ITO 3(1)(2), MUMBAI V. DEVIDAYAL PLASTIC INDUSTRIES P.LTD, MUMBAI

ITA 254/MUM/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2866 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 09-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DEEPAK TIKEKAR
• Keywords: Capital asset

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI D BENCH , MUMBAI BEFORE SHRI SHAILEND RA K UMAR YADAV, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR , ACCOUNTANT MEMBER . ITA. NO. 254 / M UM /20 1 4 (ASSESSMENT YEAR: 2 0 10 - 1 1 ) I NCOME T AX O FFICER - 3 ( 1 )(2), AA YAKAR BHAVAN, ROOM NO.666, 6 TH FLOOR, M. K. ROAD, MUMBAI - 400020 APPELLANT VS. M/S. DEVIDAYAL PLASTIC INDUSTRIES PVT. LTD. S - 1, PEMINO, ALTAMOUNT ROAD, MUMBAI 400 026 RESPONDENT PAN: AA AC D3767G / BY APPELLANT : SHRI VIVEK ANAND OJHA , D.R. / BY RESPONDENT : SHRI DEEPAK TIKEKAR , A .R. / DATE OF HEARING : 06 . 1 0.2015 / DATE OF PRONOUNCEMENT : 28 . 1 0 .201 5 ORDER PER SHAILENDR A KUMAR YADAV, J . M: THIS APPEAL HAS BEEN FILED BY REVENU E AGAINST THE ORDER OF COMMISSIONER OF INCOME - TAX (APPEALS) - 6 , MUMBAI , DATED 1 7 . 1 0 . 20 1 3 FOR A.Y. 20 10 - 1 1 ON FOLLOWING GROUNDS: I T A NO . 254 / M UM / 1 4 A.Y. 10 - 1 1 [ ITO VS. M/S. DEVIDAYAL PLASTIC INDS. PVT. LTD. ] PAGE 2 1. WHETHER O N THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN RESTRICTING THE SHORT TERM CAPITAL GAIN TO RS.40,69,030/ - AS AGAINST THE STCG WORKED OUT BY THE AO AT RS.53,66,599/ - GIVING A RELIEF OF RS.12,97,569/ - BY ASSIGNING THE PROPORTIONATE SALE VALUE IN THE RATIO OF WDV OF THE LAND AND THE BUILDING WITHOUT APPRECIATING THE FACT THAT THE STCG WAS WORKED OUT APPROPRIATELY AS PER THE PROVISIONS OF ACT. 2. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2. ASSESSE E IS A PRIVATE LIMITED COMPANY. THE ONLY ISSUE BEFORE US IS REGARDING SHORT TERM CAPITAL GAIN. DURING YEAR UNDER CONSIDERATION, ASSESSEE SOLD ITS FACTORY PREMISES AT HALOL, GUJARAT, FOR RS.67LACS. ASSESSEE HAD NOT DISCLOSED ANY CAPITAL GAIN FROM SALE OF FACTORY IN RETURN OF INCOME. SINCE ASSESSING OFFICER RECEIVED INFORMATION IN RESPECT OF SALE OF FACTORY FROM AIR DATA, HE QUESTIONED THE ASSESSEE IN THIS REGARD. IN FACT ASSESSING OFFICER OBTAINED INFORMATION FROM THE SUB - REGISTRAR, HALOL U/S.133(6) VIDE LETTER DATED 13.12.2012. THE CONCERNED SUB - REGISTRAR, HALOL CONFIRMED THE TRANSFER/REGISTRATION OF THE PROPERTY SOLD BY ASSESSEE. THEREFORE, HE COMPUTED SHORT TERM CAPITAL GAIN IN RESPECT OF FACTORY SOLD AS PER PROVISIONS OF SECTION 50 OF THE ACT BY RED UCING WRITTEN DOWN VALUE (WDV) OF ASSETS SOLD FROM THE SALE CONSIDERATION OF RS.67LACS AND COMPUTED SHORT TERM CAPITAL GAIN AT RS.53,66,599/ - . I T A NO . 254 / M UM / 1 4 A.Y. 10 - 1 1 [ ITO VS. M/S. DEVIDAYAL PLASTIC INDS. PVT. LTD. ] PAGE 3 2.1 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, WHEREIN HAVING CONSIDERED THE SUBMISSION ON BEHALF O F ASSESSEE, CIT(A) RESTRICTED THE SHORT TERM CAPITAL GAIN TO RS.40,69,030/ - AS AGAINST SHORT TERM CAPITAL GAIN WORKED OUT BY ASSESSING OFFICER AT RS.53,66,599/ - GIVING A RELIEF OF RS.12,97,569/ - . 