The Peerless Gen. fin. & Inv. Co. Ltd., Kolkata v. DCIT, Circle-3(1), Kolkata, Kolkata

ITA 892/KOL/2019 | 2014-2015
Pronouncement Date: 19-03-2021 | Result: Allowed

Appeal Details

RSA Number 89223514 RSA 2019
Assessee PAN AABCT3043L
Bench Kolkata
Appeal Number ITA 892/KOL/2019
Duration Of Justice 1 year(s) 10 month(s) 26 day(s)
Appellant The Peerless Gen. fin. & Inv. Co. Ltd., Kolkata
Respondent DCIT, Circle-3(1), Kolkata, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 19-03-2021
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 19-03-2021
Last Hearing Date 16-03-2021
First Hearing Date 16-03-2021
Assessment Year 2014-2015
Appeal Filed On 23-04-2019
Judgment Text
ITA NO. 892/KOL/2019 ASS ESSMENT YEAR: 2014-2015 THE PEERLESS GENERAL FINANCE & IN VESTMENT COMPANY LIMITED 1 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH KOLKATA BEFORE SHRI P.M. JAGTAP VICE-PRESIDENT & SHRI A.T. VARKEY JUDICIAL MEMBER I.T.A. NO. 892/KOL/2019 ASSESSMENT YEAR: 2014-2015 THE PEERLESS GENERAL FINANCE & INVESTMENT COMPANY L IMITED .... APPELLANT PEERLESS BHAVAN 3 ESPLANADE EAST KOLKATA-700069 [PAN:AABCT3043L] -VS.- DEPUTY COMMISSIONER OF INCOME TAX ................. ........................... RESPONDENT CIRCLE-3(1) KOLKATA AAYAKAR BHAWAN P-7 CHOWRINGHEE SQUARE KOLKATA-700069 APPEARANCES BY: SHRI S.K. TULSIAN ADVOCATE MS. RIYA SOMANI C.A & MS. LATA GOYAL C.A. APPEARED ON BEHALF OF THE ASSESSEE SHRI SANJAY RAI CIT APPEARED ON BEHALF OF THE REV ENUE DATE OF CONCLUDING THE HEARING : MARCH 16 2021 DATE OF PRONOUNCING THE ORDER : MARCH 19 2021 O R D E R PER SHRI P.M. JAGTAP VICE-PRESIDENT:- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LD. PRINCIPAL COMMISSIONER OF INCOME TAX-1 KOLKATA DAT ED 25.03.2019 PASSED UNDER SECTION 263 OF THE INCOME TAX ACT 196 1. 2. THE ASSESSEE IN THE PRESENT CASE IS A NON-BANKIN G FINANCE COMPANY. THE RETURN OF INCOME FOR THE YEAR UNDER CO NSIDERATION WAS FILED BY IT ON 26.11.2014 DECLARING TOTAL INCOME OF RS.1 25 53 07 990/-. SUBSEQUENTLY A REVISED RETURN WAS FILED BY THE ASSE SSEE ON 04.03.2016 ITA NO. 892/KOL/2019 ASS ESSMENT YEAR: 2014-2015 THE PEERLESS GENERAL FINANCE & IN VESTMENT COMPANY LIMITED 2 DECLARING THE SAME TOTAL INCOME BUT CLAIMING HIGHER AMOUNT OF LONG-TERM CAPITAL LOSS OF RS.109.80 CRORES ON TRANSFER OF GOV ERNMENT SECURITIES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE CL AIM OF THE ASSESSEE FOR SUCH HIGHER AMOUNT OF LONG TERM CAPITAL LOSS WA S EXAMINED BY THE ASSESSING OFFICER. ON SUCH EXAMINATION HE FOUND TH AT THE HIGHER AMOUNT OF LONG TERM CAPITAL LOSS ON THE TRANSFER OF GOVERN MENT SECURITIES WAS CLAIMED BY THE ASSESSEE BY APPLYING COST INFLATION INDEX ON THE COST OF THE GOVERNMENT SECURITIES. IN THIS REGARD HE NOTED THAT A SIMILAR CLAIM OF THE ASSESSEE FOR THE BENEFIT OF INDEXATION WAS INIT IALLY ALLOWED BY THE ASSESSING OFFICER IN THE ASSESSMENT YEAR 2010-11 B UT THE SAME WAS FINALLY DISALLOWED BY THE ASSESSING OFFICER IN PURS UANCE OF THE ORDER PASSED BY THE CONCERNED LD. CIT UNDER SECTION 263 O F THE ACT. HE ALSO NOTED THAT AN APPEAL WAS FILED BY THE ASSESSEE AGAI NST THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) READ WITH SECTION 263 OF THE ACT BEFORE THE LD. CIT(A) BUT THE SAME WAS STI LL PENDING. FOLLOWING THE STAND TAKEN IN ASSESSEES OWN CASE FOR A.Y. 201 0-11 ON A SIMILAR ISSUE THE CLAIM OF THE ASSESSEE FOR LONG-TERM CAPITAL LOS S ON THE SALE OF GOVERNMENT SECURITIES BY APPLYING COST INFLATION IN DEX WAS REJECTED BY THE ASSESSING OFFICER. HE ALSO REJECTED THE CLAIM O F THE ASSESSEE FOR SET OFF OF CAPITAL GAIN ARISING FROM SALE OF BUILDING AGAIN ST BROUGHT FORWARD LONG-TERM CAPITAL LOSS AMOUNTING TO RS.2 79 36 337/ - ON THE GROUND THAT THE SAID ASSET BEING DEPRECIABLE ASSET FORMING PART OF THE BLOCK OF ASSETS BUILDING WAS SHORT TERM CAPITAL GAIN IN TERMS OF SECTION 50 OF THE ACT AND THEREFORE THE LONG TERM CAPITAL LOSS COULD NO T BE SET OFF AGAINST THE SAME. THE ASSESSING OFFICER ALSO MADE FURTHER DISAL LOWANCES UNDER SECTIONS 14A AND 40(A)(IA) OF THE ACT DETERMINING T HE TOTAL INCOME OF THE ASSESSEE AT RS.1 35 48 59 800/- IN THE ASSESSMENT C OMPLETED UNDER SECTION 143(3) OF THE ACT VIDE AN ORDER DATED 28.12 .2016. 3. THE RECORDS OF THE ASSESSMENT MADE BY THE ASSESS ING OFFICER UNDER SECTION 143(3) OF THE ACT SUBSEQUENTLY CAME TO BE E XAMINED BY THE LD. ITA NO. 892/KOL/2019 ASS ESSMENT YEAR: 2014-2015 THE PEERLESS GENERAL FINANCE & IN VESTMENT COMPANY LIMITED 3 PRINCIPAL CIT. ON SUCH EXAMINATION HE FOUND THE FO LLOWING ERRORS IN THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE ACT:- LONG TERM CAPITAL LOSS (WITHOUT STT) OF RS.109 80 30 873/- WAS CLAIMED FOR THE RELEVANT YEA R. THIS LOSS WAS DUE TO TRANSACTION IN GOVERNMENT SECURITIE S AND GOLD ETF AND LOSS OF RS.111 33 28 388/- WAS FROM GOVERNMENT SECURITIES. THE LOSS OF RS.111 33 28 388/- WAS ASSESSED AS LTCG OF RS.16 17 578/- THE LTCG FROM BOND BEING RS.86 39 024/- AND THE LTCG FROM RIGHT TO PROPERTY BEING RS.1 13 02 064/- REMAINED UNAVAILABLE FOR ADJUSTMEN T AGAINST THE CLAIMED LOSS OF RS.111 33 28 388/-. THE REFORE LTCG (WITHOUT STT) FOR RS.86 39 024/- AND RS.1 13 02 064/ - SHOULD HAVE BEEN TAXED @20%. THE TAX EFFECT WOULD BE RS.39 88 218/- WITHOUT SURCHARGE AN D CESS. INDEXED LONG TERM CAPITAL LOSS OF RS.46 43 572/- WAS CLAIMED FROM SALE OF GOLD ETF & WAS ALLOWED AS SUCH IN ASSESSMENT. EVEN THOUGH THEY WERE ALL HELD FOR L ESS THAN 36 MONTHS. GOLD ETF IS A NON EQUITY FUND AND PRIOR TO 31.05.2015 AND AS PER SEC. 2(42A) 1ST PROVISO STC G TAX IS APPLICABLE IF THE UNITS ARE SOLD WITHIN THREE YEARS OF PURCHASE. THUS THE INDEXED LTCL OF RS.46 43 572/- S HOULD ACTUALLY BE STCG OF RS.12 58 271/- FROM THE SALE OF GOLD ETF AND TAXABLE@30%. THE TAX EFFECT WOULD BE RS.3 77 481/- WITHOUT SURCHARGE AND CESS. THE ASSESSEE HELD 4 DEPRECIABLE ASSETS AS HOUSE PROPERTY WHICH WERE SOLD DURING RELEVANT YEAR AND S TCG OF RS.3 16 04 127/- WAS DECLARED. THE STAMP DUTY VA LUE OF THE PROPERTIES WAS RS.9 91 43 740/- WHICH FOR THE PURPOSE OF SECTION 48 SHALL BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF S UCH TRANSFER AS PER SECTION 50C. WHILE ASSESSING THE S TCG FROM THESE FOUR PROPERTIES THE SALE VALUE SHOULD H AVE BEEN DEEMED TO BE RS.9 91 43 740/- WHICH WOULD RES ULT IN STCG OF RS.5 05 46 267/-. THIS OMISSION HAD RESULTE D IN UNDERASSESSMENT OF INCOME OF RS.1 89 42 140/- AND T HE TAX EFFECT WOULD BE RS.65 67 201/- WITHOUT SURCHARGE AN D CESS. THE LD. PRINCIPAL CIT ACCORDINGLY ISSUED A SHOW-CAU SE NOTICE TO THE ASSESSEE ON 20.11.2018 POINTING OUT THE ABOVE ERROR S AND SEEKING EXPLANATION AS TO WHY THE ASSESSMENT MADE BY THE AS SESSING OFFICER UNDER SECTION 143(3) OF THE ACT SHOULD NOT BE REVIS ED BY INVOKING THE PROVISIONS OF SECTION 263. THEREAFTER ANOTHER NOTIC E WAS ISSUED BY THE LD. ITA NO. 892/KOL/2019 ASS ESSMENT YEAR: 2014-2015 THE PEERLESS GENERAL FINANCE & IN VESTMENT COMPANY LIMITED 4 PRINCIPAL CIT ON 19.02.2019 UNDER SECTION 263 OF TH E ACT POINTING OUT THE FURTHER ERROR ALLEGEDLY COMMITTED BY THE ASSESSING OFFICER IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) OF THE AC T AS UNDER :- DURING THE COURSE OF ASSESSMENT OF RETURN OF AY 20 15-16 IT WAS FOUND THAT RIGHT ON PROPERTY BEING 37 FLATS OF DIFFERENT CONFIGURATIONS HAVING AN APPROXIMATE TOTAL AREA OF 50051 SQFT IN A THEN UPCOMING HOUSING PROJECT NAMED 4 SIGHT MA NOR AT KOLKATA - 700084 WAS ACQUIRED BY THE ASSESSEE UPON EXECUTION OF THE AGREEMENT FOR SALE AND MOU ON 26.08.2011 AND THE SAME RIGHT WAS TRANSFERRED TO THE THIRD PARTY INDIVIDUAL S BY EXECUTION OF TRIPARTITE AGREEMENT FOR SALE IN FY 20 11-12 2012-13 2013-14 AND 2014-15. SINCE THE ASSESSEE FO LLOWED A MERCANTILE METHOD OF ACCOUNTING THE FULL VALUE OF SALE TO THE THIRD-PARTY BUYERS ACCRUED AS A RECEIPT TO THE ASSE SSEE AS AND WHEN THE TRIPARTITE AGREEMENT FOR SALE WITH THE 37 THIRD PARTY BUYERS HAPPENED DURING THE FY 2011-12 2012-13 201 3-14 AND 2014-15 IN THE SAME MANNER AS THE RIGHT ON THE 37 FLATS WERE ACQUIRED BY THE ASSESSEE ON 26.08.2011. THUS BUSINE SS INCOME ACCRUED TO THE ASSESSEE FROM THE SALE OF 'RIGHT' TO THE 37 BUYERS ON THE DAY OF SIGNING OF THE TRIPARTITE AGRE EMENT WITH THE 37 BUYERS IN SUCCESSIVE ASSESSMENT YEARS COVERI NG AYS 2012-13 2013-14 2014-15 AND 2015-16 AS PER DATES GIVEN IN ANNEXURE 10H FILED DURING THE COURSE OF ASSESSMENT OF AY 2015- 16. DURING THE ASSESSMENT OF AY 2015-16 IT WAS FOU ND THAT THE MOTIVE OF THE ASSESSEE WAS ALWAYS TO SELL AT PROFIT WHICH WAS PENNED IN THE MOU VERY CLEARLY. IT MORE LOOKED LIKE A FINANCIAL TRANSACTION HAVING ALL CONNOTATION OF BUSINESS OR V ENTURE IN THE NATURE OF TRADE. THE RELEVANT FACTORS AND CIRCUMSTA NCES DETERMINED THE DISTINCTIVE CHARACTER OF THE TRANSAC TIONS IN THIS CASE AS WAS HELD BY THE APEX COURT IN THE CASE OF G . VENKATASWAMI NAIDU & CO VS. THE COMMISSIONER OF INC OME TAX. THE INTENTION OF ACQUIRING THE FLATS IN THE PROPERT Y WAS NOT PRESENT IN THIS CASE FROM THE VERY BEGINNING AND TH IS WAS EVIDENT IN THE MOU EXECUTED AT THE TIME OF DEPLOYIN G THE FUND OF THE ASSESSEE IN THE DEVELOPMENT ACTIVITY OF THE OWNER/DEVELOPER. IT WAS THUS HELD THAT PROFITS EARN ED BY THE ASSESSEE BY SALE OF 'RIGHTS' ON THE PROPERTY WAS BU SINESS PROFIT IN THE REGULAR COURSE OF ITS FINANCIAL BUSINESS AND OTHER SIMILAR VENTURES. II) THE ASSESSEE FAILED TO OFFER SUCH INCOME IN TH OSE YEARS AS FOUND DURING THE ASSESSMENT OF AY 2015-16. THUS THERE WAS ESCAPEMENT OF BUSINESS INCOME OF RS.1 52 78 585/- D URING AY 2014-15 WHICH THE ASSESSEE FAILED TO DISCLOSE TRUL Y AND FULLY AS EXTRACTED AND REPRODUCED BELOW FROM ANNEXURE 10H. 4. IN RESPONSE TO THE NOTICES ISSUED BY THE LD. PRI NCIPAL CIT UNDER SECTION 263 ON 20.11.2018 AND 19.02.2019 THE FOLLO WING WRITTEN ITA NO. 892/KOL/2019 ASS ESSMENT YEAR: 2014-2015 THE PEERLESS GENERAL FINANCE & IN VESTMENT COMPANY LIMITED 5 SUBMISSIONS INTER ALIA WERE MADE BY THE ASSESSEE IN RESPECT OF EACH AND EVERY ERROR ALLEGEDLY POINTED OUT BY THE LD. PRINCI PAL CIT IN THE ORDER OF THE ASSESSING OFFICER PASSED UNDER SECTION 143(3):- ] SET OFF OF LTCG OF RS.86 39.024/- FROM SALE OF BON DS AND LTCG OF RS.11 302 064/- FROM SALE OF RIGHT TO PROPERTY AGAI NST LTCL OF RS.111 33 28 388!