INCOME TAX ACT, 1961

Section 45

Capital gains - Gain arising out of the sale of land - Assessee with an opening stock during the year under assessment purchased land for an integrated project -

Assessee was engaged into business of construction/ leasing of residential houses, commercial buildings, flats etc. Assessee with an opening stock of Rs. 12.58 crores during the year under assessment purchased land of Rs. 12.13 crores for an integrated project by incurring an amount of Rs. 7.51 crores as construction expenses and thereby reduced an amount of Rs. 12.66 crores as recoveries from purchase of total amount shown under the head construction work-in-progress. AO disallowed adjustment of expenses which were not related to project on the ground that assessee had sold lands which were lying as stock-in-trade in different places other than the place where the main project was carrying out and thereby made an addition. Held: CIT (A) had not deliberated in any manner as to what would be the outcome of Board Resolutions relied upon by assessee when examined in light of the audited accounts. CIT (A) was required to get Board Resolutions examined in the light of the audited financials and other circumstantial evidence during appellate proceedings but he dismissed argument of assessee by merely recording the findings that no third party evidence has been brought on record by assessee. Consequently, matter was remanded back to AO to decide afresh after providing adequate opportunity of being heard to assessee.

REFERRED :

FAVOUR : In assessee's favour by way of remand

A.Y. : 2006-07

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