M/s Pyne Properties Pvt Ltd, Kolkata V. I.T.O Wd - 5(2),kolkata, Kolkata

ITA 1791/KOL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4723 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 06-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 07-06-2013
• Court: TRIBUNAL
• Department Lawyers: S S ALAM
• Assessee Lawyers: S K TULSIYAN; SUBRATA DE FCA LD ARS
• Keywords: Capital asset; Depreciation; Cost of acquisition; Fair market value; Valuation report; Assessment record

Judgement Text

ITA NO. 1791/KOL/13 M/S. PYNE PROPERTIES P.LTD. 1 IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, KO LKATA BEFORE SHRI P.M.JAGTAP, ACCOUNTANT M EMBER AND SHRI S.S.VISWANETHRA RA VI, JUDICIAL MEMBER I.T.A. NO. 1791/KOL/ 2013 A.Y: 2008-09 M/S. PYNE PROPERTIES P.LTD VS. I.T.O WARD 5(2), K OLKATA PAN: AABCP 8138L (APPELLANT) (RESPONDENT) APPEARANCES BY: S/SHRI S.K.TULSIYAN, ADVOCATE & SUBRATA DE, FCA, LD.ARS FOR THE ASSESSEE SHRI S.S. ALAM, JCIT, SR. D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : 06-06- 2016 DATE OF PRONOUNCING THE ORDER : 05 -08-2016 O R D E R PER SHRI S.S. VISWANETHRA RAVI :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-VI, KOLKATA DATED 28-03- 2013 FOR THE ASSESSMENT YEAR 2008-09 ON THE FOLLOWI NG GROUNDS:- 1. THAT THE LD. CIT(A) ERRED IN COMPUTING THE TOTAL CAPITAL GAIN ON THE SALE OF THE ASSESSEE'S LAND AND BUILDING AT RS. 89, 43,205/- AS AGAINST RS. 36,12,1371- RETURNED BY THE ASSESSEE. I (A) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. A.O. ERRED IN REFERRING THE VALUATION OF THE ASSESS EE'S PROPERTY AS ON 01.04.1981 TO THE DEPARTMENTAL VALUATION OFFICER IN TERMS OF SEC. 55A(A) OF THE IT.ACT. ITA NO. 1791/KOL/13 M/S. PYNE PROPERTIES P.LTD. 2 1 (B) THAT THE LD. CIT(A) ERRED IN OBSERVING IN PAR AS 22 AND 23 OF HIS APPELLATE ORDER THAT THE ASSESSEE HAD ACCEPTED THE VALUATION OF ITS PROPERTY AS PER THE REPORT OF THE DEPARTMENTAL VALU ATION OFFICER. I (C) THAT WHILE COMPUTING THE TOTAL CAPITAL GAIN O F THE ASSESSEE AT RS. 89,43,205/-, THE LD. CIT(A) ERRED IN TAKING THE FAI R MARKET VALUE OF THE PROPERTY AT RS. 55,32,474/- AS PER THE REPORT OF TH E DEPARTMENTAL VALUATION OFFICER INSTEAD OF RS. 65,00,000 AS PER T HE REPORT OF THE APPROVED VALUER. 2. THAT THE LD. CITCA) ERRED IN DIRECTING THE LD. A .O. TO ASSESS LONG TERM CAPITAL GAIN OF RS. 68,19,615 AND ON THE SALE OF ITS BUILDING SHORT TERM CAPITAL GAIN OF RS. 21,23,5901-IN THE HAND OF THE ASSESSEE. 2 (A) THAT BOTH THE LD. A.O. AND THE CIT (A) ERRED IN REJECTING THE ASSESSEE'S CONTENTION THAT AS NO DEPRECIATION WAS A LLOWED ON ITS BUILDING IN THE COURSE OF ITS INCOME TAX ASSESSMENT , SEC. 50 OF THE INCOME TAX ACT HAD NO APPLICATION IN THIS CASE AND CONSEQUENTLY NO SHORT TERM CAPITAL GAIN COULD BE ASSESSED ON THE SA LE OF ITS BUILDING. 2(B) THAT EVEN AFTER ADMITTING IN PARA 22 OF HIS AP PELLATE ORDER THE FACT THAT NO DATA REGARDING GRANT OF DEPRECIATION ON THE ASSESSEE'S BUILDING IS AVAILABLE IN ITS ASSESSMENT RECORD, THE LD. CIT( A) ERRED IN DIRECTING THE LD. A.O. TO ASSESS SHORT TERM CAPITAL GAIN OF R S. 21,23,590 IN THE HAND OF THE ASSESSEE ON THE SALE OF ITS BUILDING. 2(C) THAT THE LD. CIT(A) ERRED IN BIFURCATING THE T OTAL ASSESSABLE CAPITAL GAIN IN THE RATIO OF 95% FOR LAND AND 5% FO R BUILDING SPECIALLY WHEN HE DIRECTED THE LD. A.O. TO TAKE THE COST OF T HE BUILDING AT NIL. 3. THAT, THE APPELLANT CRAVES LEAVE TO ALTER, AMEND , RESCIND AND SUBSTITUTE ANY OF THE ABOVE- MENTIONED GROUNDS AND ADD ANY FURTHER GROUNDS BEFORE OR AT THE TIME OF HEARING OF THE APP EAL. 2. THE ONLY OBJECTION IN THIS APPEAL FILED BY THE ASSESSEE BEFORE THE HON'BLE TRIBUNAL IS AGAINST THE COMPUTATION OF CAPITAL GAIN ON THE SALE OF ITS IMMOVABLE PROPERTY. THE FACTS LEADING TO THE GROUNDS TAKEN IN THIS APPEAL ARE THAT DURING THE ASSTT. YEAR 2008-09 THE ASSESSEE COMPANY SUBMITTED ITS RETURN SHOWING RENTAL INCOME FROM HOUSE PROPERTY, DIVIDEND AND LONG TERM CAPITAL GAIN. THE LONG TERM CAPITAL GAIN AROSE ON THE SALE OF ITS IMMOVABL E PROPERTY LOCATED AT 618 B.T.ROAD, KOLKATA-700115. THE PROPERTY CONSISTED OF A TWO STOREYED DILAPIDATED ITA NO. 1791/KOL/13 M/S. PYNE PROPERTIES P.LTD. 3 BUILDING (PLINTH AREA - 5000 SFT.) OVER A PLOT OF L AND ADMEASURING 4.36 ACRES OR 263.78 COTTAHS. THE REGISTERED VALUER ESTIMATED THE TOTAL VALUE OF THE PROPERTY AS ON 01.04.1981 AT RS.65,00,000/- CONSISTING OF LAND VALUE RS.56,37,000/-, BUILDING VALUE RS.6,82,000/-, VALUE OF ADDITIONAL ITEMS RS.L,80,000/-. 3. ON THE SALE OF THIS PROPERTY, THE ASSESSEE DISC LOSED A LONG TERM CAPITAL GAIN OF RS.36,12,137. AT THE ASSESSMENT STAGE THE A.O. HOWEVER HELD THAT THE PROPERTY SOLD BY THE ASSESSEE WAS A DEPRECIABLE ASS ET AND CONSEQUENTLY AFTER APPLYING THE PROVISIONS OF SEC. 50 OF I.T.ACT, HE COMPUTED SHORT TERM CAPITAL GAIN OF RS.3,94,10,577 ON THE SALE OF THE PROPERTY AS PER DETAILS GIVEN BELOW:- AS PER THE ASSESSEE AS PER THE LD.A.O. SALE PROCEED OF THE PROPERTY RS.4,24,71,800 RS.4,24, 71,800 LESS: EXPENSES INCURRED RS. 30,44,663 RS . 30,44,663 IN CONNECTION WITH THE SALE OF PROPERTY. --------- --------- ------------------ RS.3, 94,27,137 RS.3,94,27,137 LESS: COST OF ACQUISITION LESS: W .D.V OF THE OF THE PROPERTY. BLOCK OF ASSE T RS.16,560 AS PER THE REGISTERED VALUER REPORT, ITS FAIR MARKET VALUE AS ON 01.04.1981 RS.65,00,000. THE INDEXED COST OF ACQUISITION WAS RS.65,00,000X551/L00 RS.3,58,15,000 ____________ ITA NO. 1791/KOL/13 