- FROM SALE OF GOVERNMENT SECURITI ES NOT PERMISSIBLE TO THE ASSESSEE. DURING THE YEAR THE ASSESSEE HAS EARNED LONG TERM C APITAL GAINS (LTCG) OF RS.86 39 024/- FROM SALE OF BONDS AND L TCG OF R S.1 13 02 064/- FROM SALE OF RIGHT TO PROPERTY TOTALLING TO RS.1 99 41 088/-. THE SAID LTCG OF RS.1 99 41 088/- WAS SET OFF BY THE ASSESSEE AGAINS T LONG TERM CAPITAL LOSS OF RS.1 11 33 28 388/- FROM SALE OF GOVERNMENT SECURITIES IN THE CURRENT YEAR. IN THE NOTICE ISSUED U/S 263 OF THE ACT YOUR GOODS ELF HAS MENTIONED THAT AS PER THE RETURN OF INCOME FILED BY THE ASSESSEE INDEXATION BENEFIT ON SALE OF GOVERNMENT SECURITIES WAS TAKEN WHICH RESULTED I N LONG TERM CAPITAL LOSS (LTCL) OF RS.1 11 33 28 388/-. HOWEVER INDEXA TION BENEFIT SHOULD NOT HAVE BEEN ALLOWED ON GOVERNMENT SECURITIES AS THE S AME ARE 'BONDS AND DEBENTURES' AND INSTEAD GAINS OF RS.16 17 578/- BEFORE INDEXATION BENEFIT SHOULD BE SUBJECTED TO TAX. THE SAME IS TA BULATED FOLLOWS: PARTICULARS SALE PRICE COST PRICE LTCG BEFORE INDEXATIO N INDEXATION COST LTCG AFTER INDEXATION GOVERNMEN T SECURITIES 1 20 00 00 0 00 1 19 83 82 4 22 16 17 57 8 2 31332838 8 1 11 33 28 3 88 THE LTCL OF RS.1 11 33 28 388/- WAS NOT ALLOWED TO THE ASSESSEE IN THE ASSESSMENT ORDER PASSED. HOWEVER THE ASSESSEE WAS ALLOWED THE CLAIM OF SET OFF OF LONG TERM CAPITAL GAINS (LTCG) OF RS.86 39 024/- FROM SALE OF BONDS AND LTCG OF RS.1 13 02 064/- FROM SALE OF RIG HT TO PROPERTY TOTALLING TO RS.I 99 41 088/- FROM THE SAID LTCL OF 1 13 33 28 388/- IN THE COMPUTATION OF INCOME FORMING PART OF THE ASSESSMEN T ORDER. AS SUCH ACCORDING TO YOU THIS HAS RESULTED IN UNDERASSESSM ENT OF INCOME AND LESS PAYMENT OF TAX. IN THIS REGARD IT IS FIRST POINTED OUT THAT AGAINS T THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT THE ASSESSEE HAS FILE D AN APPEAL BEFORE THE LEARNED CIT(A) AND THE SAID APPEAL IS PENDING FOR A DJUDICATION. HERE IT IS FURTHER POINTED OUT THAT THE ASSESSEE W AS DISALLOWED THE BENEFIT OF INDEXATION IN RESPECT OF GOVERNMENT SECURITIES O N THE NOTION THAT COST INFLATION INDEX WAS NOT APPLICABLE ON GOVERNMENT SE CURITIES IN TERMS OF THE THIRD PROVISO TO SECTION 48 OF THE ACT AS THESE WERE BONDS AND DEBENTURES. THIRD PROVISO TO SECTION 48 READ AS UND ER: ITA NO. 892/KOL/2019 ASS ESSMENT YEAR: 2014-2015 THE PEERLESS GENERAL FINANCE & IN VESTMENT COMPANY LIMITED 6 'PROVIDED ALSO THAT NOTHING CONTAINED IN THE SECOND PROVISO SHALL APPLY TO THE LONG-TERM CAPITAL GAIN ARISING FROM THE TRANSFE R OF A LONG-TERM CAPITAL ASSET BEING A BOND OR DEBENTURE OTHER THAN- (A) CAPITAL INDEXED BONDS ISSUED BY THE GOVERNMENT; OR (B) SOVEREIGN GOLD BOND ISSUED BY THE RESERVE BANK OF INDIA UNDER THE SOVEREIGN GOLD BOND SCHEME 2015:' HERE IT IS OF UTMOST RELEVANCE TO DISCUSS THE MEAN ING OF 'GOVERNMENT SECURITY' THE TERM 'GOVERNMENT SECURITY' HAS BEEN D EFINED UNDER EXPLANATION (B) TO SECTION 194LD(2) OF THE INCOME T AX ACT 1961 AS FOLLOWS: GOVERNMENT SECURITY' SHALL HAVE THE MEANING ASSIGNE D 10 IT IN CLAUSE (B) OF SECTION 2 OF THE SECURITIES CONTRACTS (REGULATIO N) ACT 1956 (42 OF 1956) AS PER SECTION 2(B) OF THE SECURITIES CONTRACTS (RE GULATION) ACT 1956 'GOVERNMENT SECURITY' MEANS A SECURITY CREATED AND ISSUED WHETHER BEFORE OR AFTER THE COMMENCEMENT OF THIS ACT BY TH E CENTRAL GOVERNMENT OR A STATE GOVERNMENT FOR THE PURPOSE OF RAISING A PUBLIC LOAN AND HAVING ONE OF THE FORMS SPECIFIED IN CLAUSE (2) OF SECTION 2 OF THE PUBLIC DEBT ACT 1944 (18 OF 1944); FURTHER SECTION 2(2) OF THE PUBLIC DEBT ACT 1944 DEFINES 'GOVERNMENT SECURITY' AS FOLLOWS: ' GOVERNMENT SECURITY' MEANS- (A) A SECURITY CREATED AND ISSUED I BY THE GOVERN MENT] FOR THE PURPOSE OF RAISING A PUBLIC LOAN AND HAVING ONE OF THE FOLLOW ING FORMS NAMELY:- (I) STOCK TRANSFERABLE BY REGISTRATION IN THE BOOKS OF THE BANK; OR (II) A PROMISSORY NOTE PAYABLE TO ORDER: OR (III) A BEARER BOND PAYABLE TO BEARER; OR (IV) A FORM PRESCRIBED IN THIS BEHALF; (B) ANY OTHER SECURITY CREATED AND ISSUED BY THE GO VERNMENT] IN SUCH FORM AND FOR SUCH OF THE PURPOSES OF THIS ACT AS MAY BE PRESCRIBED; THE GOVERNMENT SECURITIES WHICH WERE SOLD DURING TH E YEAR WERE STOCKS BEING OF THE NATURE DESCRIBED IN CLAUSE (I) TO SECT ION 2(A) OF THE PUBLIC DEBT ACT 1944. THE THIRD PROVISO TO SECTION 48 OF THE ACT RESTRICT S THE INDEXATION IN THE CASE OF LONG TERM CAPITAL ASSETS BEING BONDS OR DE BENTURES OTHER THAN CAPITAL INDEXED BONDS ISSUED BY THE GOVERNMENT. THE TERM DEBENTURE HAS BEEN DEFINED IN SECTION 2(30) OF THE COMPANIES ACT' 2013 WHICH READS AS UNDER: 'DEBENTURE' INCLUDES DEBENTURE STOCK BONDS OR ANY OTHER INSTRUMENT OF A COMPANY EVIDENCING A DEBT WHETHER CONSTITUTING A C HARGE ON THE ASSETS OF THE COMPANY OR NOT; ITA NO. 892/KOL/2019 ASS ESSMENT YEAR: 2014-2015 THE PEERLESS GENERAL FINANCE & IN VESTMENT COMPANY LIMITED 7 ON A COMBINED READING OF THE ABOVE SECTIONS IT EME RGES THAT GOVERNMENT SECURITIES ARE NOT BONDS OR DEBENTURES AND ARE THER EFORE NOT COVERED BY PROVISO 3 TO SECTION 48 OF THE ACT AND THEREFORE TH E ASSESSEE HAS RIGHTLY CLAIMED THE BENEFIT OF INDEXATION ON SALE OF GOVERN MENT SECURITIES. SALE OF GOLD ETFS TO BE TAXED AS STCG AND NOT LTCG IN THE PRESENT CASE SINCE THE GOLD ETFS WERE HELD FOR A PERIOD OF LESS THAN 3 YEARS THE GAINS FROM SALE OF GOLD ETFS WOULD BE CONSIDERED AS STCG. ACCORDINGLY THE SAID GAINS OF RS.12 58 271/- WOULD BE TAXABLE AS STCG @ 30% AND NOT L TCG. THIS ERROR IN THE ASSESSMENT ORD ER IS ACCEPTED. STAMP DUTY VALUE SHOULD HAVE BEEN-CONSIDERED AS FUL L VALUE OF CONSIDERATION FOR SALE OF HOUSE PROPERTY FOR THE PU RPOSE OF SECTION 48 OF THE ACT . IN THE PRESENT CASE THE ASSESSEE HAD SOLD 4 DEPREC IABLE ASSETS/F1ATS DURING THE YEAR BELONGING TO THE SAME BLOCK OF ASSE TS - BUILDING. THE OPENING WDV OF THE SAID BLOCK WAS RS.1 33 21 798/-. THE SALE CONSIDERATION RECEIVED FROM THESE 4 PROPERTIES WAS MORE THAN THE OPENING WDV OF THE BLOCK AND THE ADDITIONS MADE DURING THE YEAR IN THE BLOCK. AS SUCH THE CLOSING WDV OF THE BLOCK WAS REDUCED TO N IL. THE COMPUTATION OF STCG FROM SALE OF THESE 4 PROPERTIES IS TABULATED B ELOW: COMPUTATION OF CAPITAL GAINS TAKING ACTUAL SALE CON SIDERATION RECEIVED PARTICULARS AMOUNT AMOUNT SALE PROCEEDS AS PER BOOKS-BLOCK BUILDING 8 02 01 600 LESS: OPENING WDV AS PER BOOKS 1 33 21 798 LESS: ADDITIONS DURING THE YEAR AS PER BOOKS 3 52 75 675 4 85 97 473 SHORT TERM CAPITAL GAINS 3 16 04 127 THE RELEVANT EXTRACT FROM THE TAX AUDIT REPORT 'CA LCULATION OF DEPRECIATION UNDER THE INCOME TAX ACT' IS ENCLOSED AT PAGE 4. IN CONTINUATION TO THE ABOVE PLEASE NOTE THAT OUT OF THESE 4 FLATS SOLD DURING THE YEAR 3 FLATS WERE HELD FOR A PERIOD OF LESS THAN36 MONTHS AND 1 FLAT WAS HELD FOR A PERIOD EXCEEDING 36 MONTHS. DETAILS OF 3 FLATS HELD FOR LESS THAN 3 YEARS IS AS FOLLOWS:- SR. NO. FLAT NO. COST OF CONSTRUCTION (A) ACTUAL SALE PROCEEDS STAMP DUTY VALUATION U/S 50C (B) ST CAPITAL GAINS (B-A) 1 FKAT 21 KALRA ROAD BURDWAN 26 92 609 36 46 400 36 46 400 9 53 791 ITA NO. 892/KOL/2019 ASS ESSMENT YEAR: 2014-2015 THE PEERLESS GENERAL FINANCE & IN VESTMENT COMPANY LIMITED 8 2 FLAT 2 KALRA ROAD BURDWAN 19 65 132 28 28 800 29 03 940 9 38 808 1 FLAT 2A KALRA ROAD BURDWAN 26 92 609 36 46 400 44 67 800 17 75 191 TOTAL 36 67 790 AS EVIDENT FROM THE ABOVE TABLE THE ASSESSEE IN CO MPUTATION OF CAPITAL GAINS FROM SALE OF THE ABOVE THREE PROPERTIES HAS C ONSIDERED THE STAMP DUTY VALUATION U/S 50C OF THE ACT AS THE SALE CONSI DERATION TO ARRIVE AT THE STCG OF RS.36 67 790/-. THE SAID SHORT TERM CAPITAL GAINS OF RS.36 67 790/- WAS OFFERED FOR TAXATION IN THE COMPUTATION OF TOTA L INCOME. WITH REGARD TO THE 4TH PROPERTY BEING FLAT AT 5 L ALA LAJPAT RAI SARANI IT WAS SUBMITTED DURING ASSESSMENT THAT THE SAID FLAT WAS ACQUIRED IN THE YEAR 1989 AND WAS THEREFORE A LONG TERM CAPITAL ASS ET BY VIRTUE OF SECTION 2(29A) OF THE ACT. IN SUPPORT RELIANCE WAS PLACED ON THE JUDGMENT OF THE HON'BLE BOMBAY HLGH COURT IN THE CASE OF CIT VS ACE BUILDERS REPORTED IN 281 ITR 210 (COPY ENCLOSED AT PAGE 5-12 ) WHERE IT WAS HELD THAT- HELD DISMISSING THE APPEAL THAT THERE WAS NOTHING IN SECTION 50 TO SUGGEST THAT THE FICTION CREATED IN SECTION 50 IS N OT ONLY APPLICABLE TO SECTIONS 48 AND 49 BUT ALSO APPLIES TO OTHER PROVIS IONS. ON THE CONTRARY THIS SECTION MAKES IT EXPLICITLY CLEAR THAT THE DEE MING FICTION CREATED IN SUB-SECTIONS (1) AND (2) IS RESTRICTED ONLY TO THE MODE OF COMPUTATION OF CAPITAL GAINS CONTAINED IN SECTIONS 48 AND 49. THE LEGAL FICTION IS TO DEEM THE CAPITAL GAIN AS SHORT-TERM CAPITAL GAIN AND NOT TO DEEM THE ASSET AS SHORT-TERM CAPITAL ASSET. SECTION 50 DID NOT CONVER T A LONG-TERM CAPITAL ASSET INTO A SHORT-TERM CAPITAL ASSET. THOUGH SECTI ON 50 WAS ENACTED WITH THE OBJECT OF DENYING MULTIPLE BENEFITS TO OWNERS O F DEPRECIABLE ASSETS YET THAT RESTRICTION WAS LIMITED TO THE COMPUTATION OF CAPITAL GAINS AND NOT THE EXEMPTION PROVISIONS. THUS THE EXEMPTION UNDER SECTION 54E COULD NOT BE DENIED TO THE ASSESSEE ON ACCOUNT OF THE FICTION CREATED IN SECTION 50. THE ABOVE DECISION WAS AFFIRMED BY THE HON'BLE SUPR EME COURT IN THE CASE OF CIT VS.- V.S. DEMPO COMPANY LTD. (CIVIL APPEAL NO(S). 