Messages

 I believe there is a judgement of Tribunal reported in 298 ITR 42 (ITAT) Jodgpur bench which has stated that if the document is not registered, then section 50C has not applicability? are there any subsequent case law on the subject? is this good law.

1. My client has sold a piece of land for rs.2.31 crores in the heart of the city. The property has several negative aspects like no proper pathway for ingress and egress, defectice vaasthu, irregular in size, no ready made buyer, impractical for commercial exploitation,etc. Hence, the sale was effected based on the practical location of the property and not with reference to the market value. The purchaser has filed an appeal in the High Court against the order of the authorities with respect to valuation.The AO has adopted the SRO valuation at Rs.4.51 crores, notwithstanding the pendency of the appeal in the Court. My questions are - a) is the action of the AO correct in law in adopting the SRO value, b) does the section allow him to do so?,c) are there any case law to overcome this situation? an early reply will be greatly appreciated.

2. My client's father bought a property (agricultural) beyond the municipal limits in 1967. Later the names of the three children (sons) were included in the passbook. Subsequently, the government allowed permission to convert into plots to facilitate housing programme and also requested for transfer of lands to create parks and greenery. This was acceded to by the owners. In 1991, few of the parcelled lands were sold and offered as capital gains in the hands of the father. The remaining land was shown as vacant in his wealth tax returns. In 2003-04 accounting year, few more plots were sold and the gains were shown as capital gains and the assessee also availed capital gains exemption u/s 54F of the Act. The AO treated the transaction as adventure in nature of trade and also denied exemption u/s 54F. Is the action of the AO justified? Please advice with necessary case law.

CA Murali

[stock register]

My client is both an investor and a trader in shares / mutual funds for the past several years and is continuing as such even till date. He maintains a "stock register" where all the transactions are recorded and whichever are treated as relating to "trade" are marked as "T" and balance are treated as investments. The gains on the sale of shares/ mutual funds relating to trade are shown as "Business Income" and the gains on sale of shares/mutual funds relating to investments are shown as "Capital Gains",whether LTCG or STCG. This has been the practice since inception and the department has not contested this practice and accepted the method of accounting.

For the assessment year 2006-07, the AO treated the STCG on sale of shares / mutual funds as business income, despite showing the stock register, the ledger, explaining the intention, etc. The AO relied only on the Board Circular and also followed the directions of the Addl.CIT u/s 144A, to whom the assessee approached in this context.

An appeal is being filed against the impugned assessment.

Is the action of the AO justified? Kindly clarify the correct legal position with case law.

My client, builder, has filed the return of income for the asst.year 2003-04 u/s 139(1). At the time of filing the ROI, the interest on loans was capitalised and treated as work in progress. During the assessment proceedings, the client revised the computation of income by treating the interest as revenue and filed the revised financial statements. The AO has not contested this but also did not take into account this revised computation of total income(loss) while determining the taxable income. The said assessment is under appeal before the CIT(A).

For the subsequent years, based on this revised computation of income(loss), the profits of the business were adjusted and the return of income(s) were filed for the assessment year 2004-05 and 2005-06. However, these returns are belated returns and also have been revised due to the above said reason.

For the assessment year 2006-07, the AO has disallowed the brought forward loss for the years 2004-05 and 2005-06 and did not check the record for 2003-04.

Is the action of the AO justified? Kindly clarify the correct legal position with the help of case law, if any.   

The Hon'ble Bench ITAT did not consider the decision of a co-ordinate bench and passed an order. Can such an 
order be recalled as there was a mistake apparent from record? Kindly give considered opinion with relevant case
as soon as possible, since the case is posted for hearing on the coming Friday.

CA Murali 

Respected Members,

Kindly go through mu query and give your considered opinion at the earliest so as to enable me to effectively represent the appeal before the ITAT.

CA Murali

My client is in trading business and has operations in several parts of the state of AP. His accounts are maintained at place   other than Hyderabad. The accountant makes the necessary entries and the same are recorded accordingly.

For the assessment year 2002-03 and 2003-04 the accountant had written the advances received from customers as "loans", for want of accurate information. During the assessment proceedings, the AO had made additions under section 68 as unexplained cash credit. Adequate time was not accorded for filing relevant information and clarification, as the assessment was getting time barred.

Before the CIT(A), an alternate ground was taken to treat the cash credit as "sales" and adopt the GP ratio of the firm and bring to tax the amount proportionately.Unfortunately, the CIT(A) ignored the submissions made and confirmed the addition.

The second appeal before the ITAT is now coming up for hearing next week.

Are there are any case law on the subject? I would be greatly appreciate a quick response from this august body.

CA Murali Krishna Murthy   

 

My understanding is that the regular rates will be applicable. Of course, the question of "residence" will have to be factored.

murali

The assessee is carrying the business of dealing in second hand cars and for this purpose requires considerable space to display the vehicles. The assess had taken for this purpose, an existing shed, on a short lease for 5 years and carried out certain improvements which include laying of fresh flooring, replacement of roof,painting etc. Most of the expenditure is not recoverable at the end of the lease period. The assessee claimed this amount as revenue expenditure whereas the AO treated the same as Capital expenditure. Aggrieved against the impugned assessment, the assesse filed an appeal before the CIT(A).

During the appellate proceedings, the CIT(A) has pointed out that there has been an amendment to the section and that the expenditure is Capital in nature only. Also he suggested if there are anu case law on the subject after the amendment, he will consider the same.

Is the action of the CIT(A) correct in law? Are there any case on the subject? Kindly clarify and also furnish the case law, if any on the subject. The case listed for hearing on Friday 07.03.2008.

CA Murali Krishnamurthy

Dear Mr. Asutosh,

Thanks for the prompt reply.

However, I am given to understand that the ITAT has given decisions on this subject. I am not sure whether the same are 
reported are not. One of them is a SB decision. Can you take the efforts to trace the same and inform. I have the MP posted on
08.02.2008. Also any other unreported decisions.

Thanking you, in anticipation,

CA Murali krishnamurthy

A miscellaneous application (MA) was filed in 1999. Due to various reasons attributable to the Tribunal and the appellant the MA could not be heard and disposed off. One of the major reasons id the creation of  a new bench and the time taken for transfer of appeals from one location to another and also that the members could not be arranged to constitute  a regular Bench.
Ultimately, at the time of hearing,in December 2007, the present Bench has pointed out that as four years have lapsed, the Bench would not be able to adjudicate on the issue.However, it was magnanimous to state that in the interest of justice, it would hear the MA if there is any case law on the subject that the Tribunal has inherent power to hear even after the lapse of four years.

Please help with relevant case law in this regard

CA Murali Krishna Murthy

I am looking for a scenario to avoid the CG u/s 50C, where the land was agricultural and sold as non-agricultural land. That the land is agricultural is borne by certificate from the concerned authority and other accompanying evidence.

Kindly give your valued opinion as the case has been picked up for scrutiny and is time barring.

CA Murali Krishnamurthy