2014 (8) TMI 719 - AT - Income Tax

Computation of LTCG on sale of two plots of land Valuation of stamp duty Held that - Following the decision in Asst. Commissioner of IT. 12(1), Mumbai Versus M/s Manubhai A Sheth Larger HUF 2012 (9) TMI 682 - ITAT MUMBAI - The property had already conveyed to the buyer prior to 2001-02 and it was only the final part payment which was made during the year along with the formal documentation - the property was agreed to be sold - The only skin of the nail, which the AO is using is the final payment and documentation and on that basis, the application of section 50 AO is using is the final payment and documentation and on that basis, the application of Sec. 50C. It is clear from the fact that except for the last installment everything was completed prior to 2001-02 - thus, the order of the CIT(A) is upheld Decided against Revenue. Treatment of interest income under income from other sources Disallowance of business loss Held that - Assessee had rightly contended that the business loss in earlier years was allowed by the AO - the interest income was taxed as business income in earlier years, therefore, there is no reason in changing the head of income for the year - Following the decision in Asst. Commissioner of IT. 12(1), Mumbai Versus M/s Manubhai A Sheth Larger HUF 2012 (9) TMI 682 - ITAT MUMBAI the matter is remitted back to the AO for verification of the contentions of the assessee Decided in favour of Assessee.

Summary

Issues:
1. Computation of long term capital gain using stamp duty authority valuation.
2. Disallowance of business loss.
3. Treatment of interest income under the head "income from other sources."

Issue 1: Computation of long term capital gain using stamp duty authority valuation:
The appeals by the assessee and the Revenue were against the order of the ld. CIT(A) for A.Y. 2007-08. The Revenue contended that the A.O. erred in computing the long term capital gain on the sale of two plots of land using the stamp duty authority's valuation. The A.O. had applied the ready reckoner rate to recompute the gain, which the assessee challenged. The ld. CIT(A) directed the A.O. to use the stamp duty authority's valuation. The Revenue appealed, but the Tribunal upheld the ld. CIT(A)'s decision based on previous Tribunal rulings and dismissed the Revenue's appeal.

Issue 2: Disallowance of business loss:
The assessee appealed against the disallowance of a business loss of Rs. 25,41,480 and the treatment of interest income under "income from other sources." The assessee argued that as the business loss was allowed in earlier years and the interest income was taxed as business income, the same treatment should continue. The Tribunal found merit in the assessee's contentions and directed the A.O. to verify the claims with proper opportunity for the assessee to substantiate. The appeal by the assessee was allowed for statistical purposes.

Issue 3: Treatment of interest income under the head "income from other sources":
The Tribunal directed the A.O. to re-examine the treatment of interest income and the disallowed business loss based on the assessee's submissions and previous treatment in earlier years. The A.O. was instructed to provide a fair opportunity for the assessee to present necessary details. The appeal by the Revenue was dismissed, while the appeal by the assessee was allowed for statistical purposes.

In conclusion, the Tribunal upheld the ld. CIT(A)'s decision regarding the computation of long term capital gain using the stamp duty authority valuation. Additionally, the Tribunal directed the A.O. to re-evaluate the disallowed business loss and the treatment of interest income based on the assessee's submissions and past treatment in earlier years.