----- Forwarded Message -----
From: Kapil Goel <advocatekapilgoel@gmail.com>
To: advocateasnagpal <advocateasnagpal@rediffmail.com>
Sent: Friday, 26 April 2013 11:59 AM
Subject: [Gzb_CA Group -CA. VINAY MITTAL] Delhi High Court Real Estate business when set up (previous year section 3 principles spelt); Section 50C Circle Rate contested & Incumbent on AO to refer to DVO; Assessee's double speak on share application money and addition u/s 68; Exempt income cannot be reduced from loss from taxable source
From: Kapil Goel <advocatekapilgoel@gmail.com>
To: advocateasnagpal <advocateasnagpal@rediffmail.com>
Sent: Friday, 26 April 2013 11:59 AM
Subject: [Gzb_CA Group -CA. VINAY MITTAL] Delhi High Court Real Estate business when set up (previous year section 3 principles spelt); Section 50C Circle Rate contested & Incumbent on AO to refer to DVO; Assessee's double speak on share application money and addition u/s 68; Exempt income cannot be reduced from loss from taxable source
Included in this update:
a) Delhi High Court bounden duty of AO to refer valuation of property to DVO (u/s 50C)
b) Delhi High Court rev fav Double speak on share application money sufficient to confirm addition u/s 68 as unexplained income
c) Delhi High Court on real estate business when set up (crucial date)
d) P&H high Court on exempt income cannot reduced to set off loss arising from taxable source
IN THE HIGH COURT OF DELHI AT NEW DELHI
KHUSHI RAM BHATNAGAR ITA 167/2013 In the present case, although the respondent/ assessee had made
such a claim in terms of Section 50C(2)(a) of the said Act, the Assessing
Officer had not made any reference to the Valuation Officer. Both the
Appellate Authorities have concluded that the Assessing officer ought to
have made the reference when it was admitted that the respondent/
assessee had made a claim. The learned counsel for the appellant /
revenue sought to contend that the claim itself was bogus and, therefore,
the Assessing Officer was not required to make any such reference. We do not agree with this contention of the learned counsel for the appellant/
revenue. In our view, the Tribunal has correctly sized up the law and
has sustained the order of the Commissioner of Income Tax (Appeals) in
directing the Assessing Officer to refer the valuation of the properties
to the Valuation Officer in terms of the provisions of Section 50C(2) of
the said Act.
KHUSHI RAM BHATNAGAR ITA 167/2013 In the present case, although the respondent/ assessee had made
such a claim in terms of Section 50C(2)(a) of the said Act, the Assessing
Officer had not made any reference to the Valuation Officer. Both the
Appellate Authorities have concluded that the Assessing officer ought to
have made the reference when it was admitted that the respondent/
assessee had made a claim. The learned counsel for the appellant /
revenue sought to contend that the claim itself was bogus and, therefore,
the Assessing Officer was not required to make any such reference. We do not agree with this contention of the learned counsel for the appellant/
revenue. In our view, the Tribunal has correctly sized up the law and
has sustained the order of the Commissioner of Income Tax (Appeals) in
directing the Assessing Officer to refer the valuation of the properties
to the Valuation Officer in terms of the provisions of Section 50C(2) of
the said Act.
IN THE HIGH COURT OF DELHI AT NEW DELHI
ITA 213/2013 NEW ERA INFRASTRUCTURE P. LTD The main point that has been accepted by the Tribunal is that
assessee had not been able to discharge the burden of proving the
identity, genuineness as also credit worthiness of the said parties. The
Tribunal also noted that two sets of affidavits had been filed by so-
called Directors of the said entities. In the first set the said amounts
were shown as unsecured loans whereas in the second set the same were
shown as share application money. This in itself shows that the position
was far from being clear and the burden which was cast upon the assessee
had not been discharged by it. The Tribunal has found, on facts, that
the said addition was sustainable. We see no reason to interfere as no
substantial question of law arises for our consideration.