M/S. PYNE PROPERTIES P.LTD. 4 L.T.CAPITAL GAIN RS. 36,12,137 S.T CAPITAL GAIN U/S. RS. 3,94,10,577 50 OF THE I.T ACT 4. THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) AND CLAIMED THAT A MAJOR PORTION OF THE PROPERTY CONSISTED OF LAND ON WHICH NO DEPRECIATION WAS ADMISSIBLE. FURTHER SUBMITTED THAT IT WAS NOT CARR YING ON ANY BUSINESS AND HAD ONLY RENTAL INCOME. CONSEQUENTLY, NO DEPRECIATION W AS ADMISSIBLE EVEN ON THE BUILDING. IT ALSO EXPLAINED THAT ALTHOUGH AS PER IT S BALANCE SHEET, DEPRECIATION WAS SHOWN TO HAVE BEEN ALLOWED, BUT THE SAME WAS CO MPUTED AND DEDUCTED BY THE AUDITORS AS PER THE COMPANIES ACT BUT NO DEPREC IATION WAS EITHER CLAIMED OR ALLOWED IN ITS INCOME TAX ASSESSMENTS. THE ASSESSEE CONTENDED THAT THE A.O. WAS THEREFORE NOT JUSTIFIED IN COMPUTING SHORT TERM CAPITAL GAIN IN TERMS OF SEC.50 OF THE .ACT. 5. FROM PARA-7 OF THE APPELLATE ORDER IT APPEARS T HAT THE CIT(A) FORWARDED A COPY OF THE WRITTEN SUBMISSION FILED BY THE ASSESSE E BEFORE HIM TO THE A.O. FOR A REMAND REPORT. HE ALSO DIRECTED THE A.O. TO REFE R THE VALUATION OF THE ASSESSEE'S LAND AS ON 01.04.1981 TO THE VALUATION C ELL. BY A LETTER DATED 14.01.20L3 THE A.O. REQUESTED THE DISTRICT VALUATI ON OFFICER TO SUBMIT A VALUATION REPORT SHOWING VALUATION OF THE ASSESSEE' S LAND AS ON 01.04.1981 AND A COPY OF SUCH LETTER IS FILED IN THE PAPER BOOK. THE VALUATION OFFICER SUBMITTED A VALUATION REPORT DATED 07.03.20L3 TO TH E A.O. WITH A COPY TO THE ASSESSEE SHOWING THE VALUE OF THE ASSESSEE'S LAND A S ON 01.04.1981 AT RS.55,32,474/-, WHICH IS AVAILABLE IN THE PAPER BO OK. 6. THEREAFTER, THE ASSESSEE FILED A WRITTEN SUB MISSION DATED 20.03.20L3 BEFORE THE CIT(A) IN WHICH HE AGREED TO ACCEPT THE VALUATION OF THE ASSESSEE'S ITA NO. 1791/KOL/13 M/S. PYNE PROPERTIES P.LTD. 5 LAND AT RS.55,32,474 AS ON 01.04.1981 AS PER THE RE PORT OF THE DVO AND ENCLOSED A STATEMENT COMPUTING THE LONG TERM CAPITA L GAIN ON THE BASIS OF THE VALUE OF THE PROPERTY AS ON 01.04.1981 AS SHOWN BEL OW. SALE PROCEED OF THE PROPERTY RS .4,24,71,800 LESS: COST OF ACQUISITION OF THE PROPERTY FAIR MARKET VALUE AS ON 01.04.1981 AS COMPUTED BY THE DVO AT RS.55,32,474. INDEXED COST OF THE PROPERTY RS.5,53,247 X 551/100 RS.3,04,83,932 EXPENSES INCURRED IN CONNECTION WITH SALE OF PROPERTY. RS. 30,44,663 RS. 3,35,28,595 LONG TERM CAPITAL GAIN RS. 89,43,205 7. THE CIT(A) HAS ACCEPTED THE TOTAL CAPITAL GA IN ON THE SALE OF THE PROPERTY AT RS.89,43,205 AS COMPUTED ABOVE AS AGAINST RS.36, 12,137 AS RETURNED BY THE ASSESSEE AND HELD THAT 95% OF THIS CAPITAL GAIN I.E . RS.68,19,615 SHOULD BE TREATED AS RELATED TO THE SALE OF ITS LAND AND THE SAME SHOULD BE ASSESSED AS LONG TERM CAPITAL GAIN. THE