TMI Blog2014 (6) TMI 776X X X X Extracts X X X X X X X X Extracts X X X X ..... ain – Decided in favour of Assessee. - I.T.A. No. 734/Coch/2013 - - - Dated:- 6-6-2014 - Shri N. R. S. Ganesan, JM And B. R. Baskaran, AM,JJ. For the Petitioner : Shri C.B.M. Warrier, CA For the Respondent : Smt. Latha V. Kumar, Jr. DR ORDER Per B. R. Baskaran, Accountant Member: The appeal filed by the assessee is directed against the order dated 24- 09-2013 passed by the Ld. CIT(A)-V, Kochi and it relates to the assessment year 2005-06. 2. The assessee is aggrieved by the decision of the Ld. CIT(A) in confirming the assessment of short term capital gain of Rs. 12,12,740/-. 3. The facts relating to the above said issue are stated in brief. The assessee is assessed in the status of Association of Persons (hereinafter AOP ). The members of AOP are Shri A.V.Abdul Rahiman and Shri A.V. Nazar. It filed its return of income for the year under consideration declaring a loss of Rs.5,417/- and it was processed u/s. 143(1) of the Act on 04-03-2006. Subsequently, the Assessing officer noticed that the assessee has computed Short term capital gain by taking the Written Down Value of assets as Rs.20,87,710/-. However, the Written Down Value of assets as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid property was sold for a consideration of Rs.32,50,000/- through six conveyance deeds to a person named Shri D. Sudevan. Through each document, a portion of building as well as a portion of land was transferred. In the return of income, the assessee computed short term capital gain as under: Sale consideration Rs. 22,50,000.00 Less : Brokerage Rs. 67,500.00 Rs. 21,82,500.00 Less : WDV of Asset Rs. 20,87,710.00 . Rs. 97,790.00 However, the Assessing officer computed the short term capital gain as under: Sales Consideration Rs. 22,50,000 Less: brokerage on sale of Asset Rs. 67,500 Less WDV as per return of income for A/Y 2004-05 Rs.8,69,538 Rs. 9,37,038 Rs. 13,12,962 The AO has adopted the WDV value of assets at Rs.8,69,538/-, while the assessee had adopted the amount of WDV at Rs.20,87,710/-. 6. Before Ld CIT(A), it was contended that the AOP was formed only for the purpose of carrying on the lodging business and the property was continued to be owned by Shri A.V. Nazar and Shri A.V. Abdul Rehiman. Accordingly, it was contended that the Capital gain should have been assessed in the hands of the above said two persons and not in the hands of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... currence of fire accident and, in fact, the assessee did not disclose in lodging business income in the immediately succeeding two years. The AO had also noticed that the assessee had been showing consistent income during the years relevant to the assessment years AY 2003-04 and 2004-05 and hence held that the assessee could not have incurred any expense on improvement in AY 2003-04 and 2004-05, while successfully running the lodge. Further, it is pertinent to note that the assessee had claimed the expenses on improvement only in the revised returns of income filed for AY 2003-04 and 2004-05 and the said returns have been ignored by the AO. With regard to the claim of investment made by the members of AOP as per the requirements of sec. 54, the AO submitted that the same is not relevant in the assessee s case. 6.3 The ld CIT(A) held that (a) the AO was correct in adopting the WDV as per the Balance sheet at Rs.8,69,538/-, as the assessee had declared the sale consideration at Rs.22,50,000/- only instead of Rs.32,50,000/-. (b) the decision rendered by Hon ble Madras High Court in the case of Raka Food Products (supra) is not applicable, as the facts are different, i.e., in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me tax purposes, it is treated as a separate person . Hence, the immovable properties have to be necessarily to be held by the members of AOP on behalf of the AOP. Once the value of immovable property is brought into the books of the Association of Persons, in our view, it shall be treated as the property of the AOP for the purposes of income tax. 7.3 However, as per the AO, the assessee has shown only the value of first, second and third floors in the Balance Sheet and the value of ground floor were not shown. Hence, there is no dispute with regard to the first, second and third floors, i.e., both the parties are agreeing that their value has been shown in the Balance Sheet. Hence, in our view, the AO was justified in assessing the capital gain arising on the sale of first, second and third floors in the hands of the assessee herein. 7.4 With regard to the ground floor, we are of the view that the matter requires fresh examination at the end of the AO, since statement of both the parties contradicts with each other and further both the parties have failed to furnish relevant documents before us. Hence, the matter relating to the Ground floor is set aside to the file of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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