The Tax Publishers2021 TaxPub(DT) 0075 (Karn-HC)

INCOME TAX ACT, 1961

Section 263

Where AO in its order had mentioned the details of all properties with dates of purchase and sale and from perusal of the same, it was evident that the properties were brought and sold within a maximum period of 20 months, from which it is evident that the assessee was engaged in real estate business and AO conducted sufficient enquiry as required under Explanation 2(a) to section 263 and there was material available on record to arrive at a conclusion, which was recorded by AO, therefore, notice issued under section 263 was quashed.

Revision under section 263 - CIT alleged that AO had not satisfied itself that assessee was engaged in business of purchase and sale of plots and has not brought any material on record - -

AO by an Order after making enquiries concluded assessment by bringing to charge the income arising from sale of properties as income from business as it was found that assessee was engaged in business of sale and purchase of the properties. The properties dealt with by assessee were treated as stock in trade and it was held that in income declared by assessee under the head capital gains is assessable only as business income. AO thereafter issued a notice under section 154 proposing to bring to charge the business income as capital gains. Thereafter a notice under section 263 was issued by CIT on the ground that income assessed as income from business in respect of sale of properties as income from capital gains to disallow interest on loan of purchase of property as deduction from sale consideration, to direct AO to adopt guidance value of sub registrar in respect of one property as deemed sale value and to bring to tax difference and to allow deduction under section 80C. Held: It was pertinent to note that several notices were issued to assessee and detailed hearings were conducted and AO in its order had mentioned the details of all properties with dates of purchase and sale and from perusal of the same, it is evident that the properties were brought and sold within a maximum period of 20 months, from which it is evident that the assessee was engaged in real estate business. AO conducted sufficient enquiry as required under Explanation 2(a) to section 263 and there was material available on record to arrive at a conclusion, which was recorded by AO. Merely because a different view can be taken, the powers under section 263 cannot be invoked.

Relied:Ultratech Cement Ltd. And Others v. State of Rajasthan And Others [Civil Appeal No. 2773/2020 Decided On 17-7-2020] CIT v. Max India Ltd. (2007) 295 ITR 282 (SC) : 2007 TaxPub(DT) 1548 (SC) Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR 83 (SC) : 2000 TaxPub(DT) 1227 (SC) Calcutta Discount Company Limited v. ITO And Anr (1961) 41 ITR 191 (SC) : 1961 TaxPub(DT) 0130 (SC) CIT v. J.L. Morrison (India) Ltd. (2014) 366 ITR 593 (CAL) : 2014 TaxPub(DT) 2646 (Cal-HC) CIT v. Hindustan Marketing & Advertising Co. Ltd. (2012) 341 ITR 180 (Del) : 2011 TaxPub(DT) 0482 (Del-HC) CIT v. Development Credit Bank Limited (2010) 323 ITR 206 (Bom) : 2010 TaxPub(DT) 1600 (Bom-HC) CIT v. Sunbeam Auto Ltd. (2011) 332 ITR 167 (DEL) : 2011 TaxPub(DT) 0088 (Del-HC) CIT v. Arvind Jewellers. (2003) 259 ITR 502 (GUJ) : 2003 TaxPub(DT) 0342 (Guj-HC).

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