ITA 213/2013 NEW ERA INFRASTRUCTURE P. LTD The main point that has been accepted by the Tribunal is that
assessee had not been able to discharge the burden of proving the
identity, genuineness as also credit worthiness of the said parties. The
Tribunal also noted that two sets of affidavits had been filed by so-
called Directors of the said entities. In the first set the said amounts
were shown as unsecured loans whereas in the second set the same were
shown as share application money. This in itself shows that the position
was far from being clear and the burden which was cast upon the assessee
had not been discharged by it. The Tribunal has found, on facts, that
the said addition was sustainable. We see no reason to interfere as no
substantial question of law arises for our consideration.
IN THE HIGH COURT OF PUNJAB & HARYANA AT
CHANDIGARH ITA No. 67 of 2012 (O&M) ANG Securities Ltd.,Ludhiana Date of decision: 23.04.2013 have heard learned counsel for the appellant and find that Section 10 falling under Chapter III of the Act contemplates the income which are not included in the expression 'total income'. Sub Clause 38 of Section 10 of the Act contemplates that any income arises from the transfer of Long Term Capital Assets is not an income. Therefore, the income from the sale of shares of the relevant year is not an income (section 10(38) income)), which can be set off from the loss from sale of shares earned in the previous year. (taxable source loss)
In view of the said fact, we find that the order of the Tribunal does not warrant any interference by this Court. The appeal is accordingly dismissed.
THE HIGH COURT OF DELHI AT NEW DELHI % Judgment delivered on: 23.04.2013 + ITA 528/2012 + ITA 529/2012
M/S DHOOMKETU BUILDERS & DEVELOPMENT PVT. LTD On a careful consideration of the issue in the light of the facts and the rival contentions, it seems to us that the decision of the Tribunal is based on the relevant tests that have been handed down judicially for the purpose ascertaining as to when a business can be said to have been set-up. The question as to when a business can be said to have been set-up is a question of fact to be ascertained on the facts and circumstances of each case and considering the nature and type of the particular business and no universal test or formula applicable to all types of businesses can be laid down. In recognition of this position the Indore Bench of the Madhya Pradesh High Court in Precision Electricals And ... vs Commissioner Of Income-Tax : (1989) 176 ITR 453 has held that the question as to when the business of the assessee had commenced is a question of fact and if the Tribunal as, after appreciating the entire material on record, found that the business of the assessee was set-up on a particular date, it would be a finding of fact from which no question of law can be said to arise. The attempt, therefore, should be to see as to whether the Tribunal had taken note of the appropriate circumstances and applied the proper tests in arriving at the conclusion which it did. The locus classicus on the question as to when a business can be said to have been set-up is the judgment of the Bombay High Court speaking through Chief Justice Chagla, in Western India Vegetable Products Ltd. v. CIT : (1954) 26 ITR 151 When the assessee in the present case was in a position to apply for the tender, borrowed money for interest albeit from its holding company and deposited the same with NGEF Ltd. on the same day, it shows that the assessee‟s business had been set-up and it was ready to commence business. The learned senior standing counsel for the revenue would, however, state that till the land is acquired, the business is not set-up. The difficulty in accepting the argument is that an assessee may not be successful in acquiring land for long period of time though he is ready to commence his business in real estate, and that would result in the expenses incurred by him throughout that period not being computed as a loss under the head "business" on the ground that he is yet to set-up his business. That would be an unacceptable position. The other argument of the learned standing counsel for the revenue that the tax auditors of assessee have themselves pointed out that the assessee is yet to commence its business is also irrelevant because of the distinction between the commencement of the business and setting-up of the same. Moreover, the Tribunal did take note of the distinction between the commencement of a business and setting-up of a business and applied the test laid down by the Bombay High Court (supra) which decision has been noticed by us to have formed the bedrock of almost all the authorities cited before us.
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