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TMI Blog2022 (10) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... ken by the assessee therefore, the order so passed by him as per Explanation 2(a) of Sec. 263(1) of the Act is to be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue. We, thus, in terms of our aforesaid observations uphold the order passed by the Pr. CIT u/s.263 of the Act qua the aforesaid issue. Whether Pr. CIT had erred in setting aside the order passed by the AO u/s. 143(3), dated 24.12.2018, for the reason that he had wrongly allowed the assessees s claim of deduction u/s.54G? - As the assessee had failed to place on record any material which would irrefutably substantiate its claim that the capital gain on the transfer of land in question, i.e, land at Wani had arisen on transfer of land (that was used for the purposes of its business of an industrial undertaking situate in an urban area) in the course of, or in consequence of, the shifting of the said industrial undertaking to a non-urban area, therefore, the Pr. CIT had rightly observed that the summarily allowing of the assessee s claim for deduction under Sec. 54G by the AO had rendered the order passed by him under Sec. 143(3), dated 24.12.2018 as erroneous in so far it is prej ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arily allowing of its claim of deduction by the AO had rendered the order passed by him u/s 143(3), dated 24.12.2018 as erroneous in so far as it is prejudicial to the interests of the revenue u/s 263 of the Act, but at the same time have modified the order of the Pr. CIT by directing the AO to re-examine the assessee s claim for deduction u/s 54G, i.e, after calling for the requisite details and affording a reasonable opportunity of being heard to the assessee; and (iv). uphold the order of the Pr. CIT, on the ground, that the failure on the part of the AO in not considering the contents of an impounded document, i.e, a notepad which referred to receipt of on money of Rs.11 lacs by the assessee on sale of flat from the purchaser, viz. Shri Srikant Swaikar had rendered the order passed by the AO u/s 143(3), dated 24.12.2018 as erroneous in so far as it is prejudicial to the interests of the revenue u/s 263 of the Act. - ITA No. 29/NAG/2021 - - - Dated:- 9-5-2022 - SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI JAMLAPPA D BATTULL, ACCOUNTANT MEMBER Assessee by: Shri Pravin Gandhi, AR Revenue by: Shri Vitthal Bhosale, DR ORDER PER RAVISH SOOD, JM: The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a factory which was closed on 02.02.2010 had summarily accepted its claim for deduction under Sec. 54G of the Act.; (iii). that the Assessing Officer dispensing with a reference to the valuation officer of the Department for ascertaining the correct cost of acquisition of the factory land as on 01.04.1981 had summarily accepted the value shown by the assessee in its return of income; and (iv). that the Assessing Officer while framing the assessment had without carrying out any verification and failing to take cognizance of the contents of an impugned document, i.e, Page 23 of a notepad which revealed an onmoney of Rs.11 lacs that was received in cash by assessee on sale of a property, had simply accepted the sale consideration of Rs.85 lacs that was claimed by the assessee to have been received on sale of flats from the purchaser, viz. Shri Shrikant Swaikar. On the basis of his aforesaid observations the Pr. CIT called upon the assessee to put forth an explanation as to why the order passed by the Assessing Officer u/s. 143(3), dated 24.12.2018 may not be revised by him u/s. 263 of the Act. 4. In reply, the assessee tried to impress upon the Pr. CIT that as no infirmity did emer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/- u/s.54G of the Act. However, it was observed by the Pr. CIT that a perusal of the records revealed that the assessee had not shifted any industrial undertaking but had sold its factory situated at Wani that was closed on 02.02.2010 and thereafter, had invested the sale proceeds towards purchase of another factory situated at Village-Nilapur, Teshil Wani, Dist. Yavatmal. Observing, that there was no shifting of any industrial undertaking from an urban to a non-urban area, but a simplicitor transaction of sale of old factory and utilization of the sale proceeds for purchase of a new factory, the Pr. CIT was of the view that the assessee was not entitled for exemption u/s. 54G of the Act. It was, thus, observed by the Pr. CIT that the summarily acceptance of the assessee s claim for deduction u/s. 54G of the Act by the Assessing Officer had rendered his order passed u/s. 143(3), dated 24.12.2018 as erroneous in so far it was prejudicial to the interest of the revenue u/s. 263 of the Act. Also, it was noticed by the Pr. CIT that the Assessing Officer while framing te assessment had without making any verification simply accepted the sale consideration of Rs.85 lacs that was claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rein totaling to an area of 29,228.79 Sq. Mtrs (or 3,14,618.31 Sq. ft.) to M/s. Shewalkar Developers Ltd., Nagpur and had not transferred any building as had been so inferred by the Pr. CIT. Our aforesaid conviction is fortified from a perusal of the aforementioned sale deed, dated 16.04.2015, the relevant extract of which for the sake of clarity is reproduced as under: (1) That, in pursuance of the aforesaid Agreement dated 02-05-2013 subsequent to the Auction and Resolution passed by the Vendor Society on 24/02/2013 and in consideration of a total sum of Rs. 21,30,00,000/- (Rupees Twenty One Crore Thirty Lac) Only paid by the Purchaser Company to the Vendor Society in the manner appearing hereinbelow, the receipt whereof the Vendor Society does hereby acknowledge, the Vendor Society as the full and absolute owner possession thereof does hereby grant, convey, assure, assign and transfer by way of sale to the PURCHASER ALL THOSE pieces and parcel of lands containing by admeasurement 25808.09 Sq. Mtrs (Or 2,77,798.31 Sq. ft.), being a portion of Nazul Plot No.1, Sheet No. 3-C and piece of land containing by admeasurement 3420.70 Sq. Mtrs ( Or 36,820 Sq. Ft.), being a portion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On the basis of our aforesaid observations, we are of the considered view, that as stated by the Ld. AR, and rightly so, now when the assessee during the year under consideration had sold land admeasuring 29,228.79 Sq. Mtrs (supra) which admittedly is not a depreciable asset, therefore, its claim for indexation of cost of acquisition of the same was as per the mandate of law and had wrongly been dislodged by the Pr. CIT on the basis of misconceived facts, i.e., on the basis of his conviction that the assessee had sold a building , i.e. a depreciable asset, on which depreciation @5% was claimed by it. We, thus, in terms of our aforesaid observations not being able to persuade ourselves to uphold the view taken by the Pr. CIT, i.e, as regards the entitlement of the assessee towards indexation of cost of acquisition of the property in question, i.e., land admeasuring 29,228.79 Sq. Mtrs, thus, set-aside his order and restore the order passed by the Assessing Officer to the said extent. 