The Assessing Officer has observed that the bank has claimed the set off of carried forward losses of earlier years of Rs. 2,39,37,185/-. In the opinion of the Assessing Officer, provisions of section 14A are applicable. The Assessing Officer has observed that up to A.Y. 2006-07, income of cooperative bank was wholly exempt u/s.80P and hence, loss was incurred because of expenditure for earning the wholly exempt income and hence, no benefit of set off can be given. The Assessing Officer made the disallowance of entire loss of Rs. 2,39,37,185/-.
Assessee is a firm engaged in business of builder and promoter. The issue before us is regarding allowability of deduction u/s.80IB(10) of the Act on partially complete project. The Assessing Officer has denied the deduction on the ground that project was not complete within the stipulated time. There is no dispute with regard to other conditions laid u/s.80IB(10) of the Act,
The case of the assessee is that the statement/admission was made under the mistaken belief of law that Rs. 50 lakhs represents the sale value of stock found short was undisclosed income of the assessee instead of the correct legal position that the gross profit on suppressed sale is the income of the assessee.
Ostensibly, while denying the assessee’s claim of carried forward unabsorbed loss/depreciation assessed under the normal provisions of the Act, the Assessing Officer has proceeded on the basis that section 10A of the Act provides an exemption and, therefore, loss suffered in such unit is not allowed to be set off or carried forward for further set off against other normal business income.
According to us for charging capital gains, the assets must have been acquired by incurring cost. In the instant case, the assessee has not incurred any cost for the acquisition of asset because the same was allotted to the assessee’s father by Government of India being refugee from Pakistan at relevant point of time.
Decision of the Mumbai Bench of the Tribunal in the case of Homi K. Bhabha Vs. ITO was brought to our notice by the learned DR wherein it was held that Portfolio Management Scheme fees is not deductible against capital gains. The decision of the Pune Bench of the Tribunal in the case of KRA Holding & Trading was not followed by the Mumbai Bench in the above cited decision.
The issue as to whether there was concealment of particulars of income on the part of the assessee so as to attract penalty under section 271(1)(c) depends on the acceptability of the explanation of the assessee that the mistake in this regard was inadvertent due to his ignorance of Indian Income-tax law, hence there was bona fide reason for the same.
Hon’ble Bombay High Court in the case of Prashant S Joshi (supra) has also noted the omission of section 47(ii) of the Act and insertion of section 45(4) of the Act with effect from 1.4.1988. Considering the entirety of the legal position, it has been affirmed by the Hon’ble High Court that amounts received by the partner on his retirement, are exempt from capital gains tax.
The Sick Industrial Companies (Special Provisions) Act, 1985 is a Central Act having legal sanctity. It has got overriding effect on any other provisions of any other Act except the provisions of FERA 1973 and Urban Land (Ceiling Act & Regulation) Act, 1976. Therefore, the directions of the BIFR have to be honoured and failure of such directions will bring legal disharmony.
Section 50C of the Act is a deeming provision and ostensibly involves creation of an additional tax liability on the assessee and, therefore, notwithstanding the presence of the expression ‘may’ in section 50C(2)(a), the Assessing Officer in the instant case (where assessee had claimed in his return itself that stamp duty values exceeds FMV) ought to have referred the matter to the Valuation Officer for ascertaining the value of the capital asset in question.
