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TMI Blog2015 (8) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... being Long Term Capital Gain without appreciating the facts of the case. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not considering this fact that the Assessing Officer had rightly taxed the capital gain on account of transfer of capital assets i.e. land within the meaning of Section 2(47) 3. Without prejudice to the above, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not considering the Assessing Officer's finding in the remand proceedings that the addition of Rs. 3,73,81,280/- should have been split and taxed as Short Term Capital Gain (Rs.3,61,84,536/-) and Long Term Capital Gain (Rs.24,04,658/-) being gains arising on account of sale of land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the settlement. The book value of the land given to Malhotra Group was at Rs. 1,12,98,740/-. The revaluation of the asset for the distribution as per the court order was capital appreciation and hence, the same was transferred to Capital Revaluation Reserve and there is no revenue receipt. The assessee further stated that the settlement among Malhotra Group and Pandit Group took place on 07.04.2005, for three pieces of land along with part construction. Since it was transferred as per court order, there was no money transaction involved in settlement as it was pure distribution of assets. Hence, there cannot be capital gain. The assessee also gave working of value of the land as recorded in the books and also the settlement expenses inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake by the auditor. The relevant observations and findings of the CIT(A) in this regard is as under: "From the perusal of the agreement dated 7/2/2005 as discussed by the AO in the assessment order in great length, it is noticed that the assets and liabilities of M/s. Clublink India Pvt. Ltd. were distributed between Malhotra and Pandit Group in 60:40 ratio. There is no dispute on this issue that land and building amounting to Rs. 5t crore was transferred to the Malhotra Group as per this agreement and settlement of the court. The dispute is only regarding the entry of capital revaluation reserve of Rs. 3,87,01,260/- in the balance sheet. The AO has presumed this amount as revaluation of the land shown at Rs. 1,12,98,740/-. Actually, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uilding has to be given, therefore, he has separately taken the value of land and building for capital gain. Remand report of the AO was also called for and he has mentioned the same facts as given in the assessment order. The AO is adamant on the word 'Revaluation' written in the Balance sheet, although there is no revaluation of work in progress transferred. The AO has contended that once the appellant has mentioned work revaluation, therefore, capital gain has to be charged without understanding the fact that there is no revaluation of the assets. From these facts of the case, it is held that the AO has erred in taking the amount at Rs. 3,87,01,260/- as revaluation of assets and charging capital gain on this amount. Keeping in view a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to classify it as Capital Revaluation Reserve and, therefore, there is no transfer or taxability of capital gain. Since there is no clarity of facts, therefore, in the interest of justice, we are of the opinion that this matter should be restored back to the file of the Assessing Officer to correctly appreciate the facts after taking into consideration the contentions of the assessee and the observations made by the CIT(A) in the light of the material on record. The Assessing Officer will decide the issue afresh after giving due and effective opportunity of hearing to the assessee to explain its case and in accordance with the provisions of law. Accordingly, the grounds raised by the Revenue is treated as allowed for statistical purposes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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