M/s. MODERN DIE CASTING P. LTD., MUMBAI V. ITO Rg. - 8(2)(3), MUMBAI

ITA 2701/MUM/2006

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55110 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 19-07-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 03-05-2006
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G P TRIVEDI
• Assessee Lawyers: DR K SHIVRAM
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Business income; Depreciation; Opportunity of being heard; Cost of acquisition
• Section: 50C; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI BEFORE SHRI R.S. SYAL, A.M. AND SHRI V. DURGA RAO, J.M. ITA NO. 2701/MUM/2006 ASSESSMENT YEAR: 2003-04 MODERN DIE CASTING PVT. LTD., . APPELLANT C-1, UDYOG SADAN NO.3, MAROL INDL. AREA, OPP. SEEPZ, ANDHERI (E), MUMBAI 400 093 (PAN AAACM 3293 J) VS. INCOME-TAX OFFICER, RESPONDENT MAHARSHI KARVE MARG, MUMBAI 400 020. ITA NO. 3654/MUM/2006 ASSESSMENT YEAR: 2003-04 INCOME-TAX OFFICER, APPELLANT MAHARSHI KARVE MARG, MUMBAI 400 020. VS. MODERN DIE CASTING PVT. LTD., . RESPONDENT C-1, UDYOG SADAN NO.3, MAROL INDL. AREA, OPP. SEEPZ, ANDHERI (E), MUMBAI 400 093 (PAN AAACM 3293 J) ASSESSEE BY : DR. K. SHIVRAM RESPONDENT BY : MR. G.P. TRIVEDI DATE OF HEARING : 19/07/2011 DATE OF PRONOUNCEMENT: 30/08/2011 ORDER PER V. DURGA RAO, J.M.: THESE ARE THE CROSS APPEALS DIRECTED AGAINST THE O RDER OF THE CIT(A)-VIII, MUMBAI, PASSED ON 24/03/2066 FOR THE A SSESSMENT YEAR 2003-04. ITA NOS. 2701 & 3654/M/06 MODERN DIE CASTING PVT. LTD. 2 ITA 2701M/06 ASSESSEES APPEAL 2. GROUND NO. 