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| The Tax Publishers2020 TaxPub(DT) 0145 (Coch-Trib) INCOME TAX ACT, 1961
Section 263
Where AO had primarily changed the head of income from business to that of long term capital gains for the reason that assessee was trying to avoid provisions of section 50C and since AO having failed to take notice of section 43CA while framing the assessment order, would render the assessment order erroneous and prejudicial to the interest of the revenue in view of Explanation (2) clause (a) of section 263.
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Revision under section 263 - Validity - AO failed to make inquiries and apply her mind with regard to applicability of the provisions of section 43CA -
Assessee was engaged in business of real estate. In the return of income, assessee had disclosed business on sale of property. AO treated the same as transfer of long term capital asset and applied provisions of section 50C. CIT issued notice under section 263 for the reason that AO had not considered the impact of section 43CA. CIT was of the view that the transfer of an asset would be governed by provisions of section 43CA and the value adopted / assessed by State Government authorities for the purpose of payment of stamp duty should be deemed to be the full value of consideration received on such transfer. The gist of objection was that AO had took a conscious decision that income arising out of transfer of sale of land was not a business income but income from transfer of capital asset, and therefore, liable for capital gain tax. Held: AO had primarily changed the head of income from business to that of long term capital gains for the reason that the assessee was trying to avoid provisions of section 50C. Provisions of section 50C apply with regard to the transfer of long term capital asset, whereas section 43CA applies to transfer of asset. As mentioned earlier, assessee had already filed an appeal as against assessment order holding the transfer of land would be assessable as income from long term capital asset. AO having failed to take notice of section 43CA while framing the assessment order, would render the assessment order erroneous and prejudicial to the interest of revenue in view of Explanation (2) clause (a) of section 263. Therefore, CIT had correctly invoked his revisionary jurisdiction under section 263.
REFERRED : CIT v. Max India Ltd. (2007) 295 ITR 282 (SC) : 2007 TaxPub(DT) 1548 (SC) Malabar Industrial Co. Ltd. v. CIT (2000) 109 taxmann.com 66 (SC) : 2000 TaxPub(DT) 1227 (SC) Raja and Co. v. CIT (2011) 335 ITRT 381 (Ker.) : 2011 TaxPub(DT) 0546 (Ker-HC) CIT v. Ansal Housing & Construction Ltd. (2014) 51 taxmann.com 376 (SC)
FAVOUR : Against the assessee
A.Y. : 2014-2015
IN THE ITAT, COCHIN BENCH
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