4797/2008) PRONOUNCED ON 05-09-2016 (COPY ENCLOSED) IN THE ORIGINAL COMPUTATION FILED BY THE ASSESSEE A LONG WITH THE RETURN OF INCOME THE CAPITAL GAINS FROM SALE OF THE 4TH PROP ERTY AT LALA LAJPAT RAI SARANI WAS COMPUTED AS FOLLOWS: SHORT TERM CAPITAL GAINS (REFER TABLE I) = RS.3 16 04 127/- LESS: STCG ON SALE OF 3 PROPERTIES (REFER TABLE 2) = RS.36 67.790/- THEREFORE STCG ON THE SALE OF THE 4TH PROPERTY = RS .2 79 36 337/- SET OFF WITH LTCL OF THE CURRENT YEAR = RS.2 79 36 337/- NET TAXABLE NIL ITA NO. 892/KOL/2019 ASS ESSMENT YEAR: 2014-2015 THE PEERLESS GENERAL FINANCE & IN VESTMENT COMPANY LIMITED 9 IN THE ORIGINAL COMPUTATION THE SALE CONSIDERATION OF RS.8 02 01 600/- ACTUALLY RECEIVED BY THE ASSESSEE WAS TAKEN IN CONS IDERATION. ON THE 3 PROPERTIES WHICH WERE HELD FOR LESS THAN 3 YEARS T HE ASSESSEE COMPUTED STCG OF RS.36 67 790/- TAKING INTO CONSIDERATION TH E STAMP DUTY VALUE AND ON THE 4TH PROPERTY WHICH WAS HELD FOR MORE THAN 3 YEARS STCG WAS COMPUTED AT RS.2 79 36 337/- AS EXPLAINED ABOVE. SI NCE THE 4TH PROPERTY AT LALA LAJPAT RAI SARANI WAS HELD FOR A PERIOD OF MOR E THAN 3 YEARS THE SAID FLAT WAS THEREFORE A LONG TERM CAPITAL ASSET BY VIR TUE OF SECTION 2(29A) OF THE ACT. IN SUPPORT RELIANCE WAS PLACED ON THE JUD GMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS ACE BUILDER (SUPRA). THE RESULTANT STCG OF RS.2 9 36.337/- WAS SET OFF WITH LTCL OF TH E CURRENT YEAR. A COPY OF THE ORIGINAL COMPUTATION IS ENCLOSED AT PAGE 2-3 . HOWEVER THE SAME WAS NOT ALLOWED IN THE ASSESSMENT ORDER ON THE PRETEXT THAT STCG FROM SALE OF THE DEPRECIABLE ASSETS CANNOT BE SET OFF WITH THE L ONG TERM CAPITAL LOSS. THE ASSESSEE HAS TILED AN APPEAL BEFORE THE LEARNED CIT(A) AGAINST THIS DISALLOWANCE AND THE SAME IS PENDING FOR ADJUDICATI ON. IN THE NOTICE ISSUED U/S 263 OF THE ACT YOUR GOODS ELF HAS RAISED THE GROUND THAT THE ASSESSEE HAS NOT CONSIDERED THE STAMP DUTY VALUATION OF RS.9 91 43 740/- IN COMPUTATION OF STCG IN THIS CAS E WHICH HAS RESULTED IN UNDERASSESSMENT OF INCOME OF RS. 1 89 42 140/- WHIC H HAS RENDERED THE ASSESSMENT ORDER AS ERRONEOUS. IN THIS REGARD PLEASE NOTE THAT DURING ASSESSMENT IT WAS SUBMITTED BEFORE THE LEARNED AO THAT IMMEDIATELY BEFORE THE SALE TH E PROPERTY WAS VALUED BY M/S N K CHAKRAVARTY AND CO REGISTERED VALUER AT A VALUE OF RS.5 84 00 000/-. A COPY OF THE VALUATION REPORT IS ENCLOSED AT PAGE 19-20. THE SAID FLAT DIDN'T HAD A CAR PARKING SPACE AND AL SO THERE WAS NO SCOPE OF GETTING A HIGH VOLTAGE ELECTRIC CONNECTION. AS SUCH IT WAS VERY DIFFICULT TO G4T BUYERS WHO WOULD HAVE PAID SUCH A HIGH PRICE FO R THE SAID FLAT AT PAR WITH THE STAMP DUTY VALUATION. IN THE ASSESSMENT ST AGE IT WAS THEREFORE REQUESTED BEFORE THE AO TO CONSIDER THE ACTUAL SALE CONSIDERATION OF RS.7 00 80 000/- RECEIVED BY THE ASSESSEE WHICH WAS MORE THAN THE FMV OF THE PROPERTY. FURTHER IT WAS ALSO REQUESTED THAT IN CASE THE ASSESSES CONTENTION IS NOT ACCEPTED THEN REFERENCE MAY BE M ADE TO THE DVO U/S 50C(2) OF THE ACT. A COPY OF THE SUBMISSIONS MADE B EFORE THE AO DATED 23.12.2016 IS ENCLOSED AT PAGE 18-20. HOWEVER NO S UCH REFERENCE WAS MADE BY THE AO TO THE DVO AND ON BEING SATISFIED WI TH THE SUBMISSIONS OF THE ASSESSEE THE SALE CONSIDERATION OF RS.7 00 80 000/- ACTUALLY RECEIVED WAS CONSIDERED IN COMPUTATION OF CAPITAL GAINS IN T HE ASSESSMENT ORDER. AS EVIDENT DETAILED ENQUIRIES WERE MADE BY THE LD. QA O IN THIS REGARD AND THE SAME WAS DULY REPLIED TO BY THE ASSESSEE. AT THIS JUNCTURE PLEASE NOTE THAT VIDE FINANCE ACT 2015 W.E.F 01-06-2015 A NEW EXPLANATION EXPLANATION 2' WAS ADDED TO SECTI ON 263 OF THE ACT WHICH READS' AS FOLLOWS: EXPLANATION 2. - FOR THE PURPOSES OF THIS SECTION IT IS HEREBY DECLARED THAT AN ORDER PASSED BY THE AO SHALL BE DEEMED TO BE ERR ONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE IF IN THE OPINION OF THE PRINCIPAL COMMISSIONER OR COMMISSIONER.: ITA NO. 892/KOL/2019 ASS ESSMENT YEAR: 2014-2015 THE PEERLESS GENERAL FINANCE & IN VESTMENT COMPANY LIMITED 10 (A) THE ORDER IS PASSED WITHOUT MAKING INQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN MADE; (B) THE ORDER IS PASSED ALLOWING ANY RELIEF WITHOUT INQUIRING INTO THE CLAIM; C) THE ORDER HAS NOT BEEN MADE IN ACCORDANCE WITH A NY ORDER DIRECTION OR INSTRUCTION ISSUED BY THE BOARD UNDER SECTION 119; OR (D) THE ORDER HAS NOT BEEN PASSED IN ACCORDANCE WIT H ANY DECISION WHICH IS PREJUDICIAL TO THE ASSESSEE RENDERED BY THE JURISD ICTIONAL HIGH COURT OR SUPREME COURT IN THE CASE OF THE ASSESSEE OR ANY OT HER PERSON. '. IN SIMPLE WORDS FOLLOWING ORDERS PASSED BY ASSESSI NG OFFICER SHALL NOW BE CONSIDERED AS ERRONEOUS AND PREJUDICIAL TO THE INTE REST OF REVENUE W.E.F 01.06.2015 WHERE AO PASSED ORDER:- 1) WITHOUT MAKING ANY INQUIRIES/VERIFICATION WHICH HE/SHE IS REQUIRED TO BE MADE. 2) WITHOUT MAKING INQUIRY INTO A CLAIM WHICH IS CLA IMED BY ASSESSEE AND ALLOWED SUCH CLAIM. 3) WHICH IS NOT IN ACCORDANCE WITH ANY ORDER/DIRECT ION/INSTRUCTION (I.E. CIRCULARS) ISSUED BY CBDT; 4) WHICH IS NOT IN ACCORDANCE WITH ANY DECISION OF JURISDICTIONAL HIGH COURT OR SUPREME COURT WHICH IS PREJUDICIAL TO THE ASSESSEE OR ANY OTHER PERSON. IN OTHER WORDS WHERE JURISDICTIONAL HIGH C OURT OR SUPREME COURT'S DECISION IS AGAINST THE ASSESSEE OR ANY OTH ER PERSON AND AO PASSED THE ORDER WITHOUT CONSIDERING SUCH JUDGMENT THEN SU CH ORDER SHALL BE CONSIDERED AS ERRONEOUS AND PREJUDICIAL TO THE INTE REST OF REVENUE. APPLYING THIS EXPLANATION TO THE FACTS OF THE ASSES SEE IT IS CLEAR THAT PROPER ENQUIRIES WERE CONDUCTED BY THE LEARNED AO W ITH REGARD TO THE SALE OF DEPRECIABLE ASSETS/FLATS. THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS BEFORE THE LEARNED AO EXPLAINING THE REASONS AS TO WHY THE STAMP DUTY VALUATION SHOULD NOT BE CONSIDERED FOR COMPUTING TH E CAPITAL GAINS WITH REGARD TO THE 4 TH PROPERTY DURING THE COURSE OF ASSESSMENT AND THE S AME WAS DULY CONSIDERED BY THE LD. AO. AS SUCH THE ASS ESSMENT ORDER CANNOT BE SAID TO BE ERRONEOUS IN THIS CASE. YOUR GOODSELF NOTED THAT THE ASSESSEE HAS ACQUIRED A RIGHT ON PROPERTY BEING 37 FLATS UPON EXECUTION OF THE AGREEMENT FOR SALE AND MOU ON 26-08- 2011 AND THE SAME RIGHT WAS TRANSFERRED TO THE THIR D PARTY INDIVIDUALS BY EXECUTION OF TRIPARTITE AGREEMENT FOR SALE IN FY 20 11-12 2012-13 2013-14 AND 2014-15. AS THE ASSESSEE FOLLOWS MERCANTILE SYS TEM OF ACCOUNTING YOUR GOODSELF OPINED THAT BUSINESS INCOME ACCRUED TO THE ASSESSEE FROM THE SALE OF 'RIGHT' TO THE 37 BUYERS ON THE DAY OF SIGNING T HE TRIPARTITE AGREEMENT. DURING THE COURSE OF ASSESSMENT OF AY 2015-16 THE LEARNED AO ALLEGED THAT THE MOTIVE OF THE ASSESSEE WAS TO SELL AT PROF IT WHICH WAS PENNED DOWN IN THE MOU AND THEREFORE HELD THAT PROFITS EAR NED BY THE ASSESSEE BY SALE OF RIGHTS WERE BUSINESS PROFITS IN THE REGULAR COURSE OF BUSINESS ITA NO. 892/KOL/2019 ASS ESSMENT YEAR: 2014-2015 THE PEERLESS GENERAL FINANCE & IN VESTMENT COMPANY LIMITED 11 TRANSACTIONS AND NOT 'CAPITAL GAINS' 0 SINCE THE AS SESSEE FAILED TO OFFER AN INCOME OF RS.1 52 78 585/- ARISING FROM SALE OF RIG HT TO PROPERTY IN AY 2014-15 ACCORDING TO YOU THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN THIS REGARD THE ASSESSEE HUMBLY SUBMITS THAT TH E ASSESSEE IS A RESIDUARY NON-BANKING FINANCIAL COMPANY AND OPERATE S UNDER THE REGISTRATION FROM RBI. THE MAIN BUSINESS OF THE ASS ESSEE IS FROM INTEREST INCOME EARNED ON LOANS AND ADVANCES GIVEN AS PER TH E RBI GUIDELINES. THE ASSESSEE ALSO INVESTS IN REAL ESTATE WHEREIN IT ENTERS INTO AGREEMENTS FOR SALE WITH DEVELOPERS FOR ACQUISITION OF RIGHTS IN A DEFINITE NUMBER OF FLATS. IN THIS REGARD FURTHER NOTE THAT THE ASSESS EE ENTERED INTO AN 'AGREEMENT FOR PURCHASE' ON 26.08.2011 BY CONTRACTI NG WITH M/S CITY STAR HOUSING PROJECT PVT. LTD. (OWNER/DEVELOPER) FOR PUR CHASE OF 37 FLATS OF DIFFERENT CONFIGURATIONS HAVING APPROXIMATE TOTAL A REA OF 50051 SQ.FT. IN AN UPCOMING HOUSING PROJECT TO BE CONSTRUCTED BY TH E DEVELOPER. THE ASSESSEE HAD PAID THE ENTIRE PURCHASE CONSIDERATION OF RS.12.57 82 542/- ON 30.08.2011 OUT OF ITS OWN FUNDS TO THE OWNER/DEV ELOPER AND THUS ACQUIRED A RIGHT ON THE SAID PROPERTY W.E. F. 26.08 .2011. BY VIRTUE OF THE SAID' AGREEMENT FOR SALE' THE ASSESSEE ONLY ACQUIR ED A RIGHT IN THOSE 37 FIATS BEING CONSTRUCTED BY M/S CITY STAR HOUSING PR OJECT PVT. LTD. THE SAID INVESTMENT IN RIGHT TO PROPERTY WAS A CAPITAL ASSET AND WAS SHOWN IN THE AUDITED ACCOUNTS AS INVESTMENT IN RIGHT TO PROPERTY ' UNDER THE HEAD 'INVESTMENTS - CURRENT AND NON-CURRENT INVESTMENTS' REFER NOTE II OF THE AUDITED ACCOUNTS. THE INVESTMENT IN RIGHT TO PROPER TY WAS NEVER CONSIDERED AS 'STOCK IN TRADE' BY THE ASSESSEE. THE ASSESSEE DECLARED A TOTAL RECEIPT OF RS.16 10 57 288/- IN THE ASSESSMEN T YEAR 2015-16 AS SALE CONSIDERATION OF THE PROPERTY BEING 37 FLATS. THE LAST DATE OF PAYMENT IN ALL THE 37 CASES WAS 18-02-2015. RIGHTS OVER THE SA ID 37 FLATS WERE TRANSFERRED AFTER MORE THAN THREE YEARS FROM THE DA TE OF ITS ACQUISITION TO RESPECTIVE INDIVIDUALS AT A TOTAL CONSIDERATION OF RS.16 10 57 288/- AFTER RECEIPT OF THE FINAL INSTALMENT OF SALE CONSIDERATI ON ON 18.02.2015. ACCORDINGLY THE APPELLANT CONSIDERED THE INDEXED C OST OF ACQUISITION OF THE RIGHT OF RESPECTIVE 37 FLATS AS PER PROVISIONS OF SEC. 48 R. W.S. 2( 14) 2(29A) AND 2(47) OF THE ACT AND COMPUTED LONG TERM CAPITAL LOSS ON TRANSFER OF THE SAID RIGHTS AT RS.36 60 000/- IN AY 2015-16. THE SAID INVESTMENT BEING A CAPITAL ASSET AND DISCL OSED AS SUCH IN THE AUDITED ACCOUNTS OF THE COMPANY WAS DULY DISCLOSED BEFORE THE DEPARTMENT IN AY 2012-13 2013-14 AND 2014-15 AND ASSESSMENTS FOR ALL THESE YEARS WERE COMPLETED AFTER PROPER EXAMINATION AND SCRUTIN Y OF THE BOOKS OF ACCOUNTS U/S 143(3) OF THE ACT. IN THE PRESENT CASE THE ASSESSEE ENTERED INTO A 'TRIPARTITE AGREEMENT FOR SALE' WITH RESPECT TO THESE 37 FLATS IN AY 2012-13 2013-14 2014-15 AN 2015-16 AND RECEIVED T HE SALE CONSIDERATION FROM THE BUYERS ON DIFFERENT DATES AS PER THE TERMS AND CONDITIONS OF THE AGREEMENT ENTERED INTO WITH THE RESPECTIVE PARTIES. THE RIGHTS OVER THESE SAID 37 FLATS WERE TRANSFERRED AT A TOTAL CONSIDERA TION OF RS.16 I 0 57 288/- AFTER RECEIPT OF THE FINAL INSTALMENT OF SALE CONSIDERATION ON 18.02.2015 I.E. AY 2015-16. THE ASSESSEE ENTERED I NTO' DEED OF CONVEYANCE' OR THE 'SALE DEED' AFTER RECEIVING THE FULL PAYMENT OF THE PROPERTY AND THE OWNERSHIP OF THE PROPERTY WAS THEN TRANSFERRED IN THE ITA NO. 892/KOL/2019 ASS ESSMENT YEAR: 2014-2015 THE PEERLESS GENERAL FINANCE & IN VESTMENT COMPANY LIMITED 12 NAME OF THE BUYER. SINCE THE LAST PAYMENT WAS RECEI VED IN AY 2015-16 THE INCOME FROM THE SALE OF THESE 37 FLATS AROSE IN AY 2015-16. HERE IT IS ALSO PERTINENT TO MENTION THAT THERE IS A SPECIFIC CLAUS E IN THE 'TRIPARTITE AGREEMENT FOR SALE' THAT THE SALE WOULD BE COMPLETE AND THE SALE DEED WILL BE EXECUTED IN FAVOUR OF THE BUYERS ONLY ON RECEIVI NG THE FULL PAYMENT OF THE PROPERTY. FURTHER NOTE THAT THE SAID INVESTMENT IN RIGHT TO PROPERTY WAS NEVER CONVERTED INTO 'STOCK IN TRADE' BY THE AS SESSEE IN ANY OF THE YEARS. THE SAME IS EVIDENT FROM THE AUDITED ACCOUNT S OF THE COMPANY FOR THE YEAR 2011-12 2012-13 2013-14 AND 2014-15 ENCL OSED WITH THE PAPER BOOK. MORE SO SECTION 45(2) OF INCOME TAX ACT DEAL S WITH THE CASES WHERE A CAPITAL ASSET IS CONVERTED INTO STOCK IN TRADE. W HENEVER A CAPITAL ASSET IS CONVERTED INTO STOCK IN TRADE BY AN ASSESSEE IT IS DEEMED AS TRANSFER OF CAPITAL ASSET AND ATTRACTS CAPITAL GAIN PROVISIONS IN SPITE OF THE FACT THAT THE OWNERSHIP OF SUCH CAPITAL ASSET DOESN'T CHANGE BY SUCH CONVERSION. AS SUCH IT IS A TRITE LAW THAT SALE/TRANSFER/CONVERSI ON OF A CAPITAL ASSET WOULD AUTOMATICALLY RESULT IN CAPITAL GAIN U/S 45 O F THE ACT AND THE INCOME