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2016 (7) TMI 1133 - ITAT MUMBAI

2016 (7) TMI 1133 - ITAT MUMBAI - TMI - Penalty u/s 271(1)(c) - Held that:- As the quantum addition is deleted, there remains no basis at all for levying the penalty for concealment or furnishing inaccurate particulars. The penalty cannot stand on its legs when addition on the basis of which the penalty was imposed remains no more in existence, thus, appeal allowed in favour of assessee. - ITA NO.5120/Mum/2014 - Dated:- 14-6-2016 - Shri Joginder Singh, Judicial Member, and Shri Ashwani Taneja, A .....

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e 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, affirming the stand of the Ld. Commissioner of Income Tax (Appeal). These cross appeals are dire .....

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- instead of ₹ 5,28,12,000/- as workout by Assessing Officer in a scientific way. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in directing the Assessing Officer to work out short term capital gain on building as per Section 50 of the Act of ₹ 87,12,170/- instead of ₹ 5,28, 12,000/- as work out by Assessing Officer. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in directing the Assessing Of .....

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ns 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 ₹ .....

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tained from the Maharashtra Industrial Development Corporation (MIDC). Since it was an assignment of tenancy rights, the AO was of the view that there is no sale of land involved and as per the provisions of section 55(2)(a) of the I.T. Act the purchase price is to be taken as the cost of acquisition. Since tenancy rights is covered by the provisions of section 55(2)(a), the market value as on 01.04.1981 need not be allowed to be substituted in the computation of long term capital gains. The AO .....

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received for land and building. In fact in the deed of assignment the total consideration has been received 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 th .....

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e is to be taken as the cost of acquisition and the market value as on 01.04.1981 is not allowed to be substituted. Despite the objection of the assessee he proceeded to compute the long term capital gains at ₹ 1,84,41,306/- and short term capital gains of ₹ 5,37,54,656/-. 6. Assessee submitted before the CIT(A) that the AO bifurcated the total consideration of ₹ 7.20 crores by taking the value of land at ₹ 1.91 crores and the balance amount of ₹ 5.28 crores as sale .....

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7/- per sq.ft. Even if the prevailing rate was 30% to 40% higher, as under the new government policy IT industries are to be promoted in that zone, with double FSI and also other availability of infrastructure. The value of the land which is sold will be approximately 7,00,00,000/- as against the value taken by the AO, i.e. ₹ 1.91 crores. 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 consist .....

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as on account of the land cost. 8. The learned CIT(A) examined the issue and observed that the Hon'ble Bombay High Court, in the case of D.K. Sandhu Bros. Chembur P. Ltd. 249 ITR 265 had considered identical issue wherein it was held that the tenancy right was a capital right and its transfer would attract capital gains. In the instant case the assessee acquired the leasehold rights for an amount of ₹ 44,772/- and this should be treated as cost of acquisition. 9. As regards computation .....

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larified that the Corporation has not considered the market value in above calculation of differential premium which highlights that the premium rates charged by MIDC is different from the actual market value. He also observed that the estimate made by the AO in arriving at the value of building has no basis. The assessee submitted before the AO that the value of the building should be taken at ₹ 87,12,170/- and the AO did not object to the working given by the assessee. He thus directed t .....

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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 the cross objections the rate of depreciation of old buildings should be worked out as per the method prescribed in the Ready Reckoner and in the instant case 30% of the value shou .....

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