SPICE ISLANDS APPARELS LTD, MUMBAI V. DCIT 3(3), MUMBAI

ITA 1101/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75575 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 13-02-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 15-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASHOK SURI
• Keywords: Sale consideration of property below Jantri Value; Depreciation; Opportunity of being heard
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENC H, MUMBAI .. , %, BEFORE S/SHRI B. R. BASKARAN, AM & AMIT SHUKLA, JM ./ ITA NO. 1101/MUM/2012 ( ' ' ' ' ' ' ' ' / / / / ASSESSMENT YEAR 2007-08) SPICE ISLANDS APPARELS LTD 125A MITTAL TOWER 210 NARIMAN POINT MUMBAI 21 / VS. THE DY COMMR OF INCOME TAX 3(3), MUMBAI ./PAN : AAACS5606D ( * /APPELLANT ) ( +,* / RESPONDENT ) * - / APPELLANT BY : SHRI JITENDRA JAIN +,* - / RESPONDENT BY : SHRI ASHOK SURI, DR - / /DATE OF HEARING : 13 TH FEB 2014 - / / DATE OF PRONOUNCEMENT : 19 TH , FEB2014 / O R D E R PER B R BASKARAN, AM : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 12.10.2011 PASSED BY LD CIT(A)-7, MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 2007-08. 2. THE SOLITARY ISSUE URGED IN THIS APPEAL RELATES TO THE VALIDITY OF COMPUTATION OF SHORT TERM CAPITAL GAIN OF RS.7,09,395/- ON SALE OF A FLA T, WHICH WAS DEPRECIABLE ASSET AND ALSO FORMED PART OF THE BLOCK BUILDING. 3. THE FACTS RELATING THERETO ARE STATED IN BRIEF. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD SOLD A FLAT FOR AN APPARENT CONSIDERAT ION OF RS.3,38,831/- AND DEDUCTED THE SALE VALUE FROM THE WDV OF THE BUILDING BLOCK WHI LE COMPUTING THE DEPRECIATION. THE AO SPICE ISLANDS APPARELS LTD 2 NOTICED THAT THE VALUE OF FLAT WAS DETERMINED AT RS .9,27,588/- UNDER THE STAMP ACT AND ACCORDINGLY TOOK THE VIEW THAT THE PROVISIONS OF SE C. 50C SHALL BE APPLICABLE TO THIS TRANSACTION AND HENCE THE SALE VALUE HAS TO BE CONS IDERED AS RS.9,27,588/-. THE AO NOTICED THAT THE WDV OF THE FLAT WAS SHOWN AT RS.2,18,193/- IN THE BLOCK BUILDING. HENCE THE AO ASSESSED THE DIFFERENCE BETWEEN THE AMOUNT OF RS.9, 27,588/- AND RS,2,18,193/- AS SHORT TERM CAPITAL GAIN. THE LD CIT(A) ALSO CONFIRMED TH E SAID ASSESSMENT BY FOLLOWING THE DECISION OF CO-ORDINATE MUMBAI BENCH OF ITAT IN THE CASE OF ITO VS. UNITED MARINE ACADEMY (9 ITTR 639). AGGRIEVED, THE ASSESSEE HAS FILED TH IS APPEAL BEFORE US. 4. THE LD A.R SUBMITTED THAT THE IMPUGNED ISSUE IS DECIDED AGAINST THE ASSESSEE BY THE SPECIAL BENCH DECISION RENDERED IN THE CASE OF (130 ITD 113). THE LD A.R FURTHER SUBMITTED THAT THE METHOD OF WORKING OF SHO RT TERM CAPITAL GAINS FOLLOWED BY THE ASSESSING OFFICER WAS NOT IN ACCORDANCE WITH THE SC HEME OF THE ACT. HE SUBMITTED THAT THE SALE VALUE SHOULD HAVE BEEN DEDUCTED FROM THE WDV O F THE BLOCK IN WHICH THE FLAT FORMED PART. ACCORDINGLY, THE LD A.R SUBMITTED THAT THE ASSESSING OFFICER MAY BE GIVEN SUITABLE DIRECTIONS IN THIS REGARD. 5. WE HEARD LD D.R ALSO. THE ADMITTED FACT IS THAT THE FLAT, WHICH WAS SOLD BY THE ASSESSEE, WAS A DEPRECIABLE ASSET AND IT FORMED PAR T OF THE BLOCK BUILDING. THE LD A.R ALSO CONCEDED THAT THE PROVISIONS OF SEC. 50C IS AP PLICABLE TO THE FLAT, EVEN THOUGH IT WAS AN DEPRECIABLE ASSET, IN VIEW OF THE DECISION OF THE S PECIAL BENCH REFERRED SUPRA. NOW THE LD A.R HAS MADE AN ALTERNATIVE CONTENTION THAT THE AO SHOULD HAVE DEDUCTED THE SALE VALUE ADOPTED BY HIM FROM THE WDV OF THE BLOCK BUILDING , INSTEAD OF WORKING OUT THE SHORT TERM CAPITAL GAIN SEPARATELY. THE ALTERNATIVE CONTENTIO N PUT FORTH BY THE LD A.R IS A NEW CONTENTION AND HENCE, IN OUR VIEW, IT NEEDS TO BE E XAMINED AT THE END OF THE ASSESSING SPICE ISLANDS APPARELS LTD 3 OFFICER. ACCORDINGLY, WE SET ASIDE THIS ALTERNATIV E CONTENTION TO THE FILE OF THE AO WITH THE DIRECTION TO EXAMINE THE SAME, AFTER AFFOR DING NECESSARY OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, AND TAKE APPROPRIATE DECISION IN A CCORDANCE WITH THE LAW. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. 2 '2 - - ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH , FEB 2014 . - 8 19TH, FEB 2014 - SD/- SD /- ( AMIT SHUKLA) ( B R BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 8 DATED 19 TH FEB2014 .../ RAJ , SR. PS - +: ;: - +: ;: - +: ;: - +: ;:/ COPY OF THE ORDER FORWARDED TO : 1. * / THE APPELLANT 2. +,* / THE RESPONDENT. 3. <() / THE CIT(A)- 4. < / CIT 5. : +, , / DR, ITAT, MUMBAI 6. ' / GUARD FILE. / BY ORDER, ,: + //TRUE COPY// / // / ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI