TMI Blog2017 (11) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... dingly, we allow this inter-connected issue of the assessee’s appeal. Disallowing unabsorbed depreciation carried forward/ brought forward - Held that:- This issue is squarely covered by the decision of Hon’ble Gujarat High Court in the case of General Motors India (P.) Limited Vs. DCIT [2012 (8) TMI 714 - GUJARAT HIGH COURT] wherein the issue regarding unabsorbed depreciation available to assessee as on 01-04-2002 will be dealt in accordance with provisions of section 32(2) as amended by the Finance Act 2001 and not by the provisions of Section 32(2) of the Act as it stood before the amendment. Thus we direct the AO to re-compute the unabsorbed depreciation without any limitation in term of the decision. This issue of the assessee’s appeal is remanded back to the file of the AO and allowed for statistical purposes. Disallowance of interest on bank loan u/s 43B - Held that:- It is not justifiable to say that no payment has been made towards outstanding interest. Further, we find that the interest of ₹ 11,53,110/- is pertaining to the A.Y. 2007-08 which was disallowed in that year and hence, the same cannot be disallowed in this year also. Further, the reliance placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the addition of ₹ 22,06,779/- under the head Short Term Capital Gain is without any basis and the same may be deleted. ii. The Ld. CIT(A) failed to appreciate that the factory building with furniture and fixtures has been transferred in the previous year relevant to the Assessment Year 2011-12. Hence, the Appellant has declared the Long Term Capital Gain on sale of factory premises in the next Assessment Year 2011-12. The Appellant, therefore, prays that the addition on account of Short Term Capital Gain amounting to ₹ 22,06,779/- is unjustified and the same may be deleted. 3. Addition on account of Long Term Capital Gain on sale of factory land unjustified - ₹ 24,32,370/-: i. The Id. CIT(A) erred in confirming the action of the Id. A.O. in making addition on account of Long Term Capital Gain on sale of factory land amounting to ₹ 24.32,370/- without appreciating the facts and circumstances of the case. ii. The Ld. CIT(A) failed to appreciate that the factory land was transferred in the previous year relevant to Assessment Year 2011-12. Thus, the Appellant has declared the Long Term Capital Gain on sale of factory land in the next A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the Purchasers, which was registered on same date. On execution of the said Sale Deed assessee received balance amount of ₹ 20,00,000/- and handed over the possession said of the said property to the Purchaser. It was claimed by the assessee that the actual transfer has taken place on 09.12.2010 i.e. in the A.Y. 2011-12. The assessee has offered the STCG of ₹ 22,06,779/- derived from sale of factory building and LTCG of ₹ 24,32,370/- derived from sale of land in the A.Y. 2011-12 and department also accepted the same in the A.Y. 2011-12. 4. But according to AO, in the agreement of sale at page 4 point 4(a), it is mentioned that a sum of ₹ 65,00,000/- paid by way of earnest money on execution of the agreement dated 26-02-2010 vide cheque No. 0271659 of HDFC bank Ltd. through RTGS to Shamrao Vithal Co-op Bank Ltd A/c of the Maniar Injectoplast Pvt. Ltd. (assessee) and the balance amount will be paid at the time of Sale deed. As per this agreement of sale, it is evident that the assessee has received payment in the month of Feb, 210 and not in the month of June 2010 as alleged by the assessee. It is a settled position that, even if the sale consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plastic molded articles. During the relevant assessment year, assessee availed the cash credit and Term Loan facilities from the Shamrao Vithal Co-op Bank Ltd against the security of the Industrial Plot with Industrial shade at Gat No. 1233. Sanaswadi. Tal-Shirur, District-Pune owned by the assessee (Including land and factory building along with furniture and fixture. Further due to the financial crisis assessee decided to sell the said plot and shade. Thus, the assessee entered into an Agreement to Sale' on 26.02.2010 with Mr. Sunil Nagarhalli and others (Purchasers). A copy of the said agreement is enclosed at pages 1 to 18 of the assessee s paper book. As per clause 4(a) of the said agreement total consideration was ₹ 85,00,000/- out of consideration was ₹ 85,00,000/- out of which Appellant received an amount of ₹ 65.00,000/- as an earnest money which was ultimately paid to the Shamrao Vithal Co-op Bank Limited to relinquish the charge on secured assets in the form of Land and Factory building along with furniture and Fixture. A copy of the continuation of the Bank for receipt of payment is enclosed at pages 19 of the paper book. The said bank handed over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ser in possession of immovable property, he was not required to pay capital gains tax. The law was amended to rectify this loophole and the clause 'v' was inserted in the section 2(47) of the Act. Till recently it was interpreted in layman's language that possession is synonymous with transfer. It was believed that the possession of immovable property is a transaction and liability for capital gains tax arises when this transaction of possession takes place. However, recent decision of Hon ble Bombay High Court in the case of Chaturbhuj Dwaarakadas Kapadia vs. CIT (2003) 260 ITR 491 (Bom.) has compelled many assessee's to rethink as to the correct interpretation of clause (v) of section 2(47) whether transaction of possession or whether transaction means transaction of possession or whether transaction means act of entering into an agreement laying down the terms and conditions about possession of immovable properties. In view of the above facts and circumstances, we are of the considered view that the AO as well as CIT(A) has gone wrong in interpreting the facts of the case and hence, we are of the view that the transfer of the above stated property took place