2.2 SAME HAS BEEN OPPOSED BEFORE US ON BEHALF OF REVENUE INTER ALIA STATING THAT UNDER THE FACTS AND CIRCUMSTANCES, CIT(A) WAS NOT JUSTIFIED IN RESTRICTING THE SHORT TERM CAPITAL GAIN TO RS.40,69,030/ - AGAINST SHORT TERM CAPITAL GAIN WORKED OUT BY ASSESSING OFFICER AT RS.53,66,599/ - . ACCORDINGLY, ORDER OF CIT( A) BE SET ASIDE AND THAT OF ASSESSING OFFICER BE RESTORED. ON OTHER HAND, LEARNED AUTHORIZED REPRESENTATIVE SUPPORTED THE ORDER OF CIT(A). 2.3 AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATERIAL ON RECORD, WE FIND THAT ASSESSEE HAS SOLD FACTORY AT HALOL, WHICH CONSISTS OF LAND, BUILDING AND COMPOUND WALL, FOR A CONSIDERATION OF RS.67 LACS. THE LAND IS NOT A DEPRECIABLE ASSET; HENCE CAPITAL GAIN IN RESPECT THEREOF CANNOT BE COMPUTED AS PER THE PROVISIONS OF SECTION 50 OF THE ACT. CAPITAL GAIN IN RESPECT O F LAND, WHICH WAS ACQUIRED BY ASSESSEE IN 1981 WOULD BE COMPUTED AS PER NORMAL PROVISIONS AS PROVIDED IN SECTION 48 OF THE ACT. ASSESSEE HAS APPORTIONED THE SALE CONSIDERATION BETWEEN LAND AND BUILDING AND IS CLAIMING THAT SALE CONSIDERATION IN RESPECT OF INDUSTRIAL I T A NO . 254 / M UM / 1 4 A.Y. 10 - 1 1 [ ITO VS. M/S. DEVIDAYAL PLASTIC INDS. PVT. LTD. ] PAGE 4 BUILDING AND COMPOUND WALL IS OF THE SAME VALUE AS IS WRITTEN DOWN VALUE OF THESE ASSETS. BALANCE SALE CONSIDERATION HAS BEEN ASSIGNED TO THE LAND. THIS METHODOLOGY CLAIMED BY ASSESSEE WAS NOT FOUND CORRECT. THE BUILDING, LAND AND COMPOUND W ALL WOULD HAVE TO BE ASSIGNED PROPORTIONATE SALE VALUE IN RATIO OF THEIR WDV OUT OF TOTAL SALE CONSIDERATION OF RS.67LACS WHICH IS LOGICAL AS WELL. FROM THIS METHODOLOGY, SALE CONSIDERATIONS OF LAND AND BUILDING AND CONSEQUENTLY CAPITAL GAINS IN RESPECT T HEREOF SHALL BE COMPUTED IN FOLLOWING MANNER: 1. SALE CONSIDERATION FOR LAND RS.16,19,968/ - (PROPORTIONATE TO WDV OF LAND) 2. SALE CONSIDERATION FOR BUILDING 3. (FACTORY AND COMPOUND WALL) RS.50,80,032/ - (PROPORTIONATE TO WDV OF BUILDING) TOTAL RS.67,00,070/ - 1. LONG - TERM CAPITAL GAIN IN RS.16,19,968/ - (SALE VALUE) RESPECT OF LAND ( - ) RS.10,11,003/ - (SALE VALUE) LONG TERM CAPITAL LOSS RS.4,17,588/ - 2. SHORT TERM CAPITAL GAIN IN RS.50,80,032/ - (SALE VALUE) RESPECT OF BUILDI NG ( - ) RS.10,11,003/ - (WDV) SHORT - TERM CAPITAL GAIN RS.40,69,030/ - REGARDING THE PROVISIONS OF SECTION 71(3), THE RESULT OF COMPUTATION MADE FOR ANY ASSESSMENT YEAR UNDER SECTIONS 48 TO 55 IN RESPECT OF ANY CAPITAL ASSET (OTHER THAN A SHORT TERM CAPITA L ASSET) IS A LOSS, ASSESSEE IS ENTITLED TO HAVE THE AMOUNT OF SUCH LOSS SET OFF AGAINST THE INCOME, IF ANY, AS ARRIVED AT I T A NO . 254 / M UM / 1 4 A.Y. 10 - 1 1 [ ITO VS. M/S. DEVIDAYAL PLASTIC INDS. PVT. LTD. ] PAGE 5 UNDER A SIMILAR COMPUTATION MADE FOR ASSESSMENT YEAR IN RESPECT OF ANY OTHER CAPITAL ASSET NOT BEING A SHORT TERM CAPITAL ASSET. IN VIEW OF ABOVE, SHORT TERM CAPITAL GAIN WAS RIGHTLY ASSESSED IN THE YEAR UNDER CONSIDERATION AT RS.40,69,030/ - . THIS REASONED FINDING OF CIT(A) NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 3 . AS A RESULT, APPEAL FILED BY REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 28TH DAY OF OCTO BER , 201 5 . SD/ - SD/ - ( RAJESH KUMAR ) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI : DATED 28 / 1 0 /2015 S.K.SINHA / COPY OF ORDER FORWARDED TO: - 1 . / REVENUE 2 . / ASSESSEE 3 . / CONCERNED CIT 4 . - / CIT (A) 5 . , , / DR, ITAT, MUMBAI 6 . / GUARD FILE. BY ORDER / , / , ,