BALANCE 5% OF THE TOTAL CAPI TAL GAIN OF RS.89,43,205 WAS TREATED BY HIM AS RELATED TO THE SALE OF THE BUILDI NG AND THEREFORE SHORT TERM CAPITAL GAIN. 8 AS AGGRIEVED BY THE ORDER OF CIT(A) THE ASSESSE E IS NOW IN SECOND APPEAL BEFORE THIS TRIBUNAL. ITA NO. 1791/KOL/13 M/S. PYNE PROPERTIES P.LTD. 6 9. IN GROUND NO.1 THE ASSESSEE HAS OBJECTED TO THE ORDER OF CIT(A) IN ENHANCING THE CAPITAL GAIN ON THE SALE OF THE ASSES SEE'S IMMOVABLE PROPERTY TO RS.89,43,205 AS AGAINST RS.36,12,137 RETURNED BY IT . SUPPORTING GROUND NO.1(A), THE ASSESSEE HAS CLAIMED THAT THE A.O. ERRED IN RE FERRING THE VALUATION OF THE ASSESSEE'S PROPERTY AS ON 01.04.1981 TO THE DVO IN TERMS OF SEC.55A(A) OF THE ACT. IN GROUND NO.1(B) IT HAS OBJECTED TO THE OBSER VATION OF THE CIT(A) IN PARAS 21 & 23 OF IMPUGNED ORDER THAT THE ASSESSEE HAS ACC EPTED THE VALUATION OF ITS PROPERTY AS PER THE REPORT OF THE DVO. IN GROUND NO . L (C), THE ASSESSEE HAS CONTENDED THAT THE CIT(A) WAS NOT JUSTIFIED IN COMP UTING ITS CAPITAL GAIN ON THE SALE OF ITS PROPERTY TAKING ITS VALUE AS ON 01.04.1 981 AT RS.55,32,474 AS PER THE VALUATION REPORT OF THE D.V.O. THE LD. DR CONTEND S THAT THE SUBMISSIONS BY THE ASSESSEE THAT THE CIT(A) HAS NO POWER IN RESPECT O F REFERENCE TO THE DVO IS NOT CORRECT. SINCE ALL THESE GROUNDS ARE CONNECTED, AN D, THEREFORE, HEARD TOGETHER WITH THE CONSENT OF BOTH THE PARTIES. 10. PRIOR TO ITS AMENDMENT BY THE FINANCE ACT 2012 W.E.F 01.07.2012, SEC.55A(A) OF THE ACT AUTHORIZED THE A.O. TO REFER THE VALUATION OF A CAPITAL ASSET TO A VALUATION OFFICER IN A CASE WHERE THE VALUE OF THE ASSET IS CLAIMED BY THE ASSESSEE IN ACCORDANCE WITH THE ESTIMATE MADE BY A REGISTERED VALUER ONLY WHEN HE WAS OF THE OPINION THAT THE VALUE SO CLAIMED WAS LESS THAN ITS FAIR MARKET VALUE. 11. THIS PROVISION REQUIRES THAT THE FOLLOWING TWO CONDITIONS MUST BE SATISFIED BEFORE THE VALUATION OF A CAPITAL ASSET COULD BE RE FERRED TO THE VALUATION CELL. (A) THE A.O. IS REQUIRED TO FORM AN OPINION ON THE BASIS OF MATERIALS AVAILABLE ON THE RECORD THAT THE CAPITAL ASSET HAS BEEN UNDER VALUED BY THE REGISTERED VALUER. ITA NO. 1791/KOL/13 M/S. PYNE PROPERTIES P.LTD. 7 (B) THE VALUATION MADE BY THE REGISTERED VALUER IS LESS THAN ITS FAIR MARKET VALUE. 12. IF THE A.O. HAS NOT FORMED AN OPINION AS STATED ABOVE, HIS REFERENCE TO THE VALUATION CELL WOULD NOT BE VALID AS HELD BY THE HO N'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS UMEDBHAI INTERNATIONAL PVT. LTD . REPORTED IN 330-ITR-506. SECONDLY PRIOR TO AMENDMENT OF S.55A(A) W.E.F. 01.0 7.2012 A REFERENCE TO THE VALUATION CELL BY THE AO WAS POSSIBLE ONLY WHEN IN HIS OPINION THE VALUE SHOWN BY THE ASSESSEE WAS LESS THAN THE FAIR MARKET VALUE . IF THIS CONDITION IS NOT SATISFIED, THE REFERENCE TO THE VALUATION CELL WOUL D ALSO BE INVALID AS HELD BY THE HON'BLE CALCUTTA HIGH COURT AND HONBLE GUJARAT H IGH COURT. IN THE CASE OF CIT VS SMT. MINA DEOGUN REPORTED IN 375 ITR 586 (C AL), REGISTERED VALUER VALUED THE ASSESSEE'S SHARE OF PROPERTY AS ON 01.04 .1981 AT RS.18,40,244. THE AO IN EXERCISE OF HIS POWER U/S. 55A REFERRED THE M ATTER TO THE DEPARTMENTAL VALUER WHO VALUED THE ASSESSEE'S SHARE OF THE PROPE RTY AS ON 01.04.1981 AT RS.11,65,570. THE COMPETENCE OF THE AO TO REFER THE MATTER TO THE DEPARTMENTAL VALUER U/S 55A WAS CHALLENGED AND THE TRIBUNAL HELD THAT THE REFERENCE MADE U/S 55A WAS INCOMPETENT AND THEREFORE THE VALUATION PRO VIDED BY THE ASSESSEE ON THE BASIS OF THE REPORT OF THE REGISTERED VALUER VALUIN G THE SHARE OF THE ASSESSEE AT A SUM OF RS.18,40,244/- WAS ACCEPTED BY THE TRIBUNAL WHICH WAS CHALLENGED BY THE DEPARTMENT BEFORE THE HONBLE HIGH COURT. THE HON' BLE CALCUTTA HIGH COURT HELD THAT WHEN THE VALUATION MADE BY THE REGISTERED VALUER WAS ON THE HIGHER SIDE, THERE WAS NO OCCASION FOR THE AO TO REFER THE MATTER TO THE VALUATION OFFICER U/S 55A IN THE CASE OF HIABEN JAYANTILAL SHAH VS ITO REPORTED IN 310 ITR 31, A SIMILAR VIEW WAS TAKEN BY THE HON'BLE GUJARAT HIGH COURT. 13. IN THE INSTANT CASE, BEFORE REFERRING THE VA LUATION OF LAND TO THE VALUATION CELL THE A.O HAD NOT FORMED AN OPINION THAT THE V ALUE OF THE ASSESSEE'S LAND WAS ITA NO. 1791/KOL/13 M/S. PYNE PROPERTIES P.LTD. 8 LESS THAN ITS FAIR MARKET VALUE. SECONDLY AS PER RE GISTERED VALUER, THE VALUE OF ITS LAND AS ON 01.04.1981 WAS RS.56,37,000/- WHICH WAS HIGHER THAN THE VALUE OF RS.55,32,474 ESTIMATED BY THE VALUATION CELL. SINCE BOTH THESE TWO CONDITIONS FAILED, FOLLOWING THE HONBLE HIGH COURT DECISIONS REFERRED TO ABOVE, THE AO WAS NOT JUSTIFIED TO REFER THE VALUATION OF THE ASS ESSEE'S LAND TO THE DVO. CONSEQUENTLY, THE VALUATION OF THE PROPERTY AS ON 0 1.04.1981 AS MADE BY THE VALUATION CELL AT RS.55,32,474/- HAS TO BE IGNORED . IF SO, THE LONG- TERM CAPITAL GAIN FROM SALE OF THE ASSESSEE'S LAND HAS TO BE COM PUTED AT RS.36,12,137/- AS PER ITS RETURN. 14. THAT WE ARE CONSCIOUS OF THE FACT THAT THE ASSE SSEE ACCEPTED THE VALUATION OF THE VALUATION OFFICER AT THE FIRST APPELLATE ST AGE CANNOT BE THE BASIS TO SUSTAIN THE ORDER OF THE AO FOR THE REASONS THAT THERE COUL D BE NO ESTOPPEL AGAINST STATUTE. IN THE ABOVE CIRCUMSTANCES, WE HOLD AND DIRECT THE A.O. TO ACCEPT THE TOTAL LONG TERM CAPITAL GAIN OF THE ASSESSEE AT RS.36,12,137/- AS RETURNED BY IT INSTEAD OF RS.89,43,205/- AS TAKEN BY THE CIT(A). 