ITAT Ranchi Judgments — October 2019

The Tribunal restored the Rs. 26 lakh capital gains deposit issue to the AO for fresh verification, as the initial deposit was transferred to a fixed deposit account without clear proof of it being a capital gains account. The Rs. 3 lakh claim for housing board advance was dismissed as insufficient for exemption. The addition of Rs. 14.50 lakhs for agricultural income was deleted based on past acceptance and lack of contrary evidence.

The Tribunal held that the reassessment proceedings were validly initiated as there was new material before the AO. However, the interest income earned on funds inextricably linked to setting up the business should be capitalized and set off against pre-operational expenses, not taxed as income from other sources.

The Tribunal held that the activity of construction and sale of flats was not an adventure in the nature of trade and the income should be treated as long-term capital gain. The assessee was also held eligible for deduction under Section 54F.

The Tribunal upheld the cancellation of registration, finding that the trust deed was altered against the founder's wishes and the sale of trust property for development was not genuine. The assessee's grounds were found to be devoid of merit.

The Tribunal held that the amendment to Section 200A of the Income Tax Act, 1961, effective from 01.06.2015, is prospective. Therefore, late fees under Section 234E could not be levied for TDS statements filed prior to this date.

The Tribunal held that the lower authorities were not justified in confirming the additions of sundry creditors. It was noted that the purchases, sales, and net profit declared by the assessee were accepted, and the addition of creditors without disputing the purchases was incorrect. Consequently, the penalty levied under Section 271(1)(c) was also deleted.

The Tribunal held that the penalty notices were not specific and did not clearly indicate the limb of Section 271(1)(c) under which the penalty was being levied. This lack of clarity indicated a non-application of mind by the Assessing Officer.

The Tribunal held that the amendment to Section 200A of the Income Tax Act, 1961, effective from 01.06.2015, is prospective. Therefore, late fees under Section 234E could not be levied for TDS statements filed prior to this date.

The Tribunal held that for the commercial space and duplex, where substantial payments were made before the amendment of Section 56(2)(vii)(b) and registration occurred during the relevant assessment year, the amended provision was not applicable. However, for the flat, where payment and registration occurred within the assessment year, the addition was confirmed.