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2016 (5) TMI 923 - ITAT CHENNAI

2016 (5) TMI 923 - ITAT CHENNAI - TMI - Treatment of income arising out of EOU unit in Mumbai SEPZ - ‘income from capital gains’ as against ‘business income’ - Held that:- From the facts of the case it is apparent that the assessee had only transferred his right to occupy / possession of the unit to the buyer and had dismantled the machinery, furniture fittings etc., and shifted the same to his place of work in Chennai. It is also obvious that the right over the unit can only be treated as right .....

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Held that:- It is evident from the order of the CIT(Appeals) that he has examined the issue in detail and observed that the Debonding charges and name transfer expense were already excluded and only the balance amount of ₹ 2.38 crores was treated as capital gain of the assessee thereby any further disallowance would amount to double addition in the case of the assessee. For these reasons, the learned Commissioner of Income Tax (Appeals) had deleted the addition made on account of Debondin .....

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e ORDER Per A. Mohan Alankamony, AM:- This appeal is filed by the Revenue aggrieved by the order of the learned Commissioner of Income Tax (Appeals)- I, Chennai dated 19.02.2012 in ITA No.230/10-11 passed under section 153A r.w.s.153C, 143(3) & 250 of the Act. 2. There was a delay of 5 days in filing this appeal by the Revenue. The Revenue has filed an affidavit explaining the reasons for the delay in filing the appeal by stating that, there was acute shortage of staff and the piled up year .....

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i SEPZ as income from capital gains as against business income . ii) The learned Commissioner of Income Tax (Appeals) has erred by deleting the disallowance made by the learned Assessing Officer towards de-bonding charges amounting to ₹ 12,48,237/- and name transfer expenses of ₹ 8,82,181/- as business expenditure. 4. Brief facts are that the assessee is a firm engaged in the business of export of pre-recorded video and audio cassettes from SEEPZ, Mumbai. There was a search in the pr .....

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from capital gains claimed by the assessee and further disallowed the expenditure incurred by the assessee towards de-bonding charges of ₹ 12,48,237/- and name transfer expenses of ₹ 8,82,181/- . 5. On appeal, the learned Commissioner of Income Tax (Appeals) has directed the Assessing Officer to treat the income returned by the assessee as income from capital gains and also deleted the addition made towards debonding charges & name transfer expenses, aggrieved by which the Revenu .....

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of income, the assessee declared the sale consideration as ₹ 2,38,00,000/- being the amount received towards the transfer of leasehold rights of the premises occupied by the assessee in the SEEPZ Mumbai and treated the same as income from capital gain . However, the learned Assessing Officer opined that the claim of the assessee was incorrect because the transaction is in the nature of business receipts and therefore it has to be taxed under the head income from business . On appeal, the .....

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and audio cassettes from SEEPZ, Mumbai. The appellant had been allotted a unit in this zone and the appellant was not the owner of this unit. The appellant decided to shift its business as it was not able to meet the competition at Mumbai. The rights in the unit in the Special Zone was given up in favour of another firm. According to the Assessing Officer, as the entire unit has been sold, the proceeds are only business receipts. According to the appellant, the unit cannot be transferred and on .....

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did not belong to the appellant. It had only rights over the unit which was transferred and this could only be a capital asset. The appellant is not in the business of real estate and in any case, the unit did not belong to the appellant. Therefore the sale of such rights can only be assessed under capital gains. In the circumstances, the Assessing Officer is directed to treat the income returned as income from capital gains. 7. The learned Departmental Representative vehemently argued in suppor .....

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y / possession of the unit to the buyer and had dismantled the machinery, furniture fittings etc., and shifted the same to his place of work in Chennai. It is also obvious that the right over the unit can only be treated as right of owning a license. Therefore, the learned Commissioner of Income Tax (Appeals) is justified in holding that the consideration received for transfer of such right being a capital asset to be assessable under the head income from capital gains . Hence we do not find it .....

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fficer to delete the addition because these amounts have already been reflected in the profit and loss account of the assessee and only the gross amount was returned as capital gains amounting to ₹ 2.38 crores. The learned Commissioner of Income Tax (Appeals) further observed in his order that the addition made by the learned Assessing Officer would amount to double addition. 10. The learned Departmental Representative vehemently argued before us by stating that the disallowance of these e .....

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