9911796707
TMI Blog2020 (3) TMI 420X X X X Extracts X X X X X X X X Extracts X X X X ..... during the year under consideration, the assessee sold five fully constructed units for a consideration of Rs. 5,07,62,001/-. These units were under consideration when purchased by the assessee in the preceding year i.e. Financial Year (FY) 2008-09 relevant to the AY 2009-10. On sale of these units in the year under consideration, the assessee applied the provisions of section 50 of the Act and since the sales consideration was less than the Written Down Value (WDV) of the block of assets, there was no Short Term Capital Gains (STCG). For the purpose of computation of the said capital gains, the assessee adopted the value as per the sale agreement, instead of the one by the Stamp Authorities. However, the AO was not convinced with the above treatment of the assessee for the reason that (i) as per the audited balance sheet of the year under consideration, in the Fixed Asset Schedule, these five units have been classified as Capital - Work - in - Progress (CWIP) and therefore, these units cannot form part of the block of assets; (ii) as the purchase of these units were completed only during the impugned assessment year, there was no evidence for these units having been put to use an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assets and also get benefit u/s 50(2) of the Act. Further, it is found by him that the assessee had taken possession of Ashok Tower C - 1803 & C-1804, Ashok Gardens E-2001, F-1901 & F-2001 on 29.04.2009. All these flats were registered in the assesssee's name on 23.12.2009 and the date of sale of the properties is 30.12.2009. The assessee had taken possession of flats only on 29.04.2009 and sold the same on 30.12.2009. Further, it is noted by him that no depreciation was claimed or allowed by the AO. All these five flats entered the block on 29.04.2009, exited the block as sale occurred on 30.12.2009. These flats were not existing in the block at the end of the assessment year. As these assets are not part of the block at the end of the impugned year, no depreciation was claimed by the assessee or allowed by the AO. The appellant filed an alternative ground on the above issue before the Ld. CIT(A) stating that its date of allotment of the said five flats is 01.04.2008 and this date must be considered as date of acquisition of the flats in view of the CBDT Circular No. 471 dated 15.10.1986 and Delhi High Court decision in CIT v. Ramakrishanan (ITA No. 114/2010 dated 18.03.2014). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to purchase the property located in Goa. Accordingly, the assessee sold all the 9 units during the impugned assessment year and out of the sale proceeds of the said flats so sold, the assessee purchased the property located in Goa. In the return of income for the impugned assessment year, the assessee claimed that there was no STCG, since the sale proceeds of 9 flats did not exceed the WDV of the block of assts of the assessee by virtue of section 50 of the Act. Further, it is stated by him that the AO in the assessment order for the impugned assessment year incorrectly alleged that the said five units whose possession were taken during the captioned assessment year would not form part of the block of assets on the alleged ground that they were classified as CWIP in the audited balance sheet of the captioned year. Elaborating further, it is stated that these units were classified as CWIP in the preceding financial year i.e. FY 2008-09 relevant to the AY 2009-10 when they were under construction and during the captioned assessment year, on the completion of construction they have been capitalized and shown as "Fixed Assets". Further, it is stated that the AO had not denied the be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceived on 29.04.2009 and the same were also treated as a part of the block of asset of the assessee - company. Indisputably, these 5 units were classified as CWIP in the preceding FY 2008-09 relevant to the AY 2009-10, when they were under construction and during the impugned assessment year, on the completion of construction, these were capitalized and shown as "Fixed Assets". The assessee's business was set up in the preceding Financial Year i.e. FY 2008-09 relevant to the AY 2009-10 and continued to be in existence during the year under consideration. In this context, we refer to the "Schedule forming part of Balance Sheet as on 31.03.2010" of the assessee which are at page 311 of the paper book. We refer here to section 50 of the Act. As per it, in certain cases, there can be capital gain on the transfer of depreciable assets, which form part of the block of assets. If the full value of the consideration as a result of transfer of any part or entire block of assets exceeds the cost of acquisition of that block of depreciable assets, there will be a capital gain, which will always be short term capital gain (STCG). For the purpose of computing the capital gains, the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the year under consideration. In appeal, the Ld. CIT(A) held that : "In this case when we examine the details mentioned in the assessment order, there were administrative expenses for Rs. 23,65,299/- including depreciation and this administrative expenses were incurred in the property in Goa which appellant had purchased during the year and which was furnished in which even the building, furniture and fixtures and office equipments were put up. As appellant has claimed the administrative expenses, it is clear that appellant would have used in his business because even furniture and fixture and office equipments were put up in the premises. AO is not right in not allowing the claim of depreciation and claim of expenditure. Here there was even expenditure of administrative expenses which shows that appellant had used the premises for business. It qualifies the condition of use for the purpose of depreciation as appellant already owned the assets which included in the block of assets. Hence, AO is directed to allow claim of depreciation and administrative expenses of the appellant as appellant's business was set up earlier and appellant had used the assets for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase price and sale price of shares shown by the assessee were much lower than actual price of the underlying assets of the companies and such transactions between related parties could not be considered as genuine transactions 15. During the preceding FY 2008-09 relevant to the AY 2009-10, the assessee had purchased shares of four independent private limited companies i.e. 10,000 shares of AAA Real Land Developers P. Ltd., 22,000 shares of Pavurotti Finance & Investment P. Ltd., 2,500 shares of JM Realty Management P. Ltd. and 1,500 shares of Lakeview Mercantile Co. P. Ltd. During the impugned assessment year, the assessee had purchased further 21,000 shares of Pavurotti Finance & Investment P. Ltd. Subsequently, during the impugned assessment year, all the above mentioned shares were sold by the assessee to an independent party name Whitecity Mercantile Pvt. Ltd. Accordingly, there was a loss on sale of shares of Rs. 2,21,11,150/- in the books. In the assessment order, the AO disallowed the short term capital loss on the ground that (i) the assessee's act of again acquiring these shares goes to prove that the sale of these shares are not borne out of real transaction, (ii) the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd incur the loss. It is also evident that appellant had sold these shares on credit basis by entering into an agreement. This shows the state of real estate at that time. As these transactions are carried out through a bank, while purchasing from Delta and sold on an agreement which was not disproved by AO even in remand report. Hence appellant's claim of short term capital loss has to be allowed. Considering it as genuine purchase and sales, appellant's claim of STCL of Rs. 2,21,11,150/- is allowed." 17. Before us, the ld. DR supports the order passed by the AO. On the other hand, the ld. counsel for the assessee supports the order passed by the Ld. CIT(A). 18. We have heard the rival submissions and perused the relevant materials on record. In the instant case, we find that the assessee has rightly valued the shares as per Rule 11UA of the Income Tax Rules, 1962 (the Rules) and filed a copy of it before the AO. Further the assessee had even obtained the valuation report from the registered valuer under Rule 11UA. In any case, the value of consideration for transfer of shares is far exceeding the valuation as per Rule 11UA. In the instant case, the AO has failed to poi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
