DCIT Vs Majestic Properties Private Limited (ITAT Delhi)
No Double Bite at Same Cherry – Profit Once Offered in Books Cannot Be Taxed Again -ITAT Delhi Rejects Duplicate Addition on Property Sales:
Delhi Tribunal dismissed Revenue’s appeal by holding that once profits on sale of converted capital assets were already recorded in audited accounts & offered to tax, AO could not again invoke section 45(2) to make duplicate additions.
Assessee, engaged in real estate, had converted certain capital assets into stock-in-trade & sold them in the same year. AO reopened assessment on the basis of information from the Sub-Registrar, Meerut & concluded that three such properties, including Pallav Tower & two Jaipur lands, had yielded capital gains of ₹3.66 crore which were not separately disclosed under “Capital Gains”. AO therefore added the amount to income.
CIT(A) on appeal examined audited accounts & found that total sales of ₹14.82 crore already included the disputed properties & corresponding profit of ₹3.66 crore was embedded in the declared figures. Since assessee had disclosed full profit in P&L as “Revenue from Operations”, addition amounted to taxing the same income twice. CIT(A) deleted the addition in full.
On Revenue’s appeal, Tribunal upheld CIT(A)’s order, holding that law does not permit double taxation of same income. Once gain is reflected in books & offered to tax, it cannot be taxed again merely under a different head. ITAT thus dismissed Revenue’s grounds & confirmed relief to the assessee.