FROM SUCH SALE CANNOT BE TREATED AS BUSINESS INCOME. INSPITE OF THE AFORESAID LEGAL POSITION THE LEARNED AO IN THE ASS ESSMENT FOR AY 2015-16 DISALLOWED THE CLAIM OF LONG TERM INDEXED CAPITAL L OSS OF RS.36 60 000/- FROM SALE OF RIGHTS CLAIMED BY THE ASSESSEE AND TRE ATED THE PROFITS ON SUCH SALE AS BUSINESS PROFITS. AGGRIEVED WITH THE ASSESS MENT ORDER THE ASSESSEE WENT IN APPEAL BEFORE THE LEARNED CLT(A) ON THIS IS SUE. THE LEARNED CLT(A) PERUSED AND EXAMINED THE FACTS OF THE CASE AND ACCE PTED THE CLAIM OF THE ASSESSEE THAT THE IMPUGNED TRANSACTIONS IS TO BE TR EATED AS CAPITAL GAINS AND DIRECTED THE LEARNED AO TO ASSESS THE INCOME FR OM THE SALE OF RIGHTS TO PROPERTY UNDER THE HEAD 'CAPITAL GAINS' THE RELEVAN T EXTRACT OF THE CITCA) ORDER IS REPRODUCED BELOW: '12. IN THIS CASE 37 FLATS WERE PURCHASED OF DIFFER ENT CONFIGURATION. THIS WAS VALIDATED BY AN AGREEMENT. THE APPROXIMATE TOTA L AREA WAS 50051 SQ. FT. ASSESSEE PURCHASED ENTIRE PURCHASE CONSIDERATIO N.CLT WAS REFLECTED IN THE AUDITED ACCOUNTS AS WALL. IT WAS SHOWN AS INVES TMENT. ASSESSEE DECLARED TOTAL RECEIPT OF RS. 16 10 57 228 /- AS SALE CONSIDERATION. THE LAST DATE OF PAYMENT IN ALL 37 CASES/FLATS WAS 18.02.2015. THIS WAS AFTER 3 YEARS. THIS POSITION WAS ACCEPTED IN EARLIE R YEARS. THUS FOLLOWING THE DECISION IN RADHA SOAMI SATSANG. I HAVE NO OPTION BUT TO GO BY THE DECISION: RADHA SOAMI SATSANG ON THE PRINCIPLES OF CONSISTENCY. RELIANCE IS ALSO PLACED ON THE DECISIO N OF CALCUTTA ITAT IN THE CASE OF DCIT VS. M/S. ABCI INFRASTRUCTURE PVT. LTD. (ITA NO. 990/KOLKATA/ 2013). ' IN LIGHT OF THE AFORESAID FACTS LET US NOW EXAMINE THE PROVISIONS OF SECTION 263 OF THE ACT AND THE SHOW CAUSE NOTICE ISSUED BY YOUR GOODSELF. HERE IT IS RELEVANT TO QUOTE SECTION 263 OF THE AC T. 263. REVISION OF ORDERS PREJUDICIAL TO REVENUE. - . (J) THE COMMISSIONER MAY CALL FOR AND EXAMINE THE R ECORD OF ANY PROCEEDING UNDER THIS ACT AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE ASSESSING] OFFICER IS ERRONEOUS IN S O FAR AS IT IS PREJUDICIAL ITA NO. 892/KOL/2019 ASS ESSMENT YEAR: 2014-2015 THE PEERLESS GENERAL FINANCE & IN VESTMENT COMPANY LIMITED 13 TO THE INTERESTS OF THE REVENUE HE MAY AFTER GIV ING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUS ING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY PASS SUCH ORDER THER EON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY INCLUDING AN ORD ER ENHANCING OR MODIFYING THE ASSESSMENT OR CANCELLING THE ASSESSM ENT AND DIRECTING AFRESH ASSESSMENT. EXPLANATION-I -- FOR THE REMOVAL OF DOUBTS IT IS H EREBY DECLARED THAT FOR THE PURPOSE OF THIS SUB- SECTION - (A) ..... (B) ..... (C) WHERE ANY ORDER REFERRED TO IN THIS SUB-SECTION AND PASSED BY THE ASSESSING OFFICER HAD BEEN THE SUBJECT MATTER OF AN Y APPEAL FILED ON OR BEFORE OR AFTER THE 1ST DAY OF JUNE 1988J THE POW ERS OF THE/PRINCIPAL COMMISSIONER OR COMMISSIONER UNDER THIS SUB-SECTION SHALL EXTEND LAND SHALL BE DEEMED ALWAYS TO HAVE EXTENDED TO SUCH MAT TERS AS HAD NOT BEEN CONSIDERED AND DECIDED IN SUCH APPEAL. ' CLAUSE (C) OF EXPLANATION 1 CLEARLY STATES THAT REV ISION UNDER SECTION 263 OF THE ACT IS NOT PERMISSIBLE ON ISSUES ALREADY CON SIDERED BY CIT(A) IN APPEAL SINCE THE ASSESSMENT ORDER MERGES WITH THE A PPELLATE ORDER AND THE POWER OF THE CIT TO INVOKE HIS REVISIONAL JURISDICT ION UNDER SECTION 263 OF THE ACI CANNOT EXTEND TO SUCH MATTERS WHICH HAVE BE EN CONSIDERED AND DECIDED IN THE APPEAL. ONCE THE ISSUE HAS BEEN CONS IDERED AND DECIDED BY THE CIT(A) THE REMEDY OF THE REVENUE CANNOT LIE IN THE INVOCATION OF THE JURISDICTION UNDER SECTION 263 OF THE ACT. TO BUTTRESS THE CONTENTION OF THE ASSESSEE RELIANCE IS PLACED ON THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CA SE OF RANKA JEWELLERS VS. ADDITIONAL COMMISSIONER OF INCOME TAX (2010) 32 8 ITR 0148 (BOMBAY HC) WHEREIN IT WAS HELD THAT REVISION-MERGER WITH APPELLATE ORDER-ISSUE CONSIDER ED AND DECIDED BY CIT(A)-WHERE ANY ORDER PASSED BY THE AO HAS BEEN MA DE A SUBJECT-MATTER OF ANY APPEAL THE POWERS OF THE CIT UNDER S. 261 S HALL EXTEND TO SUCH MATTERS ONLY AS HAD NOT BEEN CONSIDERED AND DECIDED IN THE APPEAL- CIT(A) HAD CONSIDERED AND DECIDED THE ISSUE- ONCE THE ISSU E WAS CONSIDERED AND DECIDED BY THE CIT(A) THE REMEDY OF THE REVENUE CA NNOT LIE IN THE INVOCATION OF THE JURISDICTION UNDER S. 263-REVISIO NAL ORDER PASSED BY THE CIT UNDER S. 263 WAS NOT VALID WHERE AN ORDER PASS ED BY THE AO IS SUBJECT TO AN APPEAL THAT HAS BEEN FILED THE POWER OF THE CIT TO INVOKE HIS REVISIONAL JURISDICTION UNDER S. 263 CAN ONLY EXTEN D TO SUCH MATTERS WHICH HAVE LIT' BEEN CONSIDERED AND DECIDED IN THE APPEAL . THE WORDS WHICH HAVE BEEN USED IN EXPLN. (C) TO IUB-S. (1) OF S. 263 ARE 'CONSIDERED AND DECIDED'. IN OTHER WORDS IT IS NOT MERELY A CONSIDERATION TH AT DISABLES BUT TILE MATTER HAS TO BE CONSIDERED AND DECIDED IN THE APPE AL. THE SUBMISSION OF COUNSEL APPEARING ON BEHALF OJ THE REVENUE THAT THE CFT(A) HAS NOT DECIDED THE ISSUE WHILE DEALING WITH THE QUESTION OJ ENHANCEMENT CANNOT BE ACCEPTED. THE SUBMISSION WHICH HAS BEEN URGED ON BEHALF OF THE ITA NO. 892/KOL/2019 ASS ESSMENT YEAR: 2014-2015 THE PEERLESS GENERAL FINANCE & IN VESTMENT COMPANY LIMITED 14 REVENUE IS THAT THE CIT(A) WAS REQUESTED TO EXERCIS E HIS POWER OF ENHANCEMENT IN PURSUANCE OF THE REQUEST MADE BY THE ADDL. CIT ON 20TH MAY 2005 AND THAT THE REQUEST WHICH WAS MADE WAS T O CARRY OUT AN ESTIMATION OF THE INITIAL INVESTMENT FOR THE FIRST YEAR OF THE BLOCK PERIOD. NOW THE POWER OF THE CIT(A) IS STRUCTURED BY THE P ROVISIONS OF S. 251. SEC. 251 INTER ALIA PROVIDES THAT IN DISPOSING OF AN APP EAL THE CIT(A) SHALL HAVE THE POWER IN AN APPEAL AGAINST AN ORDER OF ASSESSME NT TO CONFIRM REDUCE ENHANCE OR ANNUL THE ASSESSMENT. CONSEQUENTLY WHEN A REQUEST FOR ENHANCEMENT WAS MADE TO THE CIT(A) HE HAD THE JURI SDICTION IN TERMS OF S. 251 TO CONFIRM REDUCE ENHANCE OR ANNUL THE AS SESSMENT. A READING OF THE ORDER PASSED BY THE CIT(A) PARTICULARLY PARA 1 6.5 OF THE ORDER WOULD LEAD TO THE CONCLUSION THAT THE CIT(A) HAD CONSIDER ED AND DECIDED THE ISSUE. ONCE THE ISSUE WAS CONSIDERED AND DECIDED BY THE CIT(A) THE REMEDY OF THE REVENUE CANNOT LIE IN THE INVOCATION OF THE JURISDICTION UNDER S. 263. 5. IN SUPPORT OF THE SUBMISSIONS MADE BEFORE THE LD . PR. CIT AS ABOVE RELIANCE WAS PLACED ON BEHALF OF THE ASSESSEE ON TH E VARIOUS JUDICIAL PRONOUNCEMENTS. THE LD. PR. CIT DID NOT FIND MERIT IN THE SAID SUBMISSIONS AND PROCEEDED TO SET ASIDE THE ORDER OF THE ASSESSING OFFICER DATED 28.12.2016 PASSED UNDER SECTION 143(3) FOR TH E YEAR UNDER CONSIDERATION WITH A DIRECTION TO THE ASSESSING OFF ICER TO PASS THE FRESH ASSESSMENT ORDER AS PER LAW AND AFTER GIVING AN OPP ORTUNITY OF BEING HEARD TO THE ASSESSEE FOR THE FOLLOWING REASON GIVE N IN PARAGRAPH NO. 6 TO 11 OF HIS ORDER DATED 25.03.2019 PASSED UNDER SECTI ON 263:- 6. I HAVE CONSIDERED THE FACTS OF THE CASE AND SUB MISSIONS OF THE ASSESSEE. THESE OBSERVATIONS WERE RAISED IN THE SHOW CAUSE NO TICE WHICH IS DISCUSSED HEREUNDER:- (I) LONG TERM CAPITAL GAIN(WITHOUT STT):- THE ASSESSEE CLAIMED LONG TERM CAPITAL LOSS (WITHOU T STT) OF RS.109 80 30 873/-ON ACCOUNT OF LOSS SUFFERED FROM GOVERNMENT SECURITIES(RS.111 33 28 388/-) GOLD ETF(LONG TERM) (RS. 46 43 572/-). HOWEVER THE AO DID NOT ALLOW THE CLAIM OF INDEXATIO N ON SALE OF THE GOVERNMENT SECURITIES WHICH THEREFORE RESULTED IN LTCG OF RS.16 17 578/- AND WHICH WAS ALLOWED TO BE SET OFF FULLY AGAINST T HE BROUGHT FORWARD LTCL. CONSEQUENTLY THE SET OFF OF LTCG FROM BONDS( RS.86 39 024/-) AND PROFIT ON SALE OF RIGHT TO PROPERTY(RS.1 13 02 064/ -) WAS NO LONGER POSSIBLE. FURTHERMORE THE GOLD ETF WERE OBSERVED T O HAVE BEEN HELD FOR LESS THAN THREE YEARS(PERIOD OF HOLDING FOUND TO BE BETWEEN 391 TO 522 DAYS). IN OTHER WORDS THE SALE OF GOLD ETF WOULD B E STCG INSTEAD OF LTCG AND AS A RESULT THE INDEXATION BENEFIT WOULD NOT BE AVAILABLE. IN THIS WAY THE UNDER-ASSESSMENT WAS FOUND TO BE TO THE TUNE OF RS. 2 11 99 359/- AS FOLLOWS: PARTICULARS SALE PRICE COST PRICE ACTUAL L.T. REMAR KS ITA NO. 892/KOL/2019 ASS ESSMENT YEAR: 2014-2015 THE PEERLESS GENERAL FINANCE & IN VESTMENT COMPANY LIMITED 15 CAPITAL GAIN BONDS (LONG TERM) 2 06 79 00 000 205 92 60 976 86 39 024 NO TAX WAS LEVIED BY THE DEPARTMENT GOVT. SECURITIES 1 20 00 00 000 119 83 82 422 16 17 578 SET OFF WITH BROUGHT FORWARD L.T. CAPITAL LOSS PROFIT ON SALE RIGHT TO PROPERTY 113 02 064 NO TAX WAS LEVIED BY THE DEPT. LONG TERM CAPITAL GAIN (WITHOUT STT) 199 41 088 86 39 024 PLUS 1 13 02 064 = RS.1 99 41 088/- GOLD ETF (SHORT TERM CAPITAL GAIN 5 90 55 635 5 77 97 364 12 58 271 THE ASSESSEE AS WAS DEPTT. TREATED IT L.T. CAPITAL LOSS OF RS.46 43 572/- AFTER APPLYING CONST. INDEXATION. SHORT TERM CAPITAL GAIN (WITHOUT STT) 12 58 271 IN THIS CONNECTION THE ASSESSEE HAS POINTED OUT TH AT THE ISSUE AT HAND WAS BEFORE THE CIT(A). NEEDLESS TO SAY IT IS TRITE LAW THAT THE PCIT CAN EXERCISE REVISIONARY PROCEEDINGS ON A MATTER WHICH IS STILL PENDING BEFORE CIT(A) FOR ADJUDICATION. THE ASSESSEE FURTHER PROCEEDS TO EXPLAIN HOW 'GOVERNMENT SECURITIES ARE NOT 'BONDS OR DEBENTURES ' TO SUPPORT ITS CLAIM OF INDEXATION BENEFIT. THESE ARE MERE ASSERTIONS. F URTHER WITHOUT PREJUDICE ASSESSEE CLAIMS TO HAVE EARLIER YEARS LT CL BROUGHT FORWARD OF RS. 3 50 28 74 344/-. BE THAT AS IT MAY THE AA SHO ULD ASCERTAIN THIS CLAIM OF THE ASSESSEE. AS FOR THE LTCL CLAIMED BY THE ASS ESSEE THE SAME REQUIRES TO BE CALCULATED AFRESH IN THE LIGHT OF THE AFORESA ID DISCUSSION. (II) GOLD ETF:- THE ASSESSEE HAD CLAIMED INDEXED LT CL TO THE TUNE OF RS.46 43 572/- FROM SALE OF GOLD ETF WHICH WAS ALLO WED IN THE IMPUGNED ORDER. HOWEVER THE DETAILS FILED BY ASSESSEE DURIN G ASSESSMENT PROCEEDINGS SHOWED THE HOLDINGS FOR LESS THAN 36 MO NTHS. GOLD ETF IS A NON-EQUITY FUND AND PRIOR TO 31.03.2015 AND AS PER SEC. 2(42A) 1ST PROVISO STCG TAX WAS APPLICABLE IF SOLD WITHIN THR EE YEARS OF PURCHASE. THUS THE INDEXED LTCG OF RS. 46 43 572/ - SHOULD A CTUALLY BE STCG OF RS. 12 58 271/- FROM SALE OF GOLD ETF. IN HIS SUBMISSIO N THE ASSESSEE HAS ACCEPTED THIS ERROR IN THE IMPUGNED ASSESSMENT ORDE R. ITA NO. 892/KOL/2019 ASS ESSMENT YEAR: 2014-2015 THE PEERLESS GENERAL FINANCE & IN VESTMENT COMPANY LIMITED 16 (III) APPLICABILITY OF SEC. 50C READ WITH SEC. 48 O F THE IT ACT ON THE PROPERTY TRANSACTION:- THE ASSESSEE HAD SOLD FOUR DEPRECIABLE PROPERTIES D URING THE YEAR ON WHICH STCG OF RS. 3 16 04 127/- WAS DECLARED AND AL LOWED BY THE AO. HOWEVER THE COPY OF SALE DEED OF FOUR PROPERTIES A VAILABLE IN THE ASSESSMENT FOLDER THE TOTAL STAMP DUTY VALUATION OF THE PROPERTIES AS ASSESSED BY THE STAMP VALUATION AUTHORITY WAS RS. 9 91 43 740/-. THIS WAS TO BE THE DEEMED FULL VALUE FOR PURPOSE OF SEC. 48 AS AGAINST RS.8 02 01 600/ - DECLARED BY THE ASSESSEE THEREBY ATTRACTING THE PROVISIONS OF SEC.50C. THE ASSESSEE HAD ALSO CLAIME D DEPRECIATION AND WAS ALLOWED AS SUCH. TO ELUCIDATE EXCEPT FOR FLAT 2A AT KALNA THE STAM P DUTY VALUATION OF THE OTHER THREE PROPERTIES WERE MORE THAN THE SALE CONS IDERATION. THUS ENSUING STCG SHOULD HAVE BEEN DETERMINED AT RS. 5 0 5 46 267/- INSTEAD OF RS. 3 16 04 127/ - AS CLAIMED BY ASSESSEE. ASSESSEE HAS VEHEMENTLY DISAGREED TO THE ABOVE OBSE RVATIONS. THE FACT OF THE MATTER IS THE AFORESAID DETAILS HAVE BEEN OBTAI NED FROM THE COPIES OF SALE DEEDS FILED BY ASSESSEE IN THE COURSE OF ASSES SMENT AND WHICH WAS NOT LOOKED INTO BY THE AO BEFORE DISPOSING. CLEARLY THE AO HAS PASSED AN ORDER WITHOUT APPLYING HIS MIND ON THE FACTS EMANATING FR OM DOCUMENTS ON RECORDS WHICH WERE FILED BY ASSESSEE. MECHANICAL CL AIM IF ASSESSEE WITHOUT THE AO EXERCISE HIS STATUTORY DUTIES TO PASS AN ASS ESSMENT IN ACCORDANCE WITH LAW ON THE FACTS OF EACH CASE HAS THEREFORE RE SULTED IN AN ERRONEOUS ASSESSMENT AS WELL AS ONE PREJUDICIAL TO THE INTERE ST OF REVENUE. 