15. IN GROUND NO.2 THE ASSESSEE HAS SUBMITTED THAT THE CIT(A) ERRED IN DIRECTING THE A.O TO ASSESS LONG TERM CAPITAL GAIN OF RS.68,19,615/- ON THE SALE OF ITS LAND AND SHORT TERM CAPITAL GAIN OF RS.21,23 ,590/- ON THE SALE OF ITS BUILDING. SUPPORTING GROUND NO.2(A) IT HAS CLAIMED THAT BOTH THE A.O AND THE CIT(A) ERRED IN REJECTING THE ASSESSEE'S CONTENTION THAT AS NO DEPRECIATION WAS ALLOWED ON ITS BUILDING IN THE COURSE OF ITS INCOME TAX ASSESSMENTS, SEC.50 OF THE ACT HAD NO APPLICATION IN THIS CASE AND CONSEQUENTL Y NO SHORT TERM CAPITAL GAIN COULD BE ASSESSED ON THE SALE OF ITS BUILDING. IN G ROUND NO.2(B) THE ASSESSEE HAS CONTENDED THAT EVEN AFTER ADMITTING IN PARA-22 OF H IS APPELLATE ORDER THAT NO DATA REGARDING GRANT OF DEPRECIATION ON THE ASSESSEE'S B UILDING WAS AVAILABLE IN ITS ASSESSMENT RECORD, THE CIT(A) ERRED IN DIRECTING TH E A.O TO ASSESS SHORT TERM ITA NO. 1791/KOL/13 M/S. PYNE PROPERTIES P.LTD. 9 CAPITAL GAIN OF RS.21,23,590/- IN THE HAND OF THE ASSESSEE ON THE SALE OF ITS BUILDING. IN GROUND NO.2(C) THE ASSESSEE HAS OBJECT ED TO THE CIT(A)'S DECISION IN BIFURCATING TOTAL ASSESSABLE CAPITAL GAIN IN THE RA TIO OF 95% FOR LAND AND 5% FOR BUILDING. THE LD.DR SUBMITS THAT THE RECORD SHOWS THAT THE ASSESSEE CLAIMED DEPRECIATION ON BUILDING G WHICH IS EVIDENT FROM PA RA 11 OF ORDER OF CIT(A). SINCE ALL THESE GROUNDS ARE CONNECTED, AND, THEREF ORE, HEARD TOGETHER WITH THE CONSENT OF BOTH THE PARTIES. 16. AS DISCUSSED ABOVE, THE CIT(A) ACCEPTED THE T OTAL CAPITAL GAIN ON THE SALE OF LAND AND BUILDING AT RS.68,19,615. HE THEREAFTER HELD THAT THE 95% OF THE CAPITAL GAIN RELATED TO THE SALE OF LAND AND 5% TO THE SALE OF BUILDING. ALTHOUGH AT SEVERAL PLACES IN THE APPELLATE ORDER HE HAS OBS ERVED THAT THERE IS NO EVIDENCE OF ALLOWING DEPRECIATION ON THE BUILDING, HE STILL DIRECTED THAT ON THE SALE OF THE BUILDING SEC.50 OF THE ACT SHOULD BE APPLIED AND T HE CAPITAL GAIN ARISING ON THE SALE OF THE BUILDING SHOULD BE TREATED AS SHORT TER M CAPITAL GAIN. 17. IT IS SUBMITTED THAT ON RECEIPT OF THE ASSESSME NT ORDER IN WHICH THE A.O TREATED THE ENTIRE CAPITAL GAIN AS SHORT TERM IN TE RMS OF THE PROVISIONS OF SEC. 50 OF THE ACT, THE ASSESSEE SUBMITTED A LETTER DATED 29.07.2011 REQUESTING HIM TO FURNISH COPIES OF COMPUTATION OF ITS TOTAL INCOME F ILED ALONG WITH ITS RETURNS AND ALSO COPIES OF ITS ASSESSMENT ORDERS SHOWING GRANT OF DEPRECIATION ON THE PROPERTY SOLD BY IT. A COPY OF SUCH LETTER WAS RECEIVED BY T HE AO ON 01.08.2011 HAS BEEN PLACED ON THE PAPER BOOK. THE AO HAD NOT ISSUED A REPLY TO THIS LETTER. WHEN THE A.R. OF THE ASSESSEE CONTACTED HIM, HE INFORMALLY R EPORTED THAT NO SUCH ASSESSMENT ORDER COULD BE TRACED BY HIM. HE HOWEVER REFUSED TO SEND A REPLY TO THIS EFFECT. ITA NO. 1791/KOL/13 M/S. PYNE PROPERTIES P.LTD. 10 18. IN