Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (9) TMI 250 - AT - Income TaxSetting off of the expenditure against the Capital gains - addition stating that there was no business and that the expenditure claimed is disallowed u/s 37 - HELD THAT:- It is an undisputed fact that though business of assessee came to a halt in the year 2010, yet the assessee was liquidating its assets. The assessee had only a leasehold rights on the land and it had to get the permission of SIPCOT for transfer of leasehold rights. The major portion of expenses claimed is on account of sales tax demand of ₹ 53.33 lakhs, property tax, audit fees, property maintenance, settlement amount paid on labour court’s order. It is therefore clear that all these expenses had to be incurred for proper liquidation of assets of the company. In identical circumstances, in the case of Lawrence D'Souza [2011 (9) TMI 212 - KARNATAKA HIGH COURT] took the view that expenditure in question had to be allowed in AY 1996-97, though business came to a halt in the year 1994 - expenses in question have to be allowed as a deduction. This issue is accordingly decided in favour of assessee. Capital gain on sale of land & building and leasehold rights - bifurcation of capital gain - short term capital gain - as per assessee same needs to be treated as short term capital gains for sale of building and long term capital gains for leasehold rights in land - HELD THAT:- On a plain reading of section 50 of the Act, it is clear that it is applicable for transfer of buildings and not for transfer of right in lease hold land. Therefore, the Capital Gains on the transfer of the right in lease hold land has to be computed under the normal provisions as Long Term Capital Gains and the Capital Gains on the transfer of the buildings has to be computed under the provisions of section 50 as Short Term Capital Gains. Observations of the CIT(Appeals) contrary to the aforesaid provisions are unsustainable and are hereby vacated. The ld. counsel for the assessee has in this regard rightly placed reliance on the decision of CIT v. Vimal Chand Golecha [1992 (12) TMI 33 - RAJASTHAN HIGH COURT] wherein it was held that when price of two capital assets is charged at one consolidated price, where a gain from one of capital assets was a short-term capital gain while from other it was a long term capital gain, then the assessee is entitled to bifurcate the same and benefit to assessee could not be denied in respect of gain arising from sale of an asset which could be considered as long-term capital gain. Set off of business loss and unabsorbed depreciation - As per section 32(2) of the Act, the unabsorbed depreciation is deemed to be current year's depreciation and can be set off against Capital Gains as per section 71 of the Act. The AO is directed to examine the claim of assessee for set off in the light of other observations in this order.
|