NALAPAD HOTELS AND CONVENTION CENTRE,BENGALURU V. ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(3), BENGALURU

MA 49/BANG/2025

AI Insights

The case involves the Income Tax Appellate Tribunal (ITAT) in Bangalore, where the Assistant Commissioner of Income Tax, Central Circle 1(3), Bangalore, appealed against M/s Nalapad Properties and M/s Nalapad Hotels and Conversion Centre regarding the computation of capital gains for the assessment year 2017-18. Initially, the ITAT had set aside the issue to the Assessing Officer for fresh adjudication. However, the assessee filed Miscellaneous Applications citing a previous ITAT decision which had already resolved the taxability of capital gains for the same assessment year, leading to the rectification of the ITAT's earlier order.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 841657 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 3 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 26-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Appeal Filed On: 23-07-2025
• Other Referred Cases: ITA No.1297 & 1298/Bang/2024
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBRAMANIAN S
• Assessee Lawyers: V SRINIVASAN
• Keywords: Set aside; Capital asset; Capital Gains

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, BANGALORE BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI SOUNDARARAJAN K, JUDICIAL MEMBER ITA No.1958/Bang/2024 Assessment Year: 2017-18 The Asst. Commissioner of Income Tax, Central Circle – 2(3), Bangalore. Vs. M/s Nalapad Properties, No.23, 1st Cross, Magarath Road, Bengaluru – 560 028. PAN – AADFN 0541 L APPELLANT RESPONDENT In ITA No. 1959/Bang/2024 Assessment Year: 2017-18 The Asst. Commissioner of Income Tax, Central Circle – 2(3), Bangalore Vs. M/s Nalapad Hotels and Conversion Centre, No.19, Nalapad Chambers, K.G Road, Bangalore – 560 009. PAN – AAEFN 5563 D APPELLANT RESPONDENT M.P No.48/Bang/2025 (In ITA No.1958/Bang/2024) Assessment Year: 2017-18 M/s Nalapad Properties, No.23, 1st Cross, Magarath Road, Bengaluru – 560 028. PAN – AADFN 0541 L Vs. The Asst. Commissioner of Income Tax, Central Circle – 2(3), Bangalore APPELLANT RESPONDENT Printed from counselvise.com ITA No.1958 & 1959/Bang/2024 MP Nos.48 & 49 /Bang/2025 Page 2 of 7 M.P No. 49/Bang/2025 (In ITA No. 1959/Bang/2024) Assessment Year: 2017-18 M/s Nalapad Hotels and Conversion Centre, No.19, Nalapad Chambers, K.G Road, Bangalore – 560 009. PAN – AAEFN 5563 D Vs. The Asst. Commissioner of Income Tax, Central Circle – 2(3), Bangalore APPELLANT RESPONDENT Assessee by : Shri V Srinivasan, Advocate Revenue by : Shri Subramanian S, JCIT (DR) Date of hearing : 11.12.2025 Date of Pronouncement : 26.02.2026 O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: These Miscellaneous Applications (M.A. Nos. 48 & 49/Bang/2025) have been filed by the assessee seeking rectification/modification of the order passed by the Tribunal in ITA Nos. 1958 & 1959/Bang/2024 dated 24.04.2025, on account of an apparent mistake within the meaning of section 254(2) of the Income-tax Act, 1961 (“the Act”). 2. The Revenue had filed appeals before the ITAT in ITA Nos. 1958 & 1959/Bang/2024 relating to the computation of capital gains. The Tribunal, vide order dated 24.04.2025, disposed of the Revenue’s appeals by setting aside the issue to the file of the Assessing Officer (AO) for fresh adjudication. Printed from counselvise.com ITA No.1958 & 1959/Bang/2024 MP Nos.48 & 49 /Bang/2025 Page 3 of 7 3. However, the assessee, through the present Miscellaneous Applications, submitted that there were cross appeals filed by the assessee bearing ITA Nos. 1297 & 1298/Bang/2024, which were disposed of by the Tribunal vide order dated 16.08.2024, holding categorically that there was no tax liability under the head “Capital Gains” for the assessment year 2017-18. 3.1 It was further submitted that this fact was also noticed by the Bench while deciding the Revenue’s appeals on 24.04.2025. The learned Authorised Representative (AR) contended that once the Tribunal had held in the assessee’s appeals that the income under the head “Capital Gains” was not chargeable to tax for AY 2017-18 and the said finding had attained finality, the Revenue’s appeals could not have been set aside to the AO for fresh computation of capital gains. Accordingly, the learned AR prayed for rectification of the order passed in the Revenue’s appeals. 4. On the contrary, the learned Departmental Representative (DR) could not controvert the submissions made by the learned AR for the assessee. 5. We have heard the rival contentions of both the parties and perused the materials available on record. The provisions of section 254(2) of the Act empower the Tribunal to rectify any mistake apparent from the record. The expression “mistake apparent from the record” has been the subject matter of judicial interpretation by various Courts. An apparent mistake refers to an error which is manifest, obvious, and self- Printed from counselvise.com ITA No.1958 & 1959/Bang/2024 MP Nos.48 & 49 /Bang/2025 Page 4 of 7 evident from the record, and in respect of which two views are not possible. Such mistake may include: • Arithmetical or clerical errors • Wrong assumption of facts • Misapplication or misinterpretation of statutory provisions • Incorrect recording of facts 5.1 However, an issue requiring elaborate arguments, debate, or re- appreciation of facts and law cannot be treated as a mistake apparent from the record. An error of judgment cannot be corrected under section 254(2); the remedy in such cases lies before a higher forum. 