A.MOHAMED NAZAR,COIMBATORE vs. ACIT NON CORPORATE CIRCLE 2, COIMBATORE

आदेश / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER:

In fact, the assessee admitted that the receipts offered as Long Term Capital Gains in the return of income and also paid the taxes accordingly.

However, the AO treated this amount as advance for purchase of marbles.

According to the Ld. Representative, the assessee is in the business of trading in marbles. In the earlier two occasions, this Tribunal has remitted the matter back to the file of the AO for re-examination and also specifically directed the AO to make available Mr.Naren Rajan for cross- examination by the assessee. According to the Ld. Representative for the assessee, the said Mr.Naren Rajan expired. Therefore, he was not made available for cross-examination. The Ld. Representative further submitted that the assessee initially thought that the amount was received for vacating a flat occupied by the assessee. Therefore, it was offered as capital gain. However, subsequently, the assessee realized that what was received only an advance, therefore, it was claimed accordingly. Hence, the Ld.CIT(A) would not be justified in confirming the order of the AO.

In the two rounds of litigation, this Tribunal has remitted the matter back to the file of the AO for re-examination, more specifically to examine Mr.Naren Rajan. Now, Mr.Naren Rajan is no more. Therefore, the question of examination and cross-examination of Mr. Naren Rajan, may not arise for consideration. The AO found that the assessee made contradictory statement. Initially, the assessee claimed that what was received by him is only a capital gain for termination of lease and vacating the premises. Subsequently, the assessee claimed before the AO that it was for sale of marbles and what was received is an advance. In view of the above facts and circumstances of the case and Mr.Naren Rajan is also no more, this Tribunal is of the considered opinion that in the interest of justice, the first statement made by the assessee has to be taken as true.

In other words, the claim of the assessee that what was received is for vacating the premises appears to be true. Therefore, the amount received for termination of lease and vacating the premises is a capital gain and the assessee admittedly offered the same as a capital gain and paid the taxes. In those circumstances, this Tribunal is of the considered opinion that there is no justification for the authorities below to assess the entire receipt of Rs.45,00,000/- as income from “other sources”. Even if undertake the receipt as advance for sale of the marbles, this Tribunal is of the considered opinion that unless and until the sale of marbles is concluded by deliver of the marbles, the advance cannot be treated as income of the assessee during the year under consideration. Moreover, what was to be assessed as income is only the profit element embedded in it and not the entire sale consideration. In these facts and circumstances, assessing the entire amount of Rs.45,00,000/- as income from “other sources” is not correct. Accordingly, the order of both the authorities below are set-aside and addition of Rs.45,00,000/- is deleted.

Order pronounced on the 3rd day of December, 2018, in Chennai.