K. Narasimha Chary ORDER
K. Narasimha Chary, Member (J)
1. Challenging the order dated 23.06.2016 in appeal No. 176/15-16 passed by the learned Commissioner of Income Tax (Appeals)-II, New Delhi ("Ld. CIT(A)"), for assessment year 2009-10, in the case of Buniyad Developers Pvt. Ltd. ("the assessee"), the Revenue filed this appeal on several grounds involving the issue of adding capital gains arising out of sale of agricultural land for the purpose of computing book profit u/s. 115JB of the Income-tax Act, 1961 (for short "the Act").
2. Brief facts of the case are that the assessee is a company, deriving income from agricultural activities and earning from investments. For the assessment year 2009-10, they have filed their return of income on 30.09.2009 declaring nil income but paid tax on book profits u/s. 115JB of the Act at Rs. 5,73,70,009/-. The return was processed u/s. 143(1) of the Act. Subsequently, during the assessment proceedings relating to assessment year 2010-11, ld. Assessing Officer noticed that the assessee claimed exempt income to the tune of Rs. 21,71,74,573/- on account of profit on sale of agricultural land and the ld. Assessing Officer treated the agricultural land as capital asset u/s. 2(14)(iii) of the Act and income arising out of transfer of such land under the head 'Long-term Capital gains'. On that, ld. Assessing Officer noticed that in F.Y. 2009-10 also, the lands were sold in part and that there has been no income declared in respect of its profits of Rs. 5,58,61,180/- earned on sale of land.
3. The Assessing Officer accordingly issued notice u/s. 148 of the Act and after hearing the assessee made an addition of Rs. 5,41,38,217/- with interest income of Rs. 21,90,212/-.
4. The assessee preferred appeal before the ld. CIT(A) and argued that income earned from sale of land is exempt u/s. 10 of the Act, as the land sold by the assessee was in village Kishora, which is more than 8 Kms. away from the Municipal limits. The assessee further argued that even for the purpose of section 115JB, the profits arising from sale of agricultural land cannot be added to the book profits under the provisions of section 115JB(2)(k)(ii) of the Act.
5. By the time of consideration of appeal for assessment year 2009-10 by the CIT(A), the first appeal preferred by the assessee in respect of assessment year 2010-11 was dismissed by the ld. CIT(A),the assessee carried the matter in appeal to Income-tax Appellate Tribunal and produced certificate issued by Tehsildar to show that the land in question was located more than 8 Kms away from the Municipal limit, the Tribunal set aside the order of CIT(A) and remanded the matter to the file of Assessing Officer for consideration of the evidence, and in the remand assessment, the Assessing Officer accepted the income earned from sale of land as exempt u/s. 10 of the Act, as the land sold was located more than 8 Kms from Municipal limits.
6. Taking note of such assessment order passed pursuant to the remand order by ITAT for assessment year 2010-11, the ld. CIT(A) found that since the village where the sold land was located was 8 Kms away from the Municipal limits, the very basis of Assessing Officer for reopening the assessment proceedings for the AY 2009-10 has no locus standi, as the Assessing Officer himself admitted the said fact. He, therefore, allowed the contention of the assessee on that ground.
7. Ld. CIT(A) further considered the contention of the assessee that u........