Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (4) TMI 647 - ITAT MUMBAI

2016 (4) TMI 647 - ITAT MUMBAI - TMI - Assessment of amount received on sale of premises as “Short Term Capital Gain” (STCG) - assessee declared STCG on sale of property u/s 50 - claim of the assessee is that the entire amount of STCG should be considered as business income and accordingly set off of brought forward business loss should be allowed against it. - Held that:- In the instant case, the sale proceeds realized over and above the cost of asset, in our view, cannot be categorized as busi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ent : Mrs.Radha Narang ORDER Per B R Baskaran, AM: The appeal filed by the assessee is directed against the order dated 14.09.2010 passed by Ld CIT(A)-7, Mumbai and it relates to the assessment year 2006-07. 2. The assessee is aggrieved by the decision of the ld.CIT(A) in confirming the assessment of amount received on sale of premises as Short Term Capital Gain (STCG). 3. The facts relating to the issue are stated in brief. The assessee had borrowed loan of ₹ 3.25 crores from M/s Kenilwor .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

a property belonging to the assessee was taken control by the custodian and it was decreed to be sold in settlement of amount due from M/s Kenilworth Investments Limited to M/s Dhanraj Mills Limited. We have earlier noticed that the assessee had taken loan from M/s Kenilworth Investments Limited, which in turn had borrowed money from M/s Dhanraj Mills Ltd. The property belonging to the assessee was auctioned for a sum of ₹ 6,80,12,659/-. The assessee had claimed depreciation on the propert .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f of business loss of the current year and also brought forward unabsorbed depreciation. 4. It is pertinent to note that the assessee had taken certain alternative contentions before the AO, i.e., the assessee had claimed that the sale consideration of the property was not taxable, since it was not transferor of the assets, it did not derive any benefit from such sale and hence no real income had accrued to it. The assessee also put up another claim that brought forward business loss should have .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of the loan payable by it to M/s Kenilworth Investments Limited and accordingly held the assessee has derived income from sale of the asset. He further held that the loan amount taken from M/s Kenilworth Investments Limited cannot be considered as cost of transfer. With regard to the decision in the case of J K Chemicals (supra) relied upon by the assessee, the AO took the view that the business loss to the extent of depreciation already allowed to the assessee and can be said to be eligible fo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t. Accordingly, the AO took the view that the sale proceeds to the extent of ₹ 81,34,682/- represents recovery of depreciation and accordingly held that the brought forward business loss can be allowed to be set off against STCG to the extent of ₹ 81,34,682/-. Accordingly the AO allowed set off of current year‟s business loss, brought forward depreciation and brought forward business loss to the extent of ₹ 81,34,862/-. 7. In the appellate proceedings, the ld.CIT(A) uphel .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rty. In this regard, he placed reliance on the decision rendered by the Hon‟ble Calcutta High Court in the case of Gopee Nath Paul and Sons V/s DCIT (2005) 278 ITR 240 (Calcutta). 9. On the contrary, the ld D.R submitted that the amount borrowed by the assessee has got no relation with the title of the property and hence the same cannot be considered as Cost of transfer. 10. We heard the parties on this issue and perused the record as well as the decisions relied upon by the assessee. The .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

es. Hence, we are of the view, that the facts prevailing in the instant case is distinguishable and hence the assessee cannot take support of the decision rendered in the case of Gopee Nath Paul and Sons (supra). 11. The Ld A.R also contended that the assessee did not derive any benefit from the sale of the property and hence no real income has accrued to it. However, as observed by the AO, the liability of the assessee against the loan taken from M/s Kenilworth Investments Limited has stood sat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

as Short term Capital gain in terms of deeming provisions of sec. 50 of the Act. Hence the brought forward business losses should be allowed to be set off against the STCG computed u/s 50 of the Act. In this regard, he placed reliance on the following case law:- (a) Lavish Apartment (P) Ltd Vs. ACIT (2012)(210 Taxmann 9) (b) Sri Padmavathi Srinivasa Cotton Ginning & Pressing Factory Vs. DCIT (125 TTJ (Visakha) 411). (c) Digital Electronics Ltd Vs. Addl. CIT (2011)(135 TTJ (Mum) 419). 13. We .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

depreciation to that extent. Under the provisions of sec. 41(2) of the Act that existed in the Statute prior to the insertion of sec. 50 of the Act, the amount recovered on sales to the extent of depreciation already allowed was taxed as balancing charge. We notice that the assessing officer has followed the same principle and accordingly held that the sale proceeds to the extent of ₹ 81,34,682/- can be considered as business income and accordingly allowed set off. 15. The claim of the as .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version