7. NOW COMING TO THE ISSUE RAISED IN THE SECOND SHO W CAUSE IT NEEDS TO BE STATED THAT THERE IS NO DISPUTE ON THE FACTS OF THE CASE. THE DISPUTE IS ON THE TREATMENT OF THE INCOME FROM SALE OF 'RIGHT TO PROPERTY' WHICH HAD TREATED AS CAPITAL GAINS. MAIN BUSINESS OF ASSESSEE IS NBFC AND HAD ALSO FORAYED INTO REAL ESTATE. ON 26.08.2011 AN 'AGREEM ENT FOR PURCHASE WAS ENTERED BY CONTRACTING DEVELOPER M/S CITY STAR HOUS ING PROJECT PVT. LT. FOR PURCHASE OF 37 FLATS. THE ENTIRE CONSIDERATION OF R S. 12 57 82 542/- WAS PAID ON 30.08.2011 THEREBY ACQUIRING A RIGHT ON THE 37 FLATS. THIS INVESTMENT WAS CLAIMED AS A CAPITAL ASSET AND SHOWN IN THE AUDITED ACCOUNTS AS 'INVESTMENT IN RIGHT TO PROPERTY' UR.CE R THE HEAD 'INVESTMENT - CURRENT AND NON-CURRENT.' DURING THIS YEAR UNDER CO NSIDERATION THESE 37 FLATS WERE SOLD AS PER TRI-PARTITE AGREEMENT AND TH E TOTAL RECEIPT OF RS.16 10 57 288/- THEREON WAS INDEXED RESULTING IS LONG TERM CAPITAL LOSS OF RS.36 60 000/-. THE ASSESSEE HAS CONTENDED THAT THE RIGHT OVER THE FLATS WERE TRANSFERRED A.TER MORE THAN THREE YEAR FROM DA TE OF ITS ACQUISITION TO RESPECTIVE INDIVIDUALS AFTER RECEIPT OF THE FINAL S ALE CONSIDERATION ON 18.07.2015. IT WAS ALSO STATED THAT THE SAID INVEST MENT IN 'RIGHT TO PROPERTY' WAS NEVER CONVERTED INTO STOCK-IN-TRADE I N ANY OF THE YEARS. THAT THIS CONVERSION NOW OF ITS CAPITAL ASSET INTO STOCK -IN-TRADE IS DEEMED AS TRANSFER OF CAPITAL ASSET ATTRACTING THE PROVISION OF SEC.45(2). FEW QUESTIONS ARISES. THE MOU WITH THE DEVELOPER WA S SIGNED ON 26.08.201L. HOWEVER THE ASSESSEE HAS NOT PROVIDED THE DATES ON WHICH THE VARIOUS TRIPARTITE AGREEMENTS WITH THE BUYERS WERE SIGNED BY VIRTUE OF ITA NO. 892/KOL/2019 ASS ESSMENT YEAR: 2014-2015 THE PEERLESS GENERAL FINANCE & IN VESTMENT COMPANY LIMITED 17 WHICH THE 'RIGHT' TO THE PROPERTIES WERE TRANSFERRE D. IN OTHER WORDS THE INCOME WOULD HAVE ACCRUED TO THE ASSESSEE AS AND WH EN A BUYER SIGNED THE TRIPARTITE AGREEMENT. HOWEVER ASSESSEE HAS STATED THAT A CLAUSE IN THE AGREEMENT PROVIDED FOR THE CONVEYANCE OF THE DEEDS WHEN THE LAST OF THE FLATS WERE SOLD. WHY?? THE ASSESSEE HAS ONLY PURCHA SED THE 'RIGHT' AS EMPHASISED; THERE WAS NO INTENTION OF HOLDING ON TO IT AS AN INVESTMENT AS APPARENT FROM THE MOU. FURTHERMORE WHAT WERE THE CO MPELLING CIRCUMSTANCES TO CONVERT THE SO CALLED INVESTMENT A S STOCK-IN-TRADE AFTER THREE YEARS? THUS IT IS VERY EVIDENT FROM THE CONDU CT OF THE ASSESSEE THAT THE PURCHASE OF 'RIGHT' HAD BEEN MADE WITH THE SOLE INTENTION OF REVISION AS 'INVESTMENT' IN THE ACCOUNTS IN RELEVANT YEARS I S NOT A CLINCHING FACTOR. THE DISTINCTION WHETHER AN INVESTMENT TRANSACTION I S A MERE REALISATION OF THE INVESTMENT ON AN ACT DONE FOR MAKING PROFITS DE PENDS ON WHETHER THE EXCESS WAS ENHANCEMENT OF THE VALUE BY REALISING A SECURITY OR A GAIN IN AN OPERATION OF PROFIT MAKING. HERE THE NATURE OF TRA NSACTIONS RAISES A VERY STRONG PRESUMPTION TOWARDS ACCEPTABLE BUSINESS CHAR ACTERS. IN OTHER WORDS THE SUBSTANTIAL NATURE OF TRANSACTION CLEARL Y REVEAL THAT THE VENTURE ENGAGED IN BY THE ASSESSEE IS CLEARLY IN TH E NATURE OF TRADE. IN ITS SUBMISSION ASSESSEE HAS STATED THAT THE CIT (A) HAVING ALREADY CONSIDERED THE ISSUE IT COULD NOT BE TAKEN UP FOR REVISION U/S 263. IT WOULD SEEM FROM THE SUBMISSION THAT THE APPELLATE ORDER R EFERRED TO IS FOR A.Y. 2015-16. HOWEVER NEITHER COPY OF THE APPEAL ORDER NOR THE GROUNDS RAISED IN FORM NO.35 HAVE BEEN PROVIDED. ON A PERUSAL OF T HE IMPUGNED ASSESSMENT RECORDS FOR A.Y. 2014-15 IT IS SEEN THA T THE ISSUE AT HAND WAS NEVER EXAMINED BY THE AO. NEEDLESS TO SAY A FINDIN G OR AN OPINION RECORDED BY A TAX AUTHORITY FOR ONE ASSESSMENT YEAR HAS NO BINDING EFFECT ON THE ISSUES IN OTHER ASSESSMENT YEARS. IN THIS CA SE AT HAND IT IS EVIDENT THAT THE ISSUE RELATES TO A.Y. 2014-15 AS PER DISCU SSION ON THE FACTUAL MATRIX. THE AO WAS REQUIRED TO DELVE INTO THE NATUR E OF THE TRANSACTION BY SCRATCHING THE SURFACE. 6. HON'BLE DELHI HIGH COURT IN THE CASE OF GEE VEE ENTERPRISE VS. ADDL.CIT REPORTED IN 99 ITR 375 386 (DEL) HAS HELD THAT THE CIT MAY CONSIDER THE ORDER OF THE ASSESSING OFFICER TO BE ERRONEOUS NOT ONLY IF IT CONTAIN SOME APPARENT ERROR OF REASONING OR OF LAW OR OF FACT ON THE FACE OF IT BUT ALSO BECAUSE THE ASSESSING OFFICER HAS FAILED TO MAKE EN QUIRIES WHICH ARE CALLED FOR IN THE CIRCUMSTANCES OF THE CASE AND IT IS AN O RDER WHICH SIMPLY ACCEPTED WHAT THE ASSESSEE HAS STATED IN HIS RETURN OF INCOME ON THE SAID ISSUE. IT IS NOT NECESSARY FOR THE CIT TO MAKE FURT HER ENQUIRIES BEFORE CANCELLING THE ASSESSMENT ORDER. THE COMMISSIONER C AN REGARD THE ORDER ERRONEOUS ON THE GROUND THAT THE ASSESSING OFFICER SHOULD HAVE MADE FURTHER ENQUIRIES. 7. HON 'BLE KARNATAKA HIGH COURT IN THE CASE OF THA LIBAI F. JAIN VS. ITO 101 ITR 1 6 (KARN) HAS HELD THAT WHERE NO ENQUIRIES MA DE BY THE ASSESSING OFFICER ON THE RELEVANT ISSUE ASSESSMENT MUST BE H ELD TO BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE AND WHAT IS PREJUDICIA L TO THE INTEREST OF THE REVENUE MUST BE HELD TO BE ERRONEOUS THOUGH THE CON VERSE MAY NOT ALWAYS BE TRUE. ITA NO. 892/KOL/2019 ASS ESSMENT YEAR: 2014-2015 THE PEERLESS GENERAL FINANCE & IN VESTMENT COMPANY LIMITED 18 8. HON'BLE SUPREME COURT IN THE CASE OF MALABAR IND USTRIAL CO. PVT. LTD VS. CIT REPORTED IN (2000) 243 ITR 83 87-88(SC) AFFIRM ING THE HON'BLE KERALA HIGH COURT DECISION (198 ITR 611) HAS HELD THAT THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE REVENUE' IS OF WIDE IMPORT AND IS NOT CONFINED TO ONLY LOSS OF TAXES. IF THE A.O. HAS ACCEPTED THE CLAIM O F THE ASSESSEE WITHOUT ANY ENQUIRIES THEN SUCH ASSESSMENT ORDER PASSED BY THE A.O. WAS HELD TO BE ERRONEOUS. 9. IN THIS REGARD IT IS MENTIONED THAT MERE NON ENQ UIRY WOULD ALSO RENDER A PARTICULAR ORDER PASSED BY LOWER AUTHORITY AS ERRON EOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. THIS POSITION HAS BEEN CL EARLY CONFIRMED BY HON 'BLE SUPREME COURT IN THE CASE OF RAMPYARI DEVI SAR AOGI V. CIT [1968] 67 ITR 84 & SMT. TARA DEVI AGGARWAL V. CIT [1973] 88 ITR 323 (SC). THE REASONING FOR THIS PROPOSITION HAS BEEN EXPLAINED B Y HON'BLE DELHI HIGH COURT IN THE CASE OF GEE VEE ENTERPRISE V. ADDL. CI T [1975] 99 ITR 375 IN THE FOLLOWING PARA :- 'IT IS NOT NECESSARY FOR THE COMMISSIONER TO MAKE F URTHER INQUIRIES BEFORE CANCELLING THE ASSESSMENT ORDER OF THE INCOME-TAX O FFICER. THE COMMISSIONER CAN REGARD THE ORDER AS ERRONEOUS ON T HE GROUND THAT IN THE CIRCUMSTANCES OF THE CASE THE INCOME-TAX OFFICER SH OULD HAVE MADE FURTHER INQUIRIES BEFORE ACCEPTING THE STATEMENTS MADE BY T HE ASSESSEE IN HIS RETURN. THE REASON IS OBVIOUS. THE POSITION AND JUN CTION OF THE INCOME-TAX OFFICER IS VERY DIFFERENT FROM THAT OF CIVIL COURT. THE STATEMENTS MADE IN THE PLEADING PROVED BY THE MINIMUM AMOUNT OF EVIDEN CE MAY BE ADOPTED BY A CIVIL COURT IN THE ABSENCE OF ANY REBUTTAL. TH E CIVIL COURT IS NEUTRAL. IT SIMPLY GIVES DECISION ON THE BASIS OF THE PLEADING AND EVIDENCE WHICH COME BEFORE IT. THE INCOME-TAX OFFICER IS NOT ONLY AN AD JUDICATOR BUT ALSO AN INVESTIGATOR HE CANNOT REMAIN PASSIVE IN THE FACE OF A RETURN WHICH IS APPARENTLY IN ORDER BUT CALLS FOR FURTHER INQUIRY IT IS HIS DUTY TO ASCERTAIN THE TRUTH OF THE FACTS STATED IN THE RETURN WHEN TH E CIRCUMSTANCES OF THE CASE ARE SUCH AS TO PROVOKE AN INQUIRY IT IS BECAU SE IT IS INCUMBENT ON THE INCOME-TAX OFFICER TO FURTHER INVESTIGATE THE FACTS STATED IN THE RETURN WHEN CIRCUMSTANCES WOULD MAKE SUCH AN INQUIRY PRUDE NT THAT THE WORD 'ERRONEOUS' IN SECTION 263 INCLUDES THE FAILURE TO MAKE SUCH AN ENQUIRY THE ORDER BECOMES ERRONEOUS BECAUSE SUCH AN INQUIRY HAS NOT BE MADE AND NOT BECAUSE THERE IS ANYTHING WRONG WITH THE ORDER IF ALL THE FACTS STATED THEREIN ARE ASSUMED TO BE CORRECT.' 