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TMI Blog2017 (9) TMI 512X X X X Extracts X X X X X X X X Extracts X X X X ..... y issuing the Notice inspite of the factthat Scrutiny assessment u/s. 143(3) of the Income Tax Act, 1961 has been completed by the DCIT Circle - 9(1)(2), Mumbai after duly examining and considering facts while framing the assessment order D/s 143 (3) of Income Tax Act, 1961. The Hon'ble CIT has erred in raising the issues and making rowing enquiries in the Proceedings D Is 263 of the Income Tax Act, 1961. Further Order D/s 263 is also passed without any conclusion merely setting aside the assessment to the file of the learned assessing officer which is unjustified. It is therefore submitted that the order passed u/s 263 should be cancelled. 2. Without prejudice to ground No. I, The CIT has mentioned that while considering the capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken in connection the said WIP and was discharged by the buyer M/S Pakm Spring Green City Developers Pvt Ltd. directly and not routed through the assessee. with the Afterwards the Principal Commissioner of Income Tax initiated proceedings under section 263 of the Act exercising the revisionary powers on the basis of his observation from the assessment record that the assessee has sold out capital work in progress on slump sale basis and the assessee has computed the short term capital loss of Rs. 32,64,09,870/- which is wrong. In the statement of total income, the said loss has been reflected under the head capital gain and out of the said loss a sum of Rs. 3,62,86,952/- has been claimed as carried forward loss in subsequent year. Accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditions no proceedings u/s 263 can be invoked. In the present case, the action of the CIT was contrary to law as revisionary power were exercised to correct a mistake which is tax neutral and not prejudicial to the interest of the revenue. Since in the present case only one condition is satisfied and no prejudice is caused to the revenue and therefore proceedings initiated u/s 263 were on wrong assumption of jurisdiction and should be quashed. 4. The ld. AR filed before us the two calculation table one showing Long Term Capital loss by the assessee reducing the loan liabilities of Rs. 32.00 Cr work in progress and the net cost of work in progress for calculating the capital loss and second as proposed by the PCIT wherein Work in progress i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elow and case law relied upon by the assessee and revenue. Prima facie the reason for invoking the provisions of section 263 is that the loan related to WIP was not considered while calculating the short term capital loss. In order to understand the issue in a proper manner, the calculation as given by assessee and that of PCIT are reproduced below: Chart showing working of capital gains by the assessee:. Table-1 S.No. Particulars amount 1 Sale consideration Rs. 4,00,00,000 Rs.4,51,00,000 Advance of earlier deal forfeited Rs. 51,00,000 2 Less:Cost being net asset Rs.37,15,08,970 3 Short term capital loss Rs.32,64,08,970 Working of capital gains by the PCIT:. Table-2 S.No. Particulars amount 1 Sale conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Commissioner under proceedings u/s 263 of the Act is tax neutral as no tax evasion is caused by the assessee resulting into any prejudicial to the interest of the revenue. In one case, the assessee has not considered the payment towards loan and taken net consideration and capital gain was worked out by taking the net asset after reduction of loan. Whereas in the second case as proposed by the CIT if the gross amount of consideration is taken the corresponding reduction is not made of the loan from the fixed assets and therefore, the net result is same as calculated by the assessee. In view of this facts, we are of the considered opinion that the one of the condition that prejudicial to the interest of revenue is missing in the present ..... X X X X Extracts X X X X X X X X Extracts X X X X
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