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2015 (10) TMI 534

ings and furnitures are not capital asset u/s 2(14) of the I. T. Act, thus AO has failed to assess the sum under the head “income from other sources” and therefore, held that the assessment order passed is both erroneous and prejudicial to the interests of the revenue - Held that:- As the list of the fittings and fixtures are not part of the record, we are unable to examine the nature of the asset and also as to whether they form part of the flat. The assets in question are fittings and fixtures in the flat. Even if they are not accepted to be part of the flat, whether the income from sale of such assets is taxable in the hands of the assessee as “income from other sources”?. The furniture and fittings are in the nature of personal effects .....

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T observed that the assessment order is erroneous, in so far as it is prejudicial to the interests of the Revenue. He, therefore, issued a notice u/s 263 of the Act, dated 28.01.2014, pointing out the error in the assessment order. According to the notice u/s 263, assessee had purchased a semi furnished flat at Yousufguda, Hyderabad admeasuring 1536 sft including car parking area and undivided share of land for a consideration of ₹ 6,81,000 on 29.05.2005 and the assessee had also entered into another agreement with M/s Vijay Krishna Promoters for complete development of flat for a consideration of ₹ 2,46,000. It was observed that the assessee had sold the said flat on 17.12.2008 for a consideration of ₹ 28,00,000 and that .....

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mitted that it was at the request of the purchaser of the flat that the total consideration received for the flat was bifurcated between the sale of the flat and sale of fittings and fixtures etc, and that this arrangement does not automatically alter the character of the consideration received. Therefore, it was submitted that the total consideration of ₹ 51.50 lakhs received, was in respect of sale of the flat alongwith fixtures and fittings and the assessee is eligible for exemption either u/s 54 or section 54F of the I. T. Act on the entire amount. 4. The ld CIT however, was not satisfied with the contentions of the assessee and held that the consideration of ₹ 23,50,000 received under a separate agreement towards sale of fi .....

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t listed in the document through which they are sold and there is no basis to hold that what is sold is not a capital asset and therefore erred in holding that they are not capital asset. 6. The learned CIT ought to have appreciated the fact that the assets income from which are assessed under the head property are nothinq but capital assets and further that if not deduction u/s.54 deduction u/s.54 F will be available being any other capital asset other than residential house and that the assessee has invested amounts required for such deduction also and thereby erred in passing order u/s.263. 7. Any other ground that may be urged at the time of hearing . 6. In addition to the above grounds, assessee has also filed the following application .....

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e results in capital gains. However, the Appellant has not taken the alternative ground that the entire amount of ₹ 23,50,OOO will go out of the purview of tax if the same are held to be 'not capital " asset' and therefore cannot be otherwise be taxed under the head 'Income from Other Sources'. The Appellant therefore with the leave of the Hon'ble Tribunal is raising the following additional ground: ADDITIONAL GROUND "On the facts and in the circumstances of the case, the learned Commissioner of Income Tax failed to appreciate that if the 'fittings and fixtures' which are part of flat does not fall within the meaning of 'capital asset' then, by the same reason they become personal asset of .....

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r needs no fresh verification of facts. Therefore, in the light of the judgment of the Hon'ble Supreme Court in the case of NTPC (Supra), we are inclined to admit the additional grounds of appeal. The facts mentioned above are not disputed by either of the parties. As pointed out by the ld Counsel for the assessee even if the fittings and fixtures are not treated as part of the flat, as rightly pointed out by the assessee, they cannot be treated as capital asset as well and they become the personal assets of the assessee. The ld Counsel for the assessee had placed reliance upon the judgment of the Hon'ble Delhi Court in ITA No.655/2014 in the case of Shri Sachinder Mohan Mehta vs. ACIT, wherein, on similar set of facts, the Hon' .....

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