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Khanna Ice and Cold Storage Pvt. Ltd. Versus ITO 10 (3) (4) , Mumbai

2016 (9) TMI 1183 - ITAT MUMBAI

Applicability of section 50 on transfer of building - non-depreciable asset - calculation of short term capital gain against long term capital gain claimed by the appellant - Held that:- In the present case no asset is depreciable asset, hence provisions of section 50 are not applicable and since plot and construction being an investment, for earning rent therefore, for the purpose of calculating long term capital gain indexed cost is to be calculated for both plot as well as structure. - AO dir .....

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ble” has been incorporated only w.e.f. 1.10.2009 (Finance Act 2009), therefore, provision of section 50C will not apply on unregistered documents. Hence learned CIT(A) wrongly confirmed the action of the Assessing Officer regarding substitution of full value consideration from ₹ 1200/- per square meter to ₹ 1300/- square meter by applying provisions of section 50C of the Income Tax Act. Even otherwise no opportunity of being heard was granted before switching over from ₹ 1200/- .....

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2. Following additional grounds raised by the assessee :- 1) The learned CIT(A) erred in confirming the applicability of section 50 on transfer of building and accordingly calculated short term capital gain against long term capital gain claimed by the appellant. 2) The learned CIT(A) erred in confirming the action of the AO regarding substitution of full value consideration from ₹ 1200/- per square meter to 1300/- per square meter without considering the facts that asset is transferred t .....

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vices such as supplying water, continuous electricity, maintenance of garden and other facilities that may be required. The assessee filed its return of income on 17.1.2006 declaring income of ₹ 6,09,698/- which was processed u/s. 143(1) and thereafter the assessment has been completed u/s 143(3) on 30.10.2008 determining total income at ₹ 42,53,560/-. During the course of assessment proceedings the Assessing Officer treated the income from capital gain as short term capital gain ins .....

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square meter. Aggrieved by the order of learned CIT(A), the assessee filed the appeal before us on the grounds mentioned herein above. Ground No. 1: 4. At the very outset, learned AR appearing on behalf of the assessee submitted that learned CIT(A) grossly erred in confirming the applicability of section 50 on transfer of building and accordingly calculated short term capital gains against long term capital gains. Learned AR submitted that section 50 is applicable only on depreciable asset but .....

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ose of business and therefore earning of rent from the premises/building was being treated as income from house property. Learned AR referred that rent received from the tenants was shown in the return and the same was being assessed under the head income from house property and the assessee has never claimed depreciation on the building and even no depreciation was allowed by the Department and therefore there is no application of section 50 of the Act. Lastly it was submitted that in those cir .....

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eciation : In respect of depreciation of : (i) Buildings, machinery, plant or furniture, being tangible assets; (ii) Know-how, patents, copyrights, trademarks, licences, franchisees or any other business or commercial rights of similar nature, being intangible assets acquired on or after the 1st day of April, 1998, owned wholly and partly, by the assessee and used for the purposes of the business or profession the following deductions shall be allowed. After analyzing the same, we are of the opi .....

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ble as the same being a special provision for computation of capital gains in the case of depreciable assets. In the present case no asset is depreciable asset, hence provisions of section 50 are not applicable and since plot and construction being an investment, for earning rent therefore, for the purpose of calculating long term capital gain indexed cost is to be calculated for both plot as well as structure. We rely upon the decision in the case of Divine Construction Co. Vs. ACIT (49 SOT 6) .....

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assessee be accepted as such . We also rely upon the decision in the case of CIT Vs. Santosh Structural & Alloys Ltd. (20 taxmann.com 501)(Punjab & Har), wherein it was held that whether once Tribunal had recorded a categorical finding of fact that plant and machinery, which is covered by section 50, would be a depreciable asset and not one on which no depreciation was ever claimed, then such assets, which were not depreciable, could not ever be assessed under section 50. 7. Having regar .....

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. Ground No. 2&3 are taken together. Regarding these grounds learned AR submitted that learned CIT(A) erred in confirming the action of the Assessing Officer regarding substitution of full value consideration from ₹ 1200/- per square meter to ₹ 1300/- square meter. The Assessing Officer has no power to substitute value shown by the assessee. Learned AR further submitted that since the asset was transferred through unregistered document therefore provision of section 50C is not ap .....

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rent on the face of the record that the word assessable was introduced w.e.f. 1.10.2009 and the asset in the present case was transferred through unregistered documents therefore from bare perusal the provisions of section 50C are not attracted in the case of the assessee. In the instant case the assessee has transferred the asset through unregistered Deed of assignment the said fact is undisputed as the same has been mentioned by the Assessing Officer in the assessment order. Moreover the asses .....

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