9911796707
TMI Blog2022 (9) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... und raised by the Revenue is allowed for statistical purposes. Addition towards reworking of cost of construction - difference of cost of construction adopted by the assessee and the cost of construction calculated by the Assessing Officer - HELD THAT:- CIT(A) has observed that the calculation carried out by the Assessing officer in the impugned assessment order, the expenditure incurred towards construction of flats has been rightly considered on proportionate basis whereas, the assessee has considered the entire amount which are not in accordance with the facts of the case. Hence, the Ld. CIT(A) has held that the discrepancy arrived at by the assessee is not correct and accordingly, the discrepancy worked out by the Assessing Officer was confirmed. In view of the above facts, we find no infirmity in the order passed by the Ld. CIT(A) on this issue and accordingly, the ground raised by the assessee is dismissed. Disallowance u/s 14A r.w. Rule 8D - income from dividend is exempted from tax and assessee had claimed certain business expenses, however, the assessee has not admitted any expenses attributable to the earning of exempt income, accordingly, by applying the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not exhibit the land as a capital asset and only the building stock as stock in trade. 2.5 The Ld. CIT(A) ought to have appreciated that consistency is one of the important aspects of taxation and ought to have held that the assessee is not free to alter the nature and characteristics of the asset as it would suit him year after year. 2.6 The income earned through the Project RMT-II is business income including gain on sale of undivided share of land. Hence, the question of computation of capital gains is out of place. 3. For these grounds and any other ground including amendment of grounds that may be raised during the course of the appeal proceedings, the order of learned CIT(Appeals) may be set aside and that of the Assessing Officer be restored. 2. Brief facts of the case are that the assessee filed the Return of income for the assessment year 2012-13 on 25.3.2013 admitting a total income of Rs. 22,62,31,810/-. The case was selected for scrutiny and notice under section 143(2) of the Income Tax Act, 1961 [ Act in short] dated 19.08.2013 was duly served on the assessee on 26.08.2013. Further, notice under section 142(1) of the Act with a detailed questionn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the profits attributable to construction of the flats should be treated as business profit thus bifurcating the profits on sale of flats as Long term Capital Gain and Profits of construction business. This view has been followed and accepted for the sale of Rani Meyyammai Towers-Phase I and similar treatment should be given for sale of flats of Rani Meyyammai Towers-Phase II. Even though for the assessment year 2011-12 the Assessing Authority treated the gain on sale of land as business profit, my appeal for earlier assessments has been accepted by CIT(A) . 2.2. After considering the submissions of the assessee and relying on various decisions, the Assessing Officer has observed that the assessee has utilised the land with an intention of realizing the profit out of it and not with an intention of enjoying the property by itself. Thus, the intention is that of to utilize the said land for construction of the flats in the course of business activity and not for the exploitation of its own assets. Hence, sale of land is not an incidental activity but, the main business activity of the assessee. Hence, it is nothing but an 'adventure in nature of trade', the profit out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land offered under LTCG and the profits on sale of flats offered as business profits) were accepted since the land comprised in project RMT I were inherited by the assessee. 2.3 The CIT(A) failed to appreciate that unlike project RMT I, in respect of RMT II, the land and semi-finished building was acquired at a cost of about Rs. 82 crores and though the scheme of arrangement is titled as partition, going by the facts of the case, the channel by which the assessee acquired the property cannot in any way categorized as partition. 2.4. The CIT(A) ought to have appreciated that when the mode of acquiring the property could not be termed as partition, it does not fall under the exclusions provided in sec. 49(1) and therefore, the cost of previous owner or the value as at 1.4.1981 cannot determine the cost for the present owner, i.e., the assessee. 2.5. It is submitted that Dr. Meena Muthiah and her son M.A.M.M. Annamalai had computed the capital gains arising in this transfer of asset to the assessee by adopting the value of the land as at 1.4.1981 and under these facts and circumstances of the case, on the very same asset, the present owner cannot once again adopt the va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised by the Revenue is allowed for statistical purposes. 5. Coming to assessee's appeal, the first ground raised by the assessee is with regard to confirmation of addition of Rs. 65,03,724/- towards reworking of cost of construction. In the assessment order, the Assessing Officer has observed that in Rani Meyyammal Towers-Phase II, totally 17 flats were constructed by the assessee to be sold to third parties. During the financial year 2010-11, assessee had sold 10 flats. Out of the balance of 7 flats constructed in Rani Meyyammai Towers, Phase II, 4 flats were sold during the financial year 2011-12. As per the unitwise profit loss account submitted by the assessee, the opening stock-in-trade of the business of sale of flats of Rani Meyyammai Towers is Rs. 6,28,89,678/- and the closing stock-in-trade is Rs. 0/-. 5.1. Further, the assessee has debited a total sum of Rs. 86,16,810/- on account of expenses incurred towards construction of flats at Rani Meyyammai Towers, Phase II. The entire expenses have been incurred in respect of the balance flats; however, out of the total of 7 flats only 4 flats have been sold during the year. Therefore only expenses to the extent of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 5,80,99,021) and the cost of construction calculated by the Assessing Officer (Rs. 5,15,95,297) was Rs. 65,03,724/-. On appeal, after considering the submissions of the assessee, the Ld. CIT(A) has observed that the calculation carried out by the Assessing officer in the impugned assessment order, the expenditure incurred towards construction of flats has been rightly considered on proportionate basis at Rs. 49,23,891/-, whereas, the assessee has considered the entire amount of Rs. 86,16,810/-, which are not in accordance with the facts of the case. Hence, the Ld. CIT(A) has held that the discrepancy of Rs. 15,79,833/- arrived at by the assessee is not correct and accordingly, the discrepancy of Rs. 65,03,724/- worked out by the Assessing Officer was confirmed. In view of the above facts, we find no infirmity in the order passed by the Ld. CIT(A) on this issue and accordingly, the ground raised by the assessee is dismissed. 6. The next ground raised in the appeal of the assessee relates to disallowance made under section 14A r.w. Rule 8D for Rs. 24,00,193/-. From the Balance sheet submitted by the assessee for the year ended 31.03.2011, the Assessing Officer has noticed that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
