TMI Blog2016 (7) TMI 1133X X X X Extracts X X X X X X X X Extracts X X X X ..... by the impugned order dated 20/05/2014 of the Ld. First Appellate Authority, Mumbai. The only ground argued by the assessee is with respect to penalty imposed u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter the Act) by claiming that quantum addition has been deleted by the Tribunal for which the ld. counsel filed a copy of the order dated 15/07/2015 (ITA No.3258/Mum/2012). This factual matrix was not controverted by the ld. DR. 2. We have considered the rival submissions and perused the material available on record. In view of the above, we are reproducing hereunder the relevant portion from the aforesaid order dated 15/07/2015, wherein, the quantum, on the basis of which penalty was imposed, was deleted by the Tribunal, affirmin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n not allowing depreciation on the property which was held for more than 40 years and also submitted that the long term capital gains of 99 years lease should be calculated after taking into consideration the indexation value as on 01.04.1981 as prescribed in Section 55(2)(b) of the Act. 3. Facts necessary for disposal of the appeal are stated in brief. Assessee was engaged in the business of manufacture of Hydraulics Systems and Components. During the financial year 2007-08 assessee stopped its business and all the assets were sold for a consideration of 7.20 crores. Assessee firm declared long term capital gains of ₹ 5,79,63,425/- whereas the cost of building was shown at ₹ 67,000/- and valuation of land and building as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived on the leasehold rights and the building situated on it and the purchaser has paid an amount of ₹ 19,14,440/- to MIDC as differential premium. Notice under section 133(6) was issued to the Area Manager of MIDC seeking certain information with regard to the guidelines of assigning leasehold rights to M/s. Meyer Organics P. Ltd. The MIDC submitted that as per Corporation guidelines the differential premium works out to ₹ 19,14,400/- because of the fact that the previous rate was ₹ 14/- whereas the current rate was ₹ 6,000/- per sq.ft. The cost of acquisition of leasehold rights accordingly worked out to ₹ 44,772/- in the hands of the assessee and the cost at the time of transfer by the assessee works out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 7. As regards sale price of the building it was submitted that the cost of the building in the year 1966 was approximately ₹ 67,000/- which consists of factory admeasuring 627.34 sq.mts., office admeasuring 222.40 sq.mts. and toilet admeasuring 18.31 sq.mts. Even if the said building is constructed new now the total cost of construction will be around ₹ 87,00,000/- as against ₹ 5.27 lakhs worked out by the AO. The AO had taken the cost of construction at ₹ 8,000/- per sq.mt. For a building constructed in 1966 no person will purchase the same at that price. It was therefore submitted that the amount paid by the purchaser was on account of the land cost. 8. The learned CIT(A) examined the issue and observ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12,000/- arrived at by the AO, However, while arriving at this figure he had taken into consideration the WDV of the building and directed the AO to work out the short term capital gains on the building as per section 50 of the I.T. Act. 10. It could thus be seen that the learned CIT(A) allocated ₹ 5,28,12,000/- towards value of land and the balance towards cost of building. The Revenue challenged the order passed by the learned CIT(A) whereas in the cross objections the assessee contends that the market value as computed under section 55(2)(b) has to be taken into consideration in the case of the building, which is more than 40 years old. It is not in dispute that the building is more than 40 years old. As per the Annexure to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e we dismiss the appeal filed by the Revenue. 2.1. In the aforesaid order, on quantum addition, the Tribunal vide aforesaid order dated 15/07/2015 dismissed the appeal of the Revenue and decided the issue in favour of the assessee. The quantum addition was deleted on the basis of which penalty was levied/confirmed. In view of this factual matrix, we are of the view that penalty imposed u/s 271(1)(c) will not survive. Our view find support from the decision in K.C. Builders vs ACIT (2004) 265 ITR 562 (SC) and the ratio laid down in CIT vs S.P. Viz, 176 ITR 76 (Patna). Even otherwise, when the quantum addition is deleted, there remains no basis at all for levying the penalty for concealment or furnishing inaccurate particulars. The pena ..... X X X X Extracts X X X X X X X X Extracts X X X X
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