8. At the same time, we find substantial force in the observation of the Pr. CIT that as the Assessing Officer had summarily accepted the cost of acquisition of the aforesaid land as on 01.04.1981 at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see had as against the LTCG of Rs. 18,49,77,815/- on the aforesaid sale transaction raised a claim for deduction of Rs. 16,73,11,080/- u/s. 54G of the Act. On a perusal of the assessment order, we find that the aforesaid claim of deduction u/s.54G of Rs.16,73,11,080/- (supra) claimed by the assessee was allowed by the Assessing Officer while framing the assessment vide his order passed u/s. 143(3), dated 24.12.2018. However, the Pr. CIT being of the view that the assessee had not shifted any industrial undertaking, but had carried out a simpliciter sale of its factory which was closed way back on 02.02.2010, and had invested the sale proceeds in purchase of another factory situated at Village Nilapur, Tehsil Wani, District: Yavatmal, therefore, the Assessing Officer had erroneously allowed the assessee s claim for deduction of Rs.16,73,11,080/-u/s. 54G of the Act, which therein had rendered his order passed u/s. 143(3), dated 24.12.2018 as erroneous in so far as it was prejudicial to the interests of the revenue u/s.263 of the Act. Accordingly, the Pr. CIT set-aside the order passed by the Assessing Officer with a direction to him to reassess the income of the assessee afresh on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,- (i) if the amount of the capital gain is greater than the cost and expenses incurred in relation to all or any of the purposes mentioned in clauses (a) to (d) (such cost and expenses being hereafter in this section referred to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year ; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its being purchased, acquired, constructed or transferred, as the case may be, the cost shall be nil ; or (ii) if the amount of the capital gain is equal to, or less than, the cost of the new asset, the capital gain shall not be charged under section 45 ; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its being purchased, acquired, constructed or tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r alia, including land that was used for the purposes of the business of an industrial undertaking situated in an urban area, effected in the course of, or in consequence of the shifting of such industrial undertaking to any area other than an urban area, and the assessee has within a period of 1 year before or 3 years after the date on which the transfer took place, appropriated the amount of capital gain towards the cost and expenses in relation to all or any of the purposes mentioned herein below : (a) purchased new machinery or plant for the purposes of business of the industrial undertaking in the area to which the said undertaking is shifted ; (b) acquired building or land or constructed building for the purposes of his business in the said area ; (c) shifted the original asset and transferred the establishment of such undertaking to such area; and (d) incurred expenses on such other purpose as may be specified in a scheme framed by the Central Government for the purposes of this section. then, to the extent the capital gain had been utilized for all or any of the aforementioned purposes, to the said extent the same shall not be charged under Sec. 45 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land in question was in the course of, or in consequence of, the shifting of its industrial undertaking as per the requirement of Sec. 54G of the Act, and was not a case of a simpliciter sale of the land of its factory that was closed way back on 02.02.2010 and investment of the sale proceeds towards purchase of factory building at Village Nilapur, Tehsil Wani, Dist. Yavatmal a/w ginning and pressing machinery, oil mill, plant accessories, spares tools and appliances. In our considered view, as the assessee had failed to place on record any material which would irrefutably substantiate its claim that the capital gain on the transfer of land in question, i.e, land at Wani had arisen on transfer of land (that was used for the purposes of its business of an industrial undertaking situate in an urban area) in the course of, or in consequence of, the shifting of the said industrial undertaking to a non-urban area, therefore, the Pr. CIT had rightly observed that the summarily allowing of the assessee s claim for deduction under Sec. 54G by the AO had rendered the order passed by him under Sec. 143(3), dated 24.12.2018 as erroneous in so far it is prejudicial to the interest of the reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. We, thus, in terms of our aforesaid observations, finding no infirmity in the view taken by the Pr. CIT who had rightly observed that the failure on the part of the Assessing Officer to consider the aforesaid amount of Rs.11 lacs (supra) as was discernible from the impugned document, i.e., Page 23 of the impounded notepad had rendered his order as erroneous in so far as it is prejudicial to the interests of the revenue u/s. 263 of the Act, uphold the same. 16. On the basis of our aforesaid deliberations, we herein, viz. (i). set-aside the order of the Pr. CIT u/s. 263, to the extent he had concluded that the assessee had wrongly sought indexation of cost of acquisition; (ii). uphold the order of the Pr. CIT, on the ground, that the summarily acceptance by the AO of the F.M.V of land as on 01.04.1981 at Rs. 36,65,327/-, i.e, as adopted by the assessee for computing the LTCG on transfer of the same had rendered the order passed by him u/s 143(3), dated 24.12.2018 as erroneous in so far as it was prejudicial to the interests of the revenue u/s 263; (iii). though principally concur with the Pr. CIT that as the assessee had failed to establish its entitlement for claim of deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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