Feedback   New User   Login      
Tax Management India. Com TMI - Tax Management India. Com
Acts / Rules Notifications Circulars Tariff/ ITC HSN Forms Case Laws Manuals Short Notes Articles SMS News Highlights
        Home        
Extracts
Home List
← Previous Next →

M/s. Indogem Versus ITO-19 (1) (5) , Mumbai

2016 (8) TMI 1095 - ITAT MUMBAI

Sale of depreciable asset / office premises - acquisition of new building - Computation of WDV versus Addition u/s 50(1)(iii) - Did the assessee acquire the office building for a consideration in the relevant previous year for the purposes of Sec. 50(1)(iii) of the Act? - Held that:- Sec. 50 of the Act does not contemplate use of property to complete the process of acquisition of property. Acquisition is a process whereby the rights of the parties are crystallized in unequivocal terms and each p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

inction between possession and occupation has to be kept in mind, which is relevant only for the purpose of determining the question of “use”, but not for the purpose of acquisition contemplated in Sec. 50(1)(iii) of the Act. Occupation could be equated to the term “use” as contemplated u/s 32 of the Act whereas it cannot be equated to the concept of possession to understand the completion of the process of acquisition in terms of Sec. 53A of the Transfer of Property Act. Here, in this matter, a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

end of the relevant financial year, that there was no agreement between the parties and there is no acquisition that took place during the relevant financial year. We hold that the assessee by his acts of parting with full sale consideration and gaining the ability to have every other person excluded from dealing with the property and by proceeding with the work of fit-outs has demonstrated that it acquired the property for the purposes of Sec. 50(1)(iii) of the Act. We hold the issue in favour .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n the relevant previous year. Here, prior to ending of the relevant financial year, though the assessee had an opportunity to take possession of the property for the purpose of fit-outs, he cannot say that he has put the property to use for the purposes of claim of depreciation under Sec. 32 of the Act either in respect of building or machinery therein; as such, we hold that the assessee is not successful to show its entitlement to the relief of depreciation u/s 32 of the Act. - ITA NO. 3442/MUM .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Assessing Officer in respect of Assessment Year 2012-13. 2. Brief facts of the case for the purpose of disposal of this appeal are that the assessee is a firm engaged in the business of trading in cut and polished diamonds and filed return of income on 13.9.2012 declaring a total loss of ₹ 15,33,833/-. In the relevant previous year assessee sold its office premises, which was forming part of the block of assets, for a sum of ₹ 5,82,43,292/- whereas the written down value (WDV) of 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

-. In the return of income, no gain on transfer of depreciable asset being sale of a building for a sum of ₹ 5,82,43,292/- was declared u/s 50 of the Act. The claim of assessee was that the WDV of block of assets at the beginning of previous year was ₹ 1,04,62,779/- and after reducing the sale consideration of the building sold for ₹ 5,82,43,292/- and adding the cost of the new office premises acquired during the year of ₹ 13,27,07,432/-, the resultant WDV of the block of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

erty, and mere payment of full consideration does not ipso facto amount to acquisition of property for the purposes of Sec. 50(1)(iii) of the Act in the absence of possession or usage of the same. It is emerging from record that assessee stated before the Assessing Officer that insofar as Sec. 50 of the Act is concerned, possession or usage of the property is not mandatory, which is in contrast to Sec. 32(1) of the Act. However, the Assessing Officer was not satisfied with the submissions of 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

,029/- respectively, on the ground that the same were not put to use. The aforesaid points of difference between the assessee and the Assessing Officer were carried in appeal before the CIT(A). 4. The CIT(A), while agreeing with the Assessing Officer, opined that possession and usage of the property are sine qua non for holding that the assessee acquired the asset, as such, in the absence of possession and usage, the assessee cannot be said to have acquired the same. While holding so, the CIT(A) .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

addition of ₹ 4,77,80,513 made by the learned Assessing Officer to the Appellant s income as short term capital gains chargeable to tax u/s 50 on ground that actual cost of a new office of ₹ 13,27,07,432 was not deductible u/s 50(1)(iii) - as the same was not acquired and used for the purpose of the business during the year under appeal. The Appellant prays that the addition of ₹ 4,77,80,513 may please be deleted in appeal. 2. On facts and circumstances of the case and in law, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

aw, the learned Commissioner (Appeals) erred in sustaining the disallowance of deprecation of ₹ 60,029 made by the learned Assessing Officer on ground that the machinery in respect of which depreciation was claimed on block of assets was not used for the purposes of the business during the year under appeal. The Appellant prays that the disallowance of ₹ 60,029 may please be deleted in appeal. 4. Both the lower authorities erred in passing their respective orders without granting you .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ec. 53A of the Transfer of Property Act to state that acquisition is incomplete without possession or usage of the property. He placed reliance on a decision reported in Mysore Minerals Ltd. vs. Commissioner of Income Tax, (1999) 106 Taxman 166 (SC) in support of his contention. 7. On the other hand, it was argued by the ld. DR that though the assessee claims to have paid the entire sale consideration before issuance of allotment letter, according to the letter dated 27.2.2012 issued by the buil .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he 3rd & 4th floors no area is mentioned, whereas vide Occupation Certificate dated 14.12.2012 an area of 3285.18 sq. mtrs. was shown in respect of 4th floor. According to the ld. DR there was no property in existence before the end of the relevant financial year, as such, no question of acquisition of such non-existent property arises. 8. Basing on the above contention, the following points arises for our consideration. i) Did the assessee acquire the office building for a consideration of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

to the Assessing Officer confirming the contract of sale and handing over of the property, Part-Occupancy Certificates dated 27.7.2012 and 14.12.2012. 10. Except to the extent of existence or non-existence of the property, there does not seem to be much dispute in respect of the genuineness of these documents or assessee paying full sale consideration in respect of the building in question. As a matter of fact, the record does not reveal that the Assessing Officer has taken any steps in that di .....

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 property between the builder and the assessee. Agreement means set of promises forming consideration for each other. Law does not require that an agreement shall always be in writing or if reduced into writing, it shall be in a particular/specific format. As could be seen from the record, the allotment letter runs into so many clauses and, in our view, it answers the description of an agreement. When all the terms agreed upon by the parties are reduced into writing in detail, nothing more is r .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

extent of area is mentioned. It clearly shows that the structure was in existence as on the date of issuance of such Certificates. Further, the unequivocal statement of the builder that he handed over the building for fit-outs on 27.2.2012 goes unchallenged and un-impeached, and it clearly shows that by 27.2.2012 there was a structure containing the floor said to have been acquired by the assessee and the same was handed over to the assessee for the purpose of fit-outs. It is difficult to hold .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and issuance of Occupation Certificate by authorities. When once the proper covenant was executed with due compliance of stamp and registration requirement, it is a settled principle of law that the transaction relates back to the date of original agreement itself, as such, formal execution of the covenant would only evidence and reinforce the rights accrued under the allotment letter. 14. As rightly argued by the learned counsel for the assessee, Sec. 50 of the Act does not contemplate use of p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e assessee started with work of fit-outs, having discharged his obligation under the contract, his animus possidendi accompanies the act of corpus possidendi. The distinction between possession and occupation has to be kept in mind, which is relevant only for the purpose of determining the question of use , but not for the purpose of acquisition contemplated in Sec. 50(1)(iii) of the Act. Occupation could be equated to the term use as contemplated u/s 32 of the Act whereas it cannot be equated t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Discussion Forum
what is new what is new
 


Share:            

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members ||

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

Go to Mobile Version