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TMI Blog2013 (11) TMI 682X X X X Extracts X X X X X X X X Extracts X X X X ..... eement dated 2.5.2006. The said office premises was purchased by assessee on 9.9.1992 for Rs.41,28,500/-, which was used for its business purposes. That the assessee claimed depreciation on the above premises and its Written Down Value (WDV) as on 31.3.2006 was Nil. That the assessee has shown receipt of Short Term Capital Gain (STCG) of Rs.67,89,750/-. 4. During the assessment year under consideration, the assessee stated that it spent an amount of Rs.54,82,250/- to purchase new office premises (i) vide agreement dated 20.3.2007 being Flat No.704, 7th floor of Jogani Apartment at Village Kole Kalyan, Kalina, Mumbai for Rs.14,00,000/- and (ii) vide agreement dated 8.3.2007 being Flat No.806 at 8th Floor, Jewel Tower, Kalina CST Road, Opp. Vidya Nagri University, Manipada Road, Santacruz (W), Mumbai-400098 for Rs.37,15,000/-. That the assessee paid total stamp duty of Rs.2,20,950/- and other expenses. Thus, the assessee claimed that actual cost of new office premises purchased during the assessment year under consideration was Rs.54,82,500/- (Rs.14,00,000 + Rs.37,15,000/- + Rs.2,20,950/- ) and formed part of the same block assets. Thus, the said cost of new office premises acquired ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of availing deduction u/s 54EC of the Act, the ld. CIT(A) decided the issue in favour of assessee by holding that the said issue is covered in favour of the assessee by the decision of Bombay High Court in the case of CIT V/s ACE Builders (P.) Ltd (supra) and accordingly, held that the assessee is entitled for exemption u/s 54EC of the Act in respect of investment of Rs.12,86,500/- made in REC Bonds. However, in respect of the issue of claim of assessee in deducting the cost of new office premises of Rs.54,82,500/- from the value of consideration received of Rs.67,68,750/- on sale of office premises at Prasad Chambers (ibid), ld. CIT(A) after seeking remand report from AO and also after considering the submissions of the assessee has held that the said new premises purchased by assessee had not been occupied by assessee before 31.3.2007. He has stated that the AO while submitting the remand report has also examined one Mr. Jayesh A Ichhaporia who claimed to have transported the assessee's furniture into the impugned premises before 31.3.2007, on which the assessee relied upon to show that the property was not only taken possession but was also occupied before 31.3.2007 and stated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the new premises acquired during the previous year relevant to the assessment year under consideration of Rs.54,82,500/- from the full value of consideration received of Rs.67,68,750/- on transfer of the said premises while computing capital gains u/s 50 of the Act as it forms part of block of assets. 13. At the time of hearing, ld. AR sated the facts, mentioned before the authorities below, which we have already stated hereinabove. He submitted that the ld. CIT(A) asked the remand report from the AO and the AO in his remand report itself confirmed that the builder handed over the possession of the premises to the assessee before 31.3.2007 and entered into an agreement, copies of which are placed at pages 63 to 151 of the paper book in respect of agreement entered into on 20.3.2007 and copies placed at pages 152 to 176 of the paper book of the agreement dated 8.3.2007 (supra). He submitted that assessee put to use the said newly acquired premises before 31.3.2007 for its business purposes. He submitted that even if the premises were not put to use, as per Clause (iii) of section 50(1) of the Act, the only requirement is to acquire the assets during the previous year and the actual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt the case law cited by ld AR (supra). 15. We have carefully considered the submissions of ld. Representatives of the parties and orders of authorities below. We observe that there is no dispute to the fact that the assessee sold its office premises in the assessment year under consideration at a cost of Rs.67,68,750/-, which was purchased on 9.9.1992 and was used for its business purpose. The assessee was admittedly claiming depreciation thereon and the WDV of the block assets at the beginning of the assessment year under consideration viz assessment year 2007-08 was nil. There is also no dispute that the assessee has acquired two flats being (i) Flat No.704, 7th floor of Jogani Apartment at Village Kole Kalyan, Kalina, Mumbai vide agreement dated 20.3.2007 and (ii) Flat being flat No.806 at 8th Floor, Jewel Tower, Kalina CST Road, Opp. Vidya Nagri University, Manipada Road, Santacruz (W), Mumbai-400098 vide agreement dated 8.3.2007 during the previous year relevant to the assessment year under consideration at a total cost of Rs.54,84,500/- and it forms part of block of assets. Thus, there is no dispute that the assessee had purchased two new premises during the previous year. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee is entitled to take actual cost of new premises aggregating to Rs.54,82,500/- which falls within the block of asset during the previous year to be deducted from the value of consideration received of Rs.67,68,750/- on transfer of earlier business premises whose WDV was NIL, while computing the capital gains u/s 50 of the Act. Therefore, Grounds No.1 and 2 of the appeal taken by assessee are allowed by reversing the orders of authorities below. 16. Now, we take up the appeal filed by Revenue being ITA No.6052/Mum/2011. 17. The department has taken following grounds of appeal. "1. On the facts and circumstances of the case and in law, the ld. CIT(A) erred in holding that the assessee is entitled for deduction u/s 54EC ignoring the fact that the capital gains arose from short term capital gain and the exemption u/s 54EC is available only for long term capital gain; 2. On the facts and circumstances of the case and in law, the ld. CIT(A) erred in relying on the decision of the Hon'ble Bombay High Court in the case of CIT V/s ACE Builders Pvt Ltd, wherein it was held that even if the assets were depreciable, but held for more than 36 months, the sale proceeds could be invested ..... X X X X Extracts X X X X X X X X Extracts X X X X
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