cannot be any taxable event in the form of capital gains that could arise to the assessee trust in A.Y.2015-16. The alternative argument advanced by the ld. AR was that even if there be any capital gains in A.Y. 2015-16 itself, the entire receipt of ₹ 71 crores was duly invested by the assessee in terms of Section 11(1A) of the Act and hence, there cannot be any taxable capital gain in the hands of the assessee trust. We find that the conveyance deed was executed only after the Order of the Charity Commissioner ; that the assessee trust was never in possession, that the possession of the Purchaser in respect of certain portions was in their capacity as lessees. In the present case, the agreement i.e the Consent Terms is not registered and hence the doctrine of part performance cannot be applied and consequently section 2(47)(v) of the Act cannot be made applicable. AO having taken a possible view in the matter after making adequate and requisite enquiries thereon and after examining the relevant documents, had framed the assessment u/s.143(3) of the Act, which in our considered opinion, cannot be termed as erroneous at all on the impugned issues - Revision jurisdiction u/s.263 of the Act invoked by the ld. PCIT on the alleged applicability of capital gains on transfer of two plots of land, is devoid of merit and against the provisions of the Act and decided judicial precedents thereon. - Decided in favour of assessee.
Issues Involved:
1. Validity of revisionary jurisdiction under Section 263 of the Income Tax Act. 2. Examination of expenditure incurred by the trust. 3. Chargeability of capital gains on the transfer of two plots of land. Issue-wise Detailed Analysis: 1. Validity of Revisionary Jurisdiction under Section 263: The primary issue was whether the Principal Commissioner of Income Tax (PCIT) validly invoked revisionary jurisdiction under Section 263 of the Income Tax Act. The assessee challenged the revision order on both technical grounds and merits. The Tribunal examined whether the original assessment order passed by the Assessing Officer (AO) was erroneous and prejudicial to the interests of the revenue. It was established that the AO had conducted relevant and sufficient inquiries during the original assessment proceedings, and the PCIT's basis for invoking Section 263 was found to be devoid of merit. 2. Examination of Expenditure Incurred by the Trust: The PCIT contended that the AO did not carry out proper inquiries on certain expenditures, including an application amount of ?10.33 Crores, which included educational expenses of ?9.19 Crores. The Tribunal found that the AO had indeed examined the expenditure details, including salary expenses and donations for education, during the original assessment. The assessee had provided detailed submissions and evidence supporting the expenditures, which the AO had duly considered. Therefore, the Tribunal concluded that the AO had taken a plausible view, and the PCIT's conclusion that no inquiries were carried out was incorrect. 3. Chargeability of Capital Gains on Transfer of Two Plots of Land: The PCIT argued that the AO did not examine the chargeability of capital gains on the transfer of two plots of land for which the assessee received ?65 Crores and ?6 Crores. The Tribunal noted that the case was selected for 'limited scrutiny,' which included examining the mismatch in income/capital gain on the sale of land or building. The AO had questioned the assessee, who provided detailed explanations and documents, including the Charity Commissioner's order and consent terms, indicating that the amount received was an advance and not a taxable capital gain for the assessment year 2015-16. The Tribunal held that the AO took a correct view based on the evidence, and the PCIT's invocation of Section 263 was unwarranted. Conclusion: The Tribunal quashed the revision order passed by the PCIT under Section 263 of the Income Tax Act, holding that the AO had conducted adequate inquiries and taken a plausible view on both the expenditure incurred by the trust and the non-chargeability of capital gains for the assessment year 2015-16. The appeal of the assessee was allowed, and the grounds raised were upheld. Order Pronounced: The order was pronounced on 30/08/2021.
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