10. FURTHER TO THIS IT IS NOTICED THAT THERE IS NO APPEAL RIGHT AVAILABLE TO THE REVENUE FROM THE ORDER OF ASSESSMENT PASSED BY ASSESSING OFFICER AND I.E. WHY REVISIONARY POWERS HAVE BEEN GIVEN TO THE COMMISSIONER AND SUCH POWER WERE HELD TO BE OF WIDE AMPLITUDE BY THE HON' BLE SUPREME COURT IN THE CASE OF CIT V. SHREE MANJUNATHESWARE PACKING PR ODUCTS & CAMPHOR WORKS [1998] 231 ITR 53/96 TAXMAN 1. THEREFORE NOR MALLY WHEN ASSESSING OFFICER HAS NOT MADE ANY ENQUIRY ON A PAR TICULAR ISSUE THEN SUCH ORDER IN VIEW OF THE ABOVE DETAILED DISCUSSION HAS TO BE CONSTRUED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E AND THEREFORE THE IMPUGNED ASSESSMENT ORDER IS ERRONEOUS AND PREJUDIC IAL TO THE INTEREST OF REVENUE AS ASSESSING OFFICER HAS FAILED TO MAKE ANY ENQUIRY. ITA NO. 892/KOL/2019 ASS ESSMENT YEAR: 2014-2015 THE PEERLESS GENERAL FINANCE & IN VESTMENT COMPANY LIMITED 19 11. HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE LIGHT OF THE AFORESAID DECISIONS OF HON'BLE SUPREME COURT AND HON'BLE HIGH COURT AND IN ACCORDANCE WITH THE AMENDMENT MADE IN SECTION-263 OF THE ACT WITH EFFECT FROM 01.06.2015 I HOLD THAT THE IM PUGNED ASSESSMENT ORDER DATED 28.12.2016 PASSED BY THE A.O. IS ERRONE OUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. I FURT HER HOLD AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD THAT THE IM PUGNED ASSESSMENT ORDER DATED 28.12.2016 IS LIABLE TO SET-ASIDE. THER EFORE I SET ASIDE THE SAID ASSESSMENT ORDER DIRECTING THE A.O. TO FRAME THE AS SESSMENT AFRESH AFTER CONSIDERING THE AFORESAID OBSERVATIONS HON'BLE SUP REME COURT AND HON'BLE HIGH COURT DECISIONS AND AS PER LAW. 6. AGGRIEVED BY THE ORDER OF THE LD. PR. CIT PASSED UNDER SECTION 263 THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL ON TH E FOLLOWING GROUNDS:- (1) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED PR. CIT ERRED IN PASSING THE IMPUGNED ORDER DATED 25.03.2019 U/S. 263 OF THE INCOME-TAX ACT 1961 WIT HOUT SATISFYING THE NECESSARY PRECONDITIONS FOR INVOKING THE PROVIS IONS OF THE SAID SECTION. (2) THAT THE ORDER OF THE LD. PR. CIT U/S.263 DIRE CTING THE A.O. TO PASS A FRESH ASSESSMENT ORDER AS PER DIRECTIONS CON TAINED THEREIN IS AGAINST THE SETTLED LAW BY VARIOUS JUDICIAL PRONOUN CEMENTS ON THE ISSUE IN AS MUCH AS THERE IS NO INCIDENCE THAT TAX LAWFULLY EXIGIBLE HAS NOT BEEN IMPOSED OR A LESSER TAX HAS BEEN IMPOS ED. (3) THAT THE LD. PR. CLT HAS WRONGLY ASSUMED JURIS DICTION U/S.263 OF THE ACT FOR SETTING ASIDE THE ORIGINAL ASSESSMENT O RDER WITH REGARD TO SET OFF OF LONG TERM CAPITAL GAINS FROM SALE OF BONDS AND LONG TERM CAPITAL GAINS FROM SALE OF RIGHT TO PROPERTY A GAINST LONG TERM CAPITAL LOSS CLAIMED BY THE ASSESSEE ON SALE OF GOV ERNMENT SECURITIES. (4) THAT THE LD. PR.CIT HAS WRONGLY ASSUMED JURISD ICTION U/S.263 OF THE ACT FOR SETTING ASIDE THE ORIGINAL ASSESSMENT O RDER WITH REGARD TO APPLICABILITY OF SECTION 50C READ WITH SECTION 4 8 OF THE IT ACT ON SALE OF DEPRECIABLE PROPERTY. (5) THAT THE LD. PR.CIT HAS WRONGLY ASSUMED JURISD ICTION ULS.263 OF THE ACT FOR SETTING ASIDE THE ORIGINAL ASSESSMENT O RDER WITH REGARD TO TREATMENT OF THE INCOME FROM SALE OF RIGHT TO PR OPERTY UNDER THE HEAD 'PROFITS FROM BUSINESS' IN SPITE OF THE FACT T HAT THE SAID INCOME IS ASSESSABLE UNDER THE HEAD 'CAPITAL GAINS' AS HEL D BY THE LEARNED CIT(A) IN HIS ORDER DATED 04-03-2019 FOR AY 2015-16 ON IDENTICAL FACTS OF THE CASE. (6) THAT THE LD. PR.CIT HAS WRONGLY ASSUMED JURISD ICTION U/S.263 OF THE ACT FOR SETTING ASIDE THE ORIGINAL ASSESSMENT O RDER ON THE PRETEXT ITA NO. 892/KOL/2019 ASS ESSMENT YEAR: 2014-2015 THE PEERLESS GENERAL FINANCE & IN VESTMENT COMPANY LIMITED 20 THAT THE AO HAS PASSED THE ASSESSMENT ORDER WITHOUT MAKING PROPER ENQUIRIES WHICH HE SHOULD HAVE MADE. (7) THAT AS THE ORDER OF LD. PR. CIT ON THE ABOVE ISSUES SUFFERS FROM JURISDICTION ILLEGALITY AND IS DEVOID OF ANY MERIT THE SAME SHOULD BE QUASHED AND YOUR APPELLANT BE GIVEN SUCH RELIEF(S) AS PRAYED FOR. 7. AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE GROUNDS NO. 1 2 6 7 & 8 RAISED BY THE ASSESSEE IN THIS APPEAL ARE GENERAL IN NATURE WHICH DO NOT CALL FOR ANY SPECIFIC ADJUDICATION. 8. AS FAR AS THE ISSUE INVOLVED IN GROUND NO. 3 REL ATING TO THE ASSESSEES CLAIM FOR SET OFF OF LONG-TERM CAPITAL G AIN FROM SALE OF BONDS AND RIGHT TO PROPERTY AGAINST LONG TERM CAPITAL LOS S ON SALE OF GOVERNMENT SECURITIES THE LD. COUNSEL FOR THE ASSE SSEE SUBMITTED THAT EVEN THOUGH THE LONG TERM CAPITAL LOSS ON SALE OF G OVERNMENT SECURITIES AS CLAIMED BY THE ASSESSEE AFTER APPLYING COST INFL ATION INDEX WAS DISALLOWED BY THE ASSESSING OFFICER IN THE ASSESSME NT COMPLETED UNDER SECTION 143(3) VIDE AN ORDER DATED 28.12.2016 THE LD. CIT(A) WHILE DISPOSING OF THE APPEAL FILED BY THE ASSESSEE AGAIN ST THE ORDER OF THE ASSESSING OFFICER UNDER SECTION 143(3) ALLOWED THE LONG-TERM CAPITAL LOSS ON TRANSFER OF GOVERNMENT SECURITIES AS CLAIME D BY THE ASSESSEE BY APPLYING THE COST INFLATION INDEX. HE CONTENDED THA T SINCE THE SAID ORDER WAS PASSED BY THE LD. CIT(A) ON 28.02.2019 I.E. B EFORE 25.03.2019 WHEN THE IMPUGNED ORDER WAS PASSED BY THE LD. PR. CIT UN DER SECTION 263 THIS ISSUE HAD ALREADY BEEN CONSIDERED AND DECIDED IN TH E APPEAL BY THE LD. CIT(A) AND IT WAS BEYOND THE SCOPE OF REVISIONARY O RDER PASSED BY THE LD. PR. CIT UNDER SECTION 263 AS PER EXPLANATION 1(C) B ELOW SUB-SECTION (1) OF SECTION 263. 9. THE LD. CIT D.R. ON THE OTHER HAND INVITED OUR ATTENTION TO THE RELEVANT PORTION OF THE IMPUGNED ORDER PASSED BY TH E LD. PR. CIT UNDER SECTION 263 TO SHOW THAT EVEN THOUGH THE APPEAL AGA INST THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) WAS S TATED TO BE PENDING ITA NO. 892/KOL/2019 ASS ESSMENT YEAR: 2014-2015 THE PEERLESS GENERAL FINANCE & IN VESTMENT COMPANY LIMITED 21 BEFORE THE LD. CIT(A) BY THE ASSESSEE THE FACT THA T THE APPELLATE ORDER DISPOSING OF THE SAID APPEAL ALLOWING THE CLAIM OF THE ASSESSEE FOR LONG- TERM CAPITAL LOSS ARISING FROM THE SALE OF GOVERNME NT SECURITIES WAS NOT BROUGHT TO THE NOTICE OF THE LD. PR. CIT BY THE ASS ESSEE. HE SUBMITTED THAT THIS FACTUAL POSITION WAS INTENTIONALLY SUPPRESSED BY THE ASSESSEE IN ORDER TO MISLEAD THE LD. PR. CIT OR OTHERWISE THE L D. PR. CIT WOULD HAVE PASSED AN APPROPRIATE ORDER TAKING COGNIZANCE OF TH E SAID APPELLATE ORDER PASSED BY THE LD. CIT(A). THE LD. CIT D.R. ALSO RA ISED FURTHER CONTENTIONS IN SUPPORT OF THE IMPUGNED ORDER OF THE LD. PR. CIT PASSED UNDER SECTION 263 ON THIS ISSUE BY SUBMITTING THAT THE CLAIM OF T HE ASSESSEE FOR LONG- TERM CAPITAL LOSS ON SALE OF GOVERNMENT SECURITIES BY APPLYING COST INFLATION INDEX IS WRONG ON MERIT IN VIEW OF THE AM ENDMENTS MADE IN THE GOVERNMENT SECURITIES ACT. 10. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY THE LD. REPRESENTATIVES OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT THE ISSUE RELATING TO THE ASSESSEES CLAIM FOR LONG-TERM CAPITAL LOSS ARISING FROM THE S ALE OF GOVERNMENT SECURITIES BY APPLYING THE COST INFLATION INDEX WAS DISALLOWED BY THE ASSESSING OFFICER IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3). HOWEVER THE SET OFF OF SUCH LOSS TO THE EXTENT OF RS.86 39 024/- AND RS.1 13 02 064/- BEING THE LONG-TERM CAPITAL GAIN F ROM BONDS AND RIGHT TO PROPERTY RESPECTIVELY AS CLAIMED BY THE ASSESSEE WAS ALLOWED BY THE ASSESSING OFFICER AND KEEPING IN VIEW THIS ERROR AL LEGEDLY COMMITTED BY THE ASSESSING OFFICER THE LD. PR. CIT EXERCISING H IS POWER CONFERRED UPON HIM UNDER SECTION 263 REVISED/SET ASIDE THE ORDER O F THE ASSESSING OFFICER PASSED UNDER SECTION 143(3) ON THIS ISSUE. AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE BEFORE US THE ACTION OF T HE ASSESSING OFFICER IN DISALLOWING ITS LONG-TERM CAPITAL LOSS ARISING FROM THE SALE OF GOVERNMENT SECURITIES BY APPLYING THE COST INFLATIO N INDEX WAS CHALLENGED BY THE ASSESSEE IN THE APPEAL FILED BEFO RE THE LD. CIT(A) AGAINST THE ORDER PASSED BY THE ASSESSING OFFICER U NDER SECTION 143(3) ITA NO. 892/KOL/2019 ASS ESSMENT YEAR: 2014-2015 THE PEERLESS GENERAL FINANCE & IN VESTMENT COMPANY LIMITED 22 AND THE SAID APPEAL WAS DISPOSED OF BY THE LD. CIT( A) VIDE HIS APPELLATE ORDER DATED 28.02.2019 ALLOWING THE CLAIM OF THE AS SESSEE FOR LONG-TERM CAPITAL LOSS ARISING FROM SALE OF GOVERNMENT SECURI TIES BY APPLYING COST INFLATION INDEX. SINCE THE SAID ORDER WAS PASSED BY THE LD. CIT(A) ON 28.02.2019 THE ORDER OF THE ASSESSING OFFICER UNDE R SECTION 143(3) ON THIS ISSUE WAS ALREADY MERGED WITH THE ORDER OF THE LD. CIT(A) ON 28.02.2019 ITSELF I.E. BEFORE 25.03.2019 WHEN THE IMPUGNED ORDER UNDER SECTION 263 CAME TO BE PASSED BY THE LD. PR. CIT AN D IT WAS THEREFORE BEYOND THE SCOPE OF REVISION UNDER SECTION 263 IN T ERMS OF EXPLANATION (1)(C) BELOW SUB-SECTION (1) OF SECTION 263 WHICH CLEARLY PROVIDES THAT WHERE ANY ORDER REFERRED TO IN SUB-SECTION (1) OF S ECTION 263 AND PASSED BY THE ASSESSING OFFICER HAD BEEN THE SUBJECT MATTE R OF ANY APPEAL THE POWERS OF THE LD. PR. CIT UNDER SECTION 263 SHALL E XTEND ONLY TO SUCH MATTERS AS HAD NOT BEEN CONSIDERED AND DECIDED IN S UCH APPEAL. IN THE PRESENT CASE THE ISSUE RELATING TO THE ASSESSEES CLAIM FOR LONG-TERM CAPITAL LOSS ARISING FROM THE SALE OF GOVERNMENT SE CURITIES HAD ALREADY BEEN CONSIDERED AND DECIDED IN THE APPEAL FILED AGA INST THE ORDER OF THE ASSESSING OFFICER PASSED UNDER SECTION 143(3) AND I T WAS THEREFORE NOT PERMISSIBLE FOR THE LD. PR. CIT TO REVISE THE ORDER OF THE ASSESSING OFFICER ON THIS ISSUE BY EXERCISING HIS POWERS UNDER SECTIO N 263. THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3 ) ON THIS ISSUE STOOD ALREADY MERGED IN THE APPELLATE ORDER OF THE LD. CI T(A) AND SINCE THE CLAIM OF THE ASSESSEE FOR LONG-TERM CAPITAL GAIN AR ISING FROM THE SALE OF GOVERNMENT SECURITIES BY APPLYING COST INFLATION IN DEX STOOD ALREADY ALLOWED WE FIND THAT THERE WAS NO ERROR IN THE ORD ER OF THE ASSESSING OFFICER IN ALLOWING THE CLAIM OF THE ASSESSEE FOR S ET OFF OF SUCH LOSS AGAINST THE LONG-TERM CAPITAL GAIN OF RS.86 39 024/ - ARISING FROM THE SALE OF BONDS AS WELL AS AGAINST THE LONG-TERM CAPI TAL GAIN OF RS.1 13 02 064/- ARISING FROM RIGHT TO PROPERTY. 