only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of General Motors India (P.) Limited Vs. DCIT [2013] 354 ITR 244 (Gujarat), wherein the issue regarding unabsorbed depreciation available to assessee as on 01-04-2002 will be dealt in accordance with provisions of section 32(2) as amended by the Finance Act 2001 and not by the provisions of Section 32(2) of the Act as it stood before the amendment. Hon ble Gujarat High Court in General Motors India (P.) Limited (supra), finally held as under: - 37. The CBDT Circular clarifies the intent of the amendment that it is for enabling the industry to conserve sufficient funds to replace plant and machinery and accordingly the amendment dispenses with the restriction of 8 years for carry forward and set off of unabsorbed depreciation. The amendment is applicable from assessment year 2002-03 and subsequent years. This means that any unabsorbed depreciation available to an assessee on 1st day of April, 2002 (A.Y. 2002-03) will be dealt with in accordance with the provisions of section 32(2) as amended by Finance Act, 2001 and not by the provisions of section 32(2) as it stood before the said amendment. Had the intention of the Legislature been to allow the unabsorbed depreciation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sorbed depreciation becomes the depreciation allowance for such succeeding year. We are of the considered opinion that any unabsorbed depreciation available to an assessee on 1st day of April 2002 (A.Y. 2002-03) will be dealt with in accordance with the provisions of section 32(2) as amended by Finance Act, 2001. And once the Circular No.14 of 2001 clarified that the restriction of 8 years for carry forward and set off of unabsorbed depreciation had been dispensed with, the unabsorbed depreciation from A.Y. 1997-98 upto the A.Y. 2001-02 got carried forward to the assessment year 2002-03 and became part thereof, it came to be governed by the provisions of section 32(2) as amended by Finance Act, 2001 and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever. Respectfully following the Hon ble Gujarat High Court in General Motors India (P) Limited (supra), we direct the AO to re-compute the unabsorbed depreciation without any limitation in term of the decision. This issue of the assessee s appeal is remanded back to the file of the AO and allowed for statistical purposes. 11. The next issue in this appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cable to the facts of the Appellant's case. Hence, the addition of ₹ 6,88,237/- under section 41(1) of the act is unjustified and the same may be deleted. 10. Addition on account of outstanding liability under section 41(1) of the Act ₹ 3,20,008/-. The CIT(A) erred in confirming the action of the Ld. A.O. in making addition of ₹ 3,20,008/- under section 41(1) without appreciating the fact that there is no cessation of liability of M/s. Agrawal Plastics. Hence, the addition of ₹ 3,20,008/- made under section 41(1) of the Act and the same may be deleted. 14. Brief facts relating to as regard to the issue of above ground 8 regarding disallowance of interest of ₹ 19,23,194/- are that the AO noted that for AY 2006.07 the assessee claimed interest expenditure of ₹ 76,937/- in the P L Account but not offered any disallowance under section 43B of the Act and no payment such amount was made during the year. It is verified from the record, the assessee has not disallowed this interest expenses under section 43B of the Act and there is no proof of payment has been furnished. According to him similar are the facts for AY 2007-08 where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated to prior period expenses. Hence, even on payment basis such expenditure cannot be allowed. Thus, the disallowance of ₹ 7,70,084/- is also sustained. Aggrieved, assessee is in second appeal before Tribunal. 16. We have heard the rival contentions and gone though the facts and circumstances of the case. As regards to Ground No. 8 i.e. the disallowance of interest of ₹ 19,23,19/- u/s 43B of the Act, we find that the interest received by the bank on settlement of the outstanding Loan Cash credit Account of ₹ 7,70,084/-. The AO has made addition of ₹ 11,53,110/- considering that the assessee has not made any payment during the year but settled the account with the bank. We have noted the fact that the AO has not appreciated the fact that the assessee has paid the entire amount of ₹ 65 lacs received as earnest money from sale of land and factory building to the Shamrao Vithal Co-op Bank Ltd for paying off outstanding dues inclusive of outstanding interest and on receipt of the said amount the Bank has sealed the loan account. Thus, it is not justifiable to say that no payment has been made towards outstanding interest. Further, we find that the int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also allowed. 20. The next issue in this appeal of assessee is addition on account of outstanding liability under section 41(1) of the Act and re-computation of book profit under section 115JB of the Act on sale of property. For this assessee has raised following ground No. 11: - 11. Re-computation of book profit under section 115JB after including the income from sale of property unjustified ₹ 79,37,299/-. The Ld. CIT(A) erred in confirming the action of Ld. AO in determining the book profit at ₹ 79,37,299/- under section 115JB of the Act after considering the capital gain on sale of property amounting to ₹ 1,43,04,691/- and immovable property of ₹ 85,00,000/-. The appellant prays that the addition made to the book profit under section 115JB of the Act is unjustified and the same may be deleted. 21. At the outset, the learned Counsel for the assessee stated that he has instruction from the assessee not to press this ground and accordingly, the same is dismissed as not pressed. 22. In the result, the appeal of assessee is partly allowed for statistical purposes. Order pronounced in the open court on 25-10-2017. - - TaxTMI - TM ..... X X X X Extracts X X X X X X X X Extracts X X X X
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