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TMI Blog2018 (6) TMI 351X X X X Extracts X X X X X X X X Extracts X X X X ..... but when the income was assessed as business income, no notice whatsoever, was given by CIT(A). Accordingly, we hold that the enhancement made by CIT(A) does not survive. Thus, we reverse the order of CIT(A). The income was assessed in the hands of assessee as income from Long Term Capital Gain. CIT(A) has decided the issue of entitlement of claim under section 54F and held the assessee to be eligible for said claim. Revenue is not in appeal against the order of CIT(A). Accordingly, we direct the Assessing Officer to allow claim of assessee under section 54F - Decided in favour of assessee - ITA No. 765/PUN/2014 - - - Dated:- 12-4-2018 - MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM For The Appellant : Smt. Deepa Khare For The Respondent : Shri Achal Sharma, Addl. CIT ORDER PER SUSHMA CHOWLA, JM The appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-V, Pune dated 24.01.2014 relating to assessment year 2009-10 against order passed under section 143(3) of the Income Tax Act, 1961 ( in short the Act ). 2. The assessee has raised following grounds of appeal: 1. The learned CIT(A) erred in law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid. Even till the date of assessment, the assessee did not furnish registered document in respect of the said property. The Assessing Officer, thus, denied the deduction claimed under section 54 of the Act. 5. The assessee, in appeal, before the Commissioner of Income Tax (Appeals) raised the issue of denial of deduction claimed under section 54 of the Act with regard to investment in residential property at ₹ 48,29,176/-. In this regard, assessee raised ground No. 2 and 3 before the Commissioner of Income Tax (Appeals). Before Commissioner of Income Tax (Appeals), the assessee filed explanation which is reproduced in Para-9 and furnished the following documents listed in Para-10 of the appellate order. i. Copy of agreement for sale dated 05.01.2010 ii. Possession letter dated 10.03.2012 iii. Copy of ledger A/c of the appellant in the books of M/s. Sakshi Constructions. iv. Copy of Registered Sale Deed dated 28.02.2013. v. Copy of Index-II. 6. The Commissioner of Income Tax (Appeals) forwarded the said documents to the Assessing Officer to submit his remand report. The remand report is reproduced in Para- 11 at page 6 7 of the appellate order. Vide P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,41,225/-. Since, the income was held to be business income , the CIT(A) held the question of deduction under section 54F becomes academic. It was further held on merit that the assessee was entitled to claim deduction under section 54F of the Act in case profit on sale of development rights in the land was held to be taxable under the head Long Term Capital Gain. The CIT(A) noted that the claim of assessee under section 54F of the Act could not be rejected on the ground of registration of document being effected after two years and possession being received later was, held to be non requirement of the section. 8. The assessee is in appeal against the order of CIT(A) in holding that transaction of sale of development rights was adventure in the nature of trade, as against the claim of assessee that the same was income from capital gain, which fact is accepted by the Assessing Officer. The assessee is aggrieved by the order of enhancement of CIT(A) without giving any show cause notice in this regard. 9. The Ld. AR of the assessee pointed out that the income was assessed as Long Term Capital Gain but deduction under section 54F of the Act was denied to the assessee. Before CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee had declared income under the head Long Term Capital Gain and claimed deduction under section 54F of the Act. The assessee had purchased development rights of plot of land. Since the same could not be developed by the assessee, the said rights were transferred by way of deed which was executed by land owner in the name of buyer, with the assessee as consenting party. The assessee had declared gain arising on the said transfer as Long Term Capital Gain. Further, the assessee had made investment in new asset and had claimed deduction under section 54F of the Act. The Assessing Officer accepted the computation of Long Term Capital Gain in the hands of assessee; however, denied the deduction claimed under section 54F of the Act on the ground that the new asset was not purchased through registered documents and even till date of assessment order, the sale deed was not executed and balance consideration was still payable. The assessee filed appeal against the said order of Assessing Officer and made claim for allowing deduction under section 54F of the Act. In this regard, additional evidences of payment of balance consideration and sale deed being registered in the year 2013 was f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he power of CIT(A) in deciding the appeal and stresses that he may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the CIT(A) by the appellant. In view of the said provisions, the CIT(A) has power to decide any matter arising out of the proceedings but the said power has to be exercised after giving reasonable opportunity to the assessee to show cause against such enhancement or reduction. The CIT(A) was not only changing the head of income but was also enhancing the assessment, since income which is assessed in the hands of assessee as per direction of CIT(A) had worked out at ₹ 49,41,225/- as against income assessed by the Assessing Officer under the head Long Term Capital Gain at ₹ 48,75,610/-. The second aspect is rate of tax. In case income is assessed under the head Long Term Capital Gain, the rate of tax is lower than the rate applied when the income is being assessed as business income. In view thereof in not giving an opportunity or any show cause notice of enhancement as required under section 251(2) of the Act, the order of CIT(A) suffers from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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