PARA-17 OF THE ORDER OF THE CIT(A), HE HAS OBSERVED AS FOLLOWS: THE ASSESSMENT RECORDS REVEAL THAT THE APPELLANT HA S NOT CLAIMED THE DEPRECIATION IN THE COMPUTATION OF INCOME SINCE ASSESSMENT YEAR 2001-02. THE APPELLANT IS ONLY SHOWING THE INC OME FROM HOUSE PROPERTY AND NO SET OFF OF ANY BUSINESS LOSS OR DEP RECIATION HAS BEEN CLAIMED BY THE ASSESSEE. THE ASSESSEE IS CLAIM ING DEPRECIATION IN THE PROFIT & LOSS ACCOUNT AS PER THE COMPANIES A CT,1956. THE DEPRECIATION HAS BEEN CLAIMED ON THE FULL VALUE OF BUILDING & LAND COSTING RS.1, 12, 000/- BUT ULTIMATELY THE DEPRECIA TION IS NOT IN THE COMPUTATION OF INCOME FILED FOR ASSESSMENT YEAR 200 8-09 AND IN THE EARLIER YEARS. THEREFORE, IT IS HELD THAT IT IS NOT A CAPITAL ASSET ON WHICH DEPRECIATION HAS BEEN CLAIMED U/S 32. 19. IN PARA-18 OF THE ORDER OF CIT(A) HAS ALSO OB SERVED THAT THE ASSESSEE WAS SHOWING ONLY INCOME FROM HOUSE PROPERTY AND IT MIGH T HAVE BEEN A DEPRECIABLE ASSET LONG BACK BUT SINCE ASSTT.YEAR 2001-02 AT LEA ST, IT HAS CEASED TO BE A DEPRECIABLE ASSET. IN PARA-21 OF THE APPELLATE ORDE R THE CIT(A) HAS ALSO HELD THAT THE A.O WAS NOT JUSTIFIED IN TREATING THE LAND AND BUILDING AS DEPRECIABLE ASSET IN TERMS OF SEC.50 OF THE ACT, SINCE NO DEPRECIATION WAS CLAIMED BY THE ASSESSEE UNDER THE ACT OR ALLOWED BY THE DEPARTMENT ON THI S ASSET SINCE THE YEAR 2001- 02. 20. IN VIEW OF THE REPEATED OBSERVATIONS OF THE C IT(A) IN HIS APPELLATE ORDER THAT NEITHER THE ASSESSEE CLAIMED ANY DEPRECIATION ON THE HOUSE PROPERTY NOR IT WAS ALLOWED BY THE DEPARTMENT, HE WAS NOT JUSTIFIED IN HOLDING THAT THE CAPITAL GAIN ARISING ON THE SALE OF THE HOUSE PROPERTY SHOU LD BE TREATED AS SHORT TERM IN TERMS OF SEC. 50 OF THE ACT. WE THEREFORE DIRECT THAT THE DIRECTION OF THE CIT(A) TO ASSESS SHORT TERM CAPITAL GAIN OF RS.21,23,590/- IN THE HANDS OF THE ASSESSEE ITA NO. 1791/KOL/13 M/S. PYNE PROPERTIES P.LTD. 11 ON THE SALE OF THE HOUSE PROPERTY DELETED AND THE A.O IS DIRECTED TO ASSESS THE ENTIRE CAPITAL GAIN ON THE SALE OF ITS LAND AND BUI LDING AS LONG TERM CAPITAL GAIN. 21. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED ORDER PRONOUNCED IN OPEN COURT ON 05 /08 /2016 SD/- P.M JAGTAP ACCOUNTANT MEMBER SD/- S.S. VISWANETHRA RAVI J JUDICIAL MEMBER DATE 05/08/2016 ITA NO. 1791/KOL/13 M/S. PYNE PROPERTIES P.LTD. 12 COPY OF THE ORDER FORWARDED TO 1. THE APPELLANT/ASSESSEE : M/S. PYNE PROPERTIES P VT. LTD ALLAHABAD BUILDING 2 ND FL., 14 INDIA EXCHANGE PLACE, KOLKATA-700 001. 2. THE RESPONDENT/DEPARTMENT: I.T.O WARD 5(2), P- 7 CHOWRINGHEE SQUARE 8 TH FLOOR, KOLKATA-700069. 3. CIT 4. CIT(A) 5. THE DEPARTMENTAL REPRESENTATIVE 6. GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA ** PRADIP SPS