The old flat had been sold on 7.3.2006 and therefore the assessee was required to construct a new residential house by 6.3.2009. The purpose of section 54 is to allow exemption to the assessee of long term capital gain arising from sale of residential house if the capital gain is invested in construction of new residential house within a period of three years from the date of transfer and, therefore, in case, the assessee had invested the capital gains in construction of a new residential house within a period of three years, this should be treated as sufficient compliance of the provisions.
High Court of Madras in the case of CIT v. M/s. High Energy Batteries (India) Ltd. (supra), which in our view is distinguishable. In that case the Hon’ble Court held that the mere fact that the asset purchased had been leased back and vendor had undertaken to pay lease charges can not per se lead to the conclusion that the transaction is sham in the absence of any other material.
As regard the provisions of sec.28(va), the Tribunal held that with the insertion of the said provisions w.e.f. 01.40.2003, receipts on account of giving up right to carry on business even if it is capital receipt would now be charged to tax as ‘income from business’. It was held that if the compensation is paid for ‘not carrying out any activity in relation to any business’ which the ‘transferor’ is not carrying on, the same would be chargeable u/s.28(va) of the Act.
We have considered submissions of ld representatives of parties and orders of authorities below. We agree that ld CIT(A) is justified to hold that the entire sales which are unaccounted cannot be the undisclosed income of the assessee. It is a fact that department has not disputed that there is unaccounted purchases. Therefore, all the purchases are accounted for. If the sales are unaccounted, which is outside the books of account, only net profit rate should be taken as income of the assessee, as rightly held by ld CIT(A). Therefore, we uphold the order of ld CIT(A) and reject ground of appeal taken by department.
While computing book profits the AO added Provision for Doubtful debts of Rs.3,53,35,020/- debited to the profit and loss account to the profits arrived at in the profit and loss account prepared in accordance with the provisions of Sec.115JA(2) of the Act. The question whether provision for doubtful debts and provision for doubtful advances have to be added while computing book profits u/s.115JA of the Act has to be answered in favour of the revenue and against the assessee because of the retrospective amendment introduced in Section 115JA of the said Act.
The issue whether a particular let out is business or earning rental income by the owner of the premises has to be decided in the facts and circumstances of each case. Therefore, so far as the rental income for the let out premises owned by the assessee is concerned, the issue is settled by the Supreme Court in various decisions and it has been held that the income realized by such owner by way of rental income from a building, whether commercial building or residential, is assessable under the head ‘income from house property’.
It was held that what is covered u/s.44C is the expenditure that is common in nature meaning thereby that the benefit of the said expenditure is derived both by the Head Office and the Branch. It was held that payment of salary made in the case of the assessee was to expatriate employees who were working actually with the assessee in India though the payment was made to them by the Head Office outside India. It was held that the expenditure incurred on such payment thus was incurred exclusively for the branch in India and the same was not covered within the purview of sec.44C.
It can be observed from the earlier parts of the TPO’s order that he confined himself only to IT/ITES for the purposes of bench marking. In such a case, there could have been no question of the TPO embarking upon the figures in relation to non-IT/ITES segments of some of the comparable cases as chosen by him. Apart from making a general statement that the TPO also considered the figures from non-IT/ITES segments in some of the comparable cases, no material has been placed on record to substantiate this argument.
Section 54EC provides for exemption from tax on long-term capital gain when the capital gain arises from the transfer of long-term capital asset and the whole or any part of the said capital gain is invested in certain bonds within the period of 6 months. Section 54EC speaks of the actual capital gain which arises out of transfer of long-term capital asset and not deeming amount. Whereas section 50C provides for deeming fiction where value of consideration is adopted as per the stamp valuation authorities or any authority of the State Government. Even if the property has been sold at a lesser price but under the deeming fiction of section 50C, the value adopted by the stamp valuation authorities is to be taken as sale consideration.
Whether where assessee invested sale proceeds of tenancy rights in specified bonds, he was entitled to deduction under section 54EC even though his wife and daughters were co-holders of said bonds? Exemption Under Section 54F if Assessee claims two units as one he has to furnish Approved Municipal Plan.