5.2 On perusal of the record, we find that in the assessee’s own appeals (ITA Nos. 1297 & 1298/Bang/2024), the Tribunal vide order dated 16.08.2024 categorically held that the income under the head “Capital Gains” was not chargeable to tax for AY 2017-18. It is also evident that while disposing of the Revenue’s appeals dated 24.04.2025, the Tribunal had taken note of the said finding. The relevant finding of the order of the ITAT is reproduced as under: \"Thus, there cannot be any taxability of income in the assessment year 2017-18 as there was no whole or part sale of stock-in-trade in the assessment year under consideration. In view of the above discussion, this ground No.2 of appeals of the assessee is allowed.\" 5.3 However, despite such categorical findings having attained finality, the issue relating to computation of capital gains was set aside to the file of the AO for fresh adjudication. The relevant finding of the ITAT is extracted as under: Printed from counselvise.com ITA No.1958 & 1959/Bang/2024 MP Nos.48 & 49 /Bang/2025 Page 5 of 7 \"8.3 After considering the rival submissions we observe that it is an undisputed fact that the assesee has converted the capital asset into stock in trade in assessment year 2008-09 and thereafter entered into a Joint Development Agreement JDA] with M/s. Brigade Enterprises Ltd. We further observe that it is a so an admitted position of fact that the assessee has got the Occupancy Certificate with respect to completion o building of the developed area on 21/07/2016. It is a so an admitted position of fact that the co-ordinate bench of the ITAT in assessee's own case cited [supra] has categorically observed that year of taxability is not assessment year 2017-18 and it is the year when the assessee has sold the whole or part of the buildin Now the only issue which we require to adjudicate in departmental appeal is whether the Id. CIT(A] is correct in directing the AO to take the value at Rs. 3085.50 ps. Per sq ft. We are of the view that Id. CIT[A] is not an export for valuation purposes, therefore, this matter is to be referred to the valuation cell by the assessing officer to ascertain the correct valuation of the developed area and also the year of taxability of the amount in dispute. The AO will also examine in which year the assessee has sold the premises and has offered the income attributable to such sale. With these observations we restore this matter to the file of AO for examining afresh with a direction that the matter may be referred to the departmental valuation officer to decide in accordance with law. Needless to say, that the AO will grant sufficient opportunity to the assessee before passing any final order.\" 5.4 In our considered view, once it has been conclusively held that capital gains are not chargeable to tax in the year under consideration, the question of computation thereof becomes academic and infructuous. Setting aside the issue for fresh computation in such circumstances amounts to an inadvertent and apparent mistake on the face of the record. Accordingly, we hold that there exists a mistake apparent from the record within the meaning of section 254(2) of the Act, which warrants rectification. Accordingly, the order passed in ITA Nos. 1958 & 1959/Bang/2024 dated 24.04.2025 is hereby recalled. Hence the miscellaneous applications filed by the assessee are hereby allowed. 6. In the result, the Miscellaneous Applications filed by the assessee are allowed. Printed from counselvise.com ITA No.1958 & 1959/Bang/2024 MP Nos.48 & 49 /Bang/2025 Page 6 of 7 Coming to the Revenue’s appeals in ITA Nos. 1958 & 1959/Bang/2024: 7. At the outset, we note that in the assessee’s appeals (ITA Nos. 1297 & 1298/Bang/2024) vide order dated 16.08.2024, the Tribunal has categorically held that the income relating to capital gains is not chargeable to tax for AY 2017-18. The relevant finding of the ITAT is extracted as under: “29. We have heard the rival submissions and perused the materials available on record. In our opinion, the income generated from this transaction to be computed while on actual sale of super built up area allotted to the present assessee along ITA Nos.1297/Bang/2024 & SP 33/Bang/2024 Nalapad Properties, Bangalore ITA No.1298/Bang/2024 & SP 34/Bang/2024 Nalapad Hotels and Convention Centre, Bangalore Page 93 of 93 with parking area as discussed in para 7.31 to 7.37 of this order. This ground of appeals of the assessee is allowed. 30. In the result, assessee’s appeal in ITA No.1298/Bang/2024 is allowed. 31. The facts and circumstances in the case of M/s. Nalapad Properties in ITA No.1297/Bang/2024 for the AY 2017-18 is identical to the facts considered in the case of M/s. Nalapad Hotels & Conventions Centre, Bangalore in ITA No.1298/Bang/2024, being so, applying the ratio laid down in ITA No.1298/Bang/2024, the appeal of the assessee in ITA No.1297/Bang/2024 is also allowed.” 8. In view of the above categorical finding: • The grounds raised by the Revenue regarding computation of capital gains do not survive. • Once income under the head “Capital Gains” is held to be not chargeable to tax in the year under consideration, the issue of computation becomes immaterial. • The Revenue has not brought any material on record to show that the findings in the assessee’s appeals have been reversed or stayed by any higher judicial forum. Printed from counselvise.com ITA No.1958 & 1959/Bang/2024 MP Nos.48 & 49 /Bang/2025 Page 7 of 7 • No distinguishing facts have been pointed out between the assessee’s appeals and the Revenue’s appeals. 8.1 Accordingly, we find no merit in the appeals filed by the Revenue. The same are dismissed as infructuous. The grounds raised by the Revenue in both the appeals are hereby dismissed. 9. In the result, the appeals filed by the Revenue in ITA Nos. 1958 & 1959/Bang/2024 are dismissed. 10. In the combined result, the Miscellaneous Applications filed by the assessee are allowed, and the Revenue’s appeals are dismissed. Order pronounced in court on 26th day of February, 2026 Sd/- Sd/- (SOUNDARARAJAN K) (WASEEM AHMED) Judicial Member Accountant Member Bangalore Dated, 26th February, 2026 / vms / Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order Asst. Registrar, ITAT, Bangalore Printed from counselvise.com "