11. AT THE TIME OF HEARING BEFORE US THE LD. D.R. HAS ALLEGED THAT THE FACT OF HAVING PASSED THE APPELLATE ORDER BY THE LD . CIT(A) ON 28.02.2019 ITA NO. 892/KOL/2019 ASS ESSMENT YEAR: 2014-2015 THE PEERLESS GENERAL FINANCE & IN VESTMENT COMPANY LIMITED 23 DISPOSING OF THE APPEAL OF THE ASSESSEE FILED AGAIN ST THE ORDER OF THE ASSESSING OFFICER UNDER SECTION 143(3) WAS NOT BROU GHT TO THE NOTICE OF THE LD. PRINCIPAL CIT BY THE ASSESSEE DURING THE CO URSE OF PROCEEDINGS UNDER SECTION 263 AND THE SAME WAS INTENTIONALLY SU PPRESSED BY THE ASSESSEE. WE ARE UNABLE TO ACCEPT THIS CONTENTION O F THE LD. CIT D.R. FIRST OF ALL WHEN THE ORDER PASSED BY THE LD. CIT(A) ON THIS ISSUE WAS IN FAVOUR OF THE ASSESSEE ALLOWING ITS CLAIM FOR LONG-TERM CA PITAL LOSS ARISING FROM THE SALE OF GOVERNMENT SECURITIES WE FIND NO JUSTI FIABLE REASON FOR THE ASSESSEE TO HAVE SUPPRESSED THIS FACT AND THAT TOO INTENTIONALLY AS ALLEGED BY THE LD. CIT D.R. MOREOVER AS CLARIFIED BY THE LD . COUNSEL FOR THE ASSESSEE NOTICE UNDER SECTION 263 POINTING OUT THE ERROR IN THE ORDER OF THE ASSESSING OFFICER ON THIS ISSUE WAS ISSUED BY T HE LD. PRINCIPAL CIT ON 20.11.2018 AND SINCE THE WRITTEN SUBMISSION IN RESP ONSE TO THE SAID NOTICE WAS FILED BEFORE THE LD. PR. CIT ON 16.01.20 19 WHEN THE APPEAL AGAINST THE ORDER UNDER SECTION 143(3) WAS PENDING BEFORE THE LD. CIT(A) AND THE ORDER DATED 28.02.2019 WAS YET TO BE PASSED BY THE LD. CIT(A) DISPOSING OF THE SAID APPEAL THE FACTUAL POSITION AS PREVALENT THEN WAS POINTED OUT BY THE ASSESSEE IN THE WRITTEN SUBMISSI ON ON 16.01.2019. KEEPING IN VIEW ALL THESE FACTS AND CIRCUMSTANCES O F THE CASE WE FIND MERIT IN THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT IT WAS THE DUTY OF THE LD. PR. CIT TO ASCERTAIN THE ACTUAL POS ITION OF THE APPEAL STATED TO BE FILED BY THE ASSESSEE AGAINST THE ORDER PASSE D BY THE ASSESSING OFFICER UNDER SECTION 143(3) ON THIS ISSUE AND HAD HE DONE THAT HE WOULD HAVE FOUND THAT THE ORDER PASSED BY THE ASSESSING O FFICER UNDER SECTION 143(3) ON THIS ISSUE WAS ALREADY MERGED IN THE APPE LLATE ORDER OF THE LD. CIT(A) AND THE CLAIM OF THE ASSESSEE FOR LONG-TERM CAPITAL LOSS ARISING FROM THE SALE OF GOVERNMENT SECURITIES AFTER APPLYI NG THE COST INFLATION INDEX HAVING BEEN ALREADY ALLOWED BY THE LD. CIT(A) THERE WAS NO ERROR IN THE ORDER OF THE ASSESSING OFFICER IN ALLOWING T HE SET OFF OF SUCH LOSS AGAINST THE LONG-TERM CAPITAL GAIN ARISING FROM THE BONDS AND RIGHT TO PROPERTY. ITA NO. 892/KOL/2019 ASS ESSMENT YEAR: 2014-2015 THE PEERLESS GENERAL FINANCE & IN VESTMENT COMPANY LIMITED 24 12. IT IS ALSO PERTINENT TO NOTE HERE THAT THE CLAI M OF THE ASSESSEE FOR LONG-TERM CAPITAL LOSS ARISING FROM THE SALE OF GOV ERNMENT SECURITIES AFTER APPLYING THE COST INFLATION INDEX WAS DISALLO WED BY THE ASSESSING OFFICER IN THE ORDER PASSED UNDER SECTION 143(3) FO R THE YEAR UNDER CONSIDERATION BY RELYING ON THE ORDER PASSED IN ASS ESSEES OWN CASE ON THE SIMILAR ISSUE FOR A.Y. 2010-11 UNDER SECTION 14 3(3) READ WITH SECTION 263 OF THE ACT. AS POINTED OUT BY THE LD. COUNSEL F OR THE ASSESSEE THE SAID ORDER PASSED BY THE ASSESSING OFFICER FOR A.Y. 2010 -11 WAS A SUBJECT MATTER OF APPEAL AND THE CLAIM OF THE ASSESSEE FOR LONG-TERM CAPITAL LOSS ARISING FROM THE SALE OF GOVERNMENT SECURITIES AFTE R APPLYING THE COST INFLATION INDEX WAS ALLOWED BY THE TRIBUNAL AND FOL LOWING THIS CONCLUSION DRAWN IN A.Y. 2010-11 THE TRIBUNAL HAS ALREADY UPH ELD THE APPELLATE ORDER OF THE LD. CIT(A) DATED 28.02.2019 FOR THE YE AR UNDER CONSIDERATION ALLOWING THE SIMILAR CLAIM OF THE ASSESSEE. THIS IS SUE THUS STANDS DECIDED BY THE TRIBUNAL ON MERIT IN ASSESSEES OWN CASE FOR A.Y. 2010-11 AS WELL AS FOR THE YEAR UNDER CONSIDERATION AND WE THEREFO RE DO NOT CONSIDER IT NECESSARY OR EXPEDIENT TO DEAL WITH THE ARGUMENT SO UGHT TO BE RAISED BY THE LD. CIT D.R. ON MERIT OF THIS ISSUE. GROUND NO . 3 OF THE ASSESSEES APPEAL IS ACCORDINGLY ALLOWED. 13. IN SUPPORT OF THE ISSUE RAISED IN GROUND NO. 4 RELATING TO THE ERROR ALLEGEDLY POINTED OUT BY THE LD. PR. CIT(A) IN THE ORDER OF THE ASSESSING OFFICER IN COMPUTING THE SHORT-TERM CAPITAL GAIN AR ISING FROM THE SALE OF FLATS WITHOUT TAKING INTO CONSIDERATION THE STAMP D UTY VALUATION THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT FOUR FLATS FORMING PART OF THE BLOCK OF ASSETS BUILDING WERE SOLD BY THE ASSESSE E DURING THE YEAR UNDER CONSIDERATION. HE SUBMITTED THAT SINCE THE SALE CON SIDERATION OF THE SAID FOUR FLATS WAS MORE THAN THE OPENING W.D.V. OF THE BLOCK AND ADDITIONS MADE DURING THE YEAR SHORT TERM CAPITAL GAIN WAS C OMPUTED AND OFFERED TO TAX BY THE ASSESSEE IN THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. HE SUBMITTED THAT OUT OF THE SAID FO UR FLATS THREE FLATS WERE HELD BY THE ASSESSEE FOR A PERIOD OF LESS THAN 36 MONTHS AND THE ITA NO. 892/KOL/2019 ASS ESSMENT YEAR: 2014-2015 THE PEERLESS GENERAL FINANCE & IN VESTMENT COMPANY LIMITED 25 SHORT-TERM CAPITAL GAIN ARISING FROM THE SALE THERE OF WAS COMPUTED BY TAKING INTO CONSIDERATION THE STAMP DUTY VALUATION AS SALE CONSIDERATION IN TERMS OF SECTION 50C OF THE ACT. HE SUBMITTED TH AT THE REMAINING FORTH FLAT WHICH HAD BEEN HELD BY THE ASSESSEE FOR MORE T HAN 36 MONTHS WAS VALUED JUST BEFORE ITS SALE BY A REGISTERED VALUER M/S. M.K. CHAKRAVORTY & COMPANY AT RS.5.84 CRORES. THE ACTUAL CONSIDERATION OF THE SAID FLAT RECEIVED BY THE ASSESSEE HOWEVER WAS RS.7 00 80 0 00/- AND THE SAME WAS TAKEN INTO CONSIDERATION WHILE COMPUTING THE CA PITAL GAIN. HE SUBMITTED THAT THE SAID SALE CONSIDERATION WAS LESS THAN THE STAMP DUTY VALUATION AND WHEN THE ASSESSEE WAS CALLED UPON BY THE ASSESSING OFFICER TO EXPLAIN THIS DIFFERENCE WITH REFERENCE TO SECTIO N 50C IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE THAT THE SAID FLAT DID NO T HAVE A CAR PARKING SPACE AND THERE WAS ALSO NO SCOPE OF GETTING A HIGH VOLTAGE ELECTRIC CONNECTION. HE CONTENDED THAT THE SALE CONSIDERATIO N RECEIVED BY THE ASSESSEE WHICH WAS LOWER THAN THE STAMP DUTY VALUAT ION ACCORDINGLY WAS JUSTIFIED BY THE ASSESSEE AND A REQUEST WAS MADE TO THE ASSESSING OFFICER THAT IF THE EXPLANATION OFFERED IN THIS REGARD WAS NO ACCEPTABLE A REFERENCE MAY BE MADE TO THE DVO UNDER SECTION 50C( 2) OF THE ACT. HE SUBMITTED THAT NO SUCH REFERENCE WAS MADE BY THE AS SESSING OFFICER TO THE DVO AND AFTER HAVING SATISFIED HIMSELF ABOUT TH E EXPLANATION OFFERED BY THE ASSESSEE THE SALE CONSIDERATION ACTUALLY RE CEIVED BY THE ASSESSEE WAS TAKEN INTO CONSIDERATION BY THE ASSESSING OFFIC ER WHILE COMPUTING THE GAIN ARISING FROM THE SAID FLATS. HE CONTENDED THAT THIS ISSUE THUS WAS EXAMINED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND A WELL CONSIDERED VIEW WAS TAKEN BY THE ASSESSING OFFICER AFTER HAVING BEEN SATISFIED WITH THE EXPLAN ATION OFFERED BY THE ASSESSEE WITH REGARD TO THE SALE CONSIDERATION ACTU ALLY RECEIVED WHICH WAS LOWER THAN THE STAMP DUTY VALUATION. HE RELIED INTER ALIA ON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF CIT VS.- R.K. CONSTRUCTION CO. [313 ITR 65] TO CONTEND THAT SINCE ALL THE NECESSARY DETAILS AND THE DOCUMENTS WERE FURNISHED BY THE ASS ESSEE BEFORE THE ASSESSING OFFICER AND ON APPRECIATION OF THE SAME A POSSIBLE VIEW WAS ITA NO. 892/KOL/2019 ASS ESSMENT YEAR: 2014-2015 THE PEERLESS GENERAL FINANCE & IN VESTMENT COMPANY LIMITED 26 TAKEN BY THE ASSESSING OFFICER IT WAS NOT OPEN FOR THE LD. PR. CIT TO TAKE A DIFFERENT VIEW WHILE EXERCISING HIS POWERS UNDER SE CTION 263. 14. THE LD. CIT D.R. ON THE OTHER HAND STRONGLY RELIED ON THE IMPUGNED ORDER OF THE LD. PR. CIT PASSED UNDER SECTION 263 I N SUPPORT OF THE REVENUES CASE ON THIS ISSUE. HE ALSO INVITED OUR A TTENTION TO THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3 ) TO POINT OUT THAT THERE IS NO DISCUSSION WHATSOEVER MADE BY THE ASSES SING OFFICER IN THE SAID ORDER ON THIS ISSUE. 15. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERV ED THAT THE SHORT TERM CAPITAL GAIN ARISING FROM THE SALE OF FOUR FLATS BE ING THE DEPRECIABLE ASSETS FORMING PART OF THE BLOCK OF ASSETS BUILDIN G WAS COMPUTED AND OFFERED TO TAX BY THE ASSESSEE AS PER SECTION 50 OF THE ACT SINCE THE SAID BLOCK OF ASSETS WAS COMPLETELY EXHAUSTED IN THE YEA R UNDER CONSIDERATION AS A RESULT OF SALE CONSIDERATION OF THE FOUR FLATS WAS MORE THAN THE OPENING VALUE OF THE BUILDING OF THE BLOCK OF ASSET S AND THE ADDITIONS MADE DURING THE YEAR UNDER CONSIDERATION TO THE SAI D BLOCK. OUT OF THESE FOUR FLATS SOLD BY THE ASSESSEE THREE FLATS WERE S HORT-TERM CAPITAL ASSETS BEING HELD BY THE ASSESSEE FOR LESS THAN 36 MONTHS AND THE CAPITAL GAIN ARISING FROM THE SALE THEREOF WAS COMPUTED BY THE A SSESSEE BY TAKING INTO CONSIDERATION THE STAMP DUTY VALUE WHEREVER IT WAS MORE THAN THE SALE CONSIDERATION ACTUALLY RECEIVED IN ACCORDANCE WITH SECTION 50C OF THE ACT. IN RESPECT OF THE REMAINING FORTH FLAT WHICH WAS LO NG-TERM CAPITAL ASSET BEING HELD BY THE ASSESSEE FOR MORE THAN 36 MONTHS THE ACTUAL SALE CONSIDERATION RECEIVED BY THE ASSESSEE AMOUNTING TO RS.7 00 80 000/- WAS LESS THAN THE STAMP DUTY VALUATION AND THE SAME WAS ADOPTED BY THE ASSESSEE FOR COMPUTATION OF CAPITAL GAIN. AS SUBMIT TED BY THE LD. COUNSEL FOR THE ASSESSEE A SPECIFIC QUERY WAS RAISED BY TH E ASSESSING OFFICER IN THIS REGARD DURING THE COURSE OF ASSESSMENT PROCEED INGS AND THE ASSESSEE WAS CALLED UPON BY HIM TO EXPLAIN AND JUSTIFY THE A CTUAL SALE ITA NO. 892/KOL/2019 ASS ESSMENT YEAR: 2014-2015 THE PEERLESS GENERAL FINANCE & IN VESTMENT COMPANY LIMITED 27 CONSIDERATION RECEIVED AND ADOPTED FOR COMPUTATION OF CAPITAL GAIN WHICH WAS LOWER THAN THE STAMP DUTY VALUATION WITH REFERE NCE TO SECTION 50C. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO INVITED O UR ATTENTION TO THE LETTER DATED 23.12.2016 (COPY PLACED AT PAGE 18 OF THE PAPER BOOK) WHEREIN THE FOLLOWING EXPLANATION WAS OFFERED BY TH E ASSESSEE IN THIS REGARD:- 4. IN THE COMPUTATION OF THE SHORT TERM CAPITAL GA IN ON THE SALE OF THE FLAT AT 5 LALA LAJPAT RAI SARANI THE SALE PROCEED OF THE FLAT HAS BEEN TAKEN AT RS.8 02 01 60 0/- AS PER SALE DEED (COPY ENCLOSED) AS AGAINST THE STAMP DUTY VALUATION OF RS.8 81 25 600/-. THE STAMP DUTY VALUATION HAS N OT BEEN TAKEN INTO ACCOUNT IN COMPUTING THE SHORT TERM CAPI TAL GAIN AS THE ASSESSEE BEFORE THE SALE OF THIS PROPERTY GOT IT VALUED BY A REGISTERED VALUER. A COPY OF VALUATION REPORT AS ON 14.04.13 SHOWING ITS MARKET VALUE AT RS.5 84 00 000 /- IS ENCLOSED. FROM THE REPORT OF THE VALUER IT MAY KIND LY BE SEEN THAT THE FLAT HAD NO CAR PARKING SPACE OR A GARAGE WITHOUT WHICH THE HIGH VALUE BUYERS WERE NOT INTERESTED IN ACQUIRING THE FLAT. THERE WAS ALSO NO SCOPE OF GETTING A HIGH VOLTAGE ELECTRIC CONNECTION. BECAUSE OF SUCH DEFECTS THE A SSESSEE COULD NOT REALIZE FULL MARKET VALUE OF THE SALE OF THIS FLAT. THE ASSESSEE THEREFORE SUBMITS THAT ITS FAIR MARKET VAL UE WAS MUCH LESS COMPARED TO THE STAMP DUTY VALUATION. IF YOUR HONOUR DOES NOT HOWEVER ACCEPT THE ASSESSEES CONTE NTION IT IS REQUESTED THAT BEFORE ADOPTING THE STAMP DUTY VA LUATION YOU MAY KINDLY REF4ER THE VALUATION OF THIS PROPERT Y TO THE DVO AS PROVIDED IN U/S 50C(2) OF THE I.T. ACT. 16. AS IS EVIDENT FROM THE SUBMISSION MADE BY THE A SSESSEE BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS THE ACTUAL SALE CONSIDERATION ADOPTED BY THE ASSESSEE FOR COMP UTATION OF CAPITAL GAIN ARISING FROM THE SALE OF CONCERNED FLATS WHICH WAS LOWER THAN THE STAMP DUTY VALUATION WAS DULY EXPLAINED BY THE ASSE SSEE AND THE SAME WAS ALSO SUPPORTED BY A VALUATION REPORT OF THE REG ISTERED VALUER WHICH HAD VALUED THE MARKET VALUE OF THE FLATS AT RS.5.84 CRORES JUST BEFORE ITS SALE BY THE ASSESSEE. IT IS ALSO RELEVANT TO NOTE H ERE THAT A SPECIFIC REQUEST WAS ALSO MADE BY THE ASSESSEE TO THE ASSESSING OFFI CER TO REFER THE MATTER RELATING TO THE VALUATION OF THE PROPERTY TO DVO IN TERMS OF SECTION 50C(2) OF THE ACT IF THE LOWER SALE CONSIDERATION A CTUALLY RECEIVED BY THE ASSESSEE THAN THE STAMP DUTY VALUE AS JUSTIFIED BY IT WAS NOT ACCEPTABLE. ITA NO. 892/KOL/2019 ASS ESSMENT YEAR: 2014-2015 THE PEERLESS GENERAL FINANCE & IN VESTMENT COMPANY LIMITED 28 NO SUCH REFERENCE HOWEVER WAS MADE BY THE ASSESSI NG OFFICER AND KEEPING IN VIEW THE SAME AS WELL AS ALL THE FACTS O F RECORD WE FIND MERIT IN THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESS EE THAT THE EXPLANATION/JUSTIFICATION OFFERED BY THE ASSESSEE I N THE MATTER WAS FOUND ACCEPTABLE BY THE ASSESSING OFFICER AND ON APPRECIA TION THEREOF A WELL CONSIDERED VIEW WAS TAKEN BY THE ASSESSING OFFICER. THIS ISSUE THUS WAS EXAMINED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND AFTER HAVING SATISFIED HIMSELF WITH THE EXPLANATION/JUSTIFICATION OFFERED BY THE ASSESSEE WHICH WAS DULY SUPPORTED BY THE VALUATION REPORT OF THE REGISTERED VALUER A POSSIBLE VIEW WAS TAKEN BY THE ASSESSING OFFICER ACCEPTING T HE STAND OF THE ASSESSEE. 17. IN THE CASE OF R.K. CONSTRUCTION CO. (SUPRA) CI TED BY THE LD. COUNSEL FOR THE ASSESSEE IT WAS HELD BY THE HONBLE GUJARA T HIGH COURT THAT WHEN THE NECESSARY DETAILS AND DOCUMENTS WERE FURNISHED BY THE ASSESSEE TO THE ASSESSING OFFICER AND A PARTICULAR VIEW WAS TAK EN BY THE ASSESSING OFFICER ON THE BASIS OF THE SAME IT WAS NOT OPEN F OR THE COMMISSIONER TO TAKE A DIFFERENT VIEW IN THE REVISION PROCEEDINGS U NDER SECTION 263 OF THE ACT. IF THE FACTS OF THE PRESENT CASE AS DISCUSSED ABOVE ARE CONSIDERED IN THE LIGHT OF THE DECISION OF THE HONBLE GUJARAT HI GH COURT IN THE CASE OF R.K. CONSTRUCTION CO. (SUPRA) WE FIND THAT THERE W AS NO ERROR IN THE ORDER OF THE ASSESSING OFFICER ON THIS ISSUE AS ALL EGED BY THE LD. PR. CIT AND THE IMPUGNED ORDER PASSED BY THE LD. PR. CIT RE VISING THE ORDER OF THE ASSESSING OFFICER ON THIS ISSUE IS NOT SUSTAINABLE. WE ACCORDINGLY SET ASIDE THE IMPUGNED ORDER PASSED BY THE LD. PR. CIT UNDER SECTION 263 ON THIS ISSUE AND RESTORE THAT OF THE ASSESSING OFFICE R. GROUND NO. 4 OF THE ASSESSEES APPEAL IS ACCORDINGLY ALLOWED. 18. AS REGARDS THE NEXT ISSUE RAISED IN GROUND NO. 5 RELATING TO THE HEAD OF INCOME AND YEAR OF TAXABILITY OF THE PROFIT ARISING TO THE ASSESSEE FROM SALE OF RIGHT IN 37 FLATS THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED ITA NO. 892/KOL/2019 ASS ESSMENT YEAR: 2014-2015 THE PEERLESS GENERAL FINANCE & IN VESTMENT COMPANY LIMITED 29 THAT THE ASSESSEE HAD ACQUIRED THE RIGHT IN THE SAI D FLATS AS PER THE AGREEMENT FOR SALE AND MOU EXECUTED ON 26.08.2011. HE SUBMITTED THAT EVEN THOUGH RIGHT IN THE SAID FLATS WAS TRANSFERRED BY THE ASSESSEE TO THIRD PARTY INDIVIDUALS BY EXECUTION OF TRIPARTITE AGREEMENTS IN PREVIOUS YEARS RELEVANT TO ASSESSMENT YEAR 2012-13 13-14 1 4-15 & 2015-16 THERE WAS A SPECIFIC CLAUSE IN THE TRIPARTITE AGREE MENTS THAT SALE WOULD BE COMPLETE AND SALE DEED WOULD BE EXECUTED IN FAVOUR OF THE BUYERS ONLY ON RECEIVING THE FULL PAYMENTS AGAINST THE PROPERTY. R EFERRING TO THE RELEVANT DETAILS OF PAYMENTS PLACED IN THE PAPER BO OK HE POINTED OUT THAT THE FULL PAYMENT FROM BUYERS WAS RECEIVED IN THE PR EVIOUS YEAR RELEVANT TO A.Y. 2015-16 AND ACCORDINGLY GAIN ARISING FROM T HE RIGHT IN SALE OF 37 FLATS WAS OFFERED BY THE ASSESSEE IN THE RETURN OF INCOME FILED FOR A.Y. 2015-16. HE SUBMITTED THAT THE ASSESSEE IS A NON-BA NKING FINANCE COMPANY AND INVESTMENT MADE IN THESE FLATS REPRESEN TED CAPITAL ASSET. HE SUBMITTED THAT THE SAID FLATS PURCHASED BY THE ASSE SSEE WERE SHOWN UNDER THE HEAD INVESTMENT FOR A.Y. 2012-13 13-14 & 201 4-15 AND THIS ACCOUNTING TREATMENT GIVEN BY THE ASSESSING OFFICER WAS ACCEPTED BY THE ASSESSING OFFICER. HE CONTENDED THAT WHEN THE ASSES SEE OFFERED THIS INCOME AS LONG-TERM CAPITAL GAIN IN AY 2015-16 THE ASSESSING OFFICER DID NOT ACCEPT THE SAME AND ASSESSED IT AS BUSINESS INC OME. HE CONTENDED THAT ON APPEAL THE LD. CIT(A) HOWEVER ALLOWED THE CLAIM OF THE ASSESSEE THAT THIS INCOME WAS CHARGEABLE TO TAX IN AY 2015-1 6 AS LONG-TERM CAPITAL GAIN AND THE TRIBUNAL HAS ALREADY UPHELD THE ORDER OF THE LD. CIT(A) ON THIS ISSUE VIDE HIS ORDER DATED 05.12.2019 PASSED I N ITA NO. 1470/KOL/2019. HE CONTENDED THAT THERE WAS THUS NO ERROR IN THE ORDER OF THE ASSESSING OFFICER ON THIS ISSUE AND THE LD. PR. CIT IS NOT JUSTIFIED IN REVISING THE SAME UNDER SECTION 263. 19. THE LD. CIT D.R. ON THE OTHER HAND SUBMITTED THAT THE RIGHT IN 37 FLATS ACQUIRED BY THE ASSESSEE IN THE PREVIOUS YEAR RELEVANT TO A.Y. 2012- 13 WAS TRANSFERRED TO THIRD PARTY INDIVIDUALLY BY W AY OF TRIPARTITE AGREEMENTS EXECUTED IN A.YS. 2012-13 2013-14 AND 2 014-15. HE ITA NO. 892/KOL/2019 ASS ESSMENT YEAR: 2014-2015 THE PEERLESS GENERAL FINANCE & IN VESTMENT COMPANY LIMITED 30 CONTENDED THAT THE INTENTION OF THE ASSESSEE THUS W AS CLEAR TO SALE THE RIGHT IN THE SAID FLATS IMMEDIATELY TO EARN PROFIT AND IT WAS THUS A CLEAR CASE OF BUSINESS TRANSACTIONS REPRESENTING TRADING THE PROFIT OF WHICH WAS CHARGEABLE TO TAX UNDER THE HEAD PROFIT AND G AINS OF BUSINESS OR PROFESSION. HE CONTENDED THAT THE ACCOUNTING TREAT MENT GIVEN BY THE ASSESSEE TO THE SAID FLATS AS INVESTMENT IS NOT CON CLUSIVE TO DECIDE THE NATURE OF THE RELEVANT TRANSACTIONS AND KEEPING IN VIEW ALL THE FACTS OF THE CASE AS WELL AS THE INTENTION OF THE ASSESSEE TO TR ANSFER THE RIGHT IN THE 37 FLATS TO EARN PROFIT THE INCOME ARISING FROM THESE TRANSACTIONS WAS CLEARLY IN THE NATURE OF BUSINESS PROFIT. HE CONTEN DED THAT THIS ISSUE IN ANY CASE WAS NOT AT ALL CONSIDERED AND EXAMINED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE YEAR UNDER CONSIDERATION AND SINCE RIGHT WAS ACQUIRED BY THE A SSESSEE IN THE RESIDENTIAL FLATS IT CANNOT BE SAID THAT THE SAME WAS IN THE NATURE OF CAPITAL ASSET BEING PURCHASED BY THE ASSESSEE FOR I TS OFFICE PURPOSE. HE ACCORDINGLY STRONGLY SUPPORTED THE IMPUGNED ORDER P ASSED BY THE LD. PR. CIT UNDER SECTION 263 OF THE ACT ON THIS ISSUE. 20. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERV ED THAT RIGHT TO THE PROPERTY REPRESENTING 37 FLATS WAS ACQUIRED BY THE ASSESSEE UNDER THE AGREEMENT FOR SALE AND MOU EXECUTED ON 26.08.2011. THE SAID RIGHT WAS SUBSEQUENTLY TRANSFERRED BY THE ASSESSEE TO THE THI RD PARTY INDIVIDUALS BY EXECUTION OF TRIPARTITE AGREEMENTS FROM TIME TO TIM E IN THE PREVIOUS YEARS RELEVANT TO A.Y. 2013-14 2014-15 AND 2015-16 . THERE WAS HOWEVER A SPECIFIC CLAUSE IN THE SAID TRIPARTITE AGREEMENTS THAT SALE WOULD BE COMPLETE AND CONVEYANCE WILL BE EXECUTED IN FAVOUR OF THE BUYERS ONLY ON RECEIVING THE FULL PAYMENT OF THE PROPERTY. AS DEMO NSTRATED BY THE LD. COUNSEL FOR THE ASSESSEE FROM THE RELEVANT DETAILS FULL PAYMENTS WERE RECEIVED BY THE ASSESSEE FROM THE BUYERS IN THE PRE VIOUS YEAR RELEVANT TO A.Y. 2015-16 AND ACCORDINGLY THE INCOME ARISING FRO M THE SALE OF FLATS WAS OFFERED BY THE ASSESSEE TO TAX AS LONG-TERM CAPITAL GAIN IN A.Y. 2015-16. ITA NO. 892/KOL/2019 ASS ESSMENT YEAR: 2014-2015 THE PEERLESS GENERAL FINANCE & IN VESTMENT COMPANY LIMITED 31 THE LD. CIT D.R. HAS NOT DISPUTED THE FACT THAT FU LL PAYMENT AGAINST THE FLATS WERE RECEIVED BY THE ASSESSEE IN THE SUBSEQUE NT YEAR I.E. A.Y. 2015- 16 AND NOT IN THE YEAR UNDER CONSIDERATION. HE HOW EVER HAS POINTED OUT CERTAIN FACTS INVOLVED IN THE ASSESSEES CASE TO CO NTEND THAT THE INCOME ARISING TO THE ASSESSEE AS A RESULT OF SALE OF THES E FLATS IS CHARGEABLE TO TAX AS BUSINESS INCOME IN THE EARLIER YEARS INCLUDI NG THE YEAR UNDER CONSIDERATION WHEN THE RIGHT IN THE FLAT WAS TRANS FERRED BY THE ASSESSEE TO THE THIRD PARTY INDIVIDUALS BY EXECUTION OF TRIP ARTITE AGREEMENTS. IT IS HOWEVER OBSERVED THAT THE ISSUE RELATING TO THE HE AD OF INCOME UNDER WHICH THIS INCOME IS CHARGEABLE TO TAX IN THE HANDS OF THE ASSESSEE AS WELL AS THE ISSUE RELATING TO YEAR OF TAXABILITY OF THE SAME ARE ALREADY DECIDED BY THE TRIBUNAL AS POINTED OUT BY THE LD. C OUNSEL FOR THE ASSESSEE. IN THIS REGARD IT IS OBSERVED THAT THE ENTIRE INCO ME ARISING FROM THE SALE OF RIGHT IN 37 FLATS WAS OFFERED BY THE ASSESSEE IN A.Y. 2015-16 UNDER THE HAD LONG-TERM CAPITAL GAIN AND WHEN THE ASSESSING OFFICER ASSESSED THE SAME AS BUSINESS INCOME OF THE ASSESSEE AN APPEAL WAS FILED BY THE ASSESSEE BEFORE THE LD. CIT(A) WHO ALLOWED THE APP EAL OF THE ASSESSEE ON THIS ISSUE AND DIRECTED THE ASSESSING OFFICER TO AS SESS THE INCOME ARISING TO THE ASSESSEE FROM THE SALE OF FLATS UNDER THE HE AD LONG-TERM CAPITAL GAIN. THIS DECISION RENDERED BY THE LD. CIT(A) HAS ALREADY BEEN UPHELD BY THE ITAT VIDE ITS ORDER DATED DECEMBER 5 2019 P ASSED IN ITA NO. 1470/KOL/2019. KEEPING IN VIEW THE SAME WE FIND ME RIT IN THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT BOTH THESE ISSUES RELATING TO HEAD OF INCOME UNDER WHICH THE INCOME I N QUESTION IS CHARGEABLE TO TAX AS WELL AS THE YEAR OF TAXABILITY OF THE SAME HAVE ALREADY BEEN DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2015-16 AND CONSEQUENTLY THE ORDER OF THE ASSESSING OFFICER PASSED FOR THE YEAR UNDER CONSIDERATION UNDER SECTION 143(3) WHICH IS IN CONSONANCE WITH THE VIEW TAKEN BY THE TRIBUNAL CAN NOT BE SAID TO BE ERRONEOUS AS ALLEGED BY THE LD. PR. CIT. WE THEREF ORE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LD. PR. CIT UNDER SECT ION 263 ON THIS ISSUE ITA NO. 892/KOL/2019 ASS ESSMENT YEAR: 2014-2015 THE PEERLESS GENERAL FINANCE & IN VESTMENT COMPANY LIMITED 32 AND RESTORE THAT OF THE ASSESSING OFFICER. GROUND N O. 5 OF THE ASSESSEES APPEAL IS ACCORDINGLY ALLOWED. 21. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON MARCH 19 202 1. SD/- SD/- (A.T. VARKEY) (P.M. JAGTAP) JUDICIAL MEMBER VICE-PRESI DENT KOLKATA THE 19 TH DAY OF MARCH 2021 COPIES TO : (1) THE PEERLESS GENERAL FINANCE & INVESTMENT COMPANY LIMITED PEERLESS BHAVAN 3 ESPLANADE EAST KOLKATA-700069 (2) DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-3(1) KOLKATA AAYAKAR BHAWAN P-7 CHOWRINGHEE SQUARE KOLKATA-700069 (3) PR. COMMISSIONER OF INCOME TAX-1 KOLKATA; (4) COMMISSIONER OF INCOME TAX- (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES KOLKATA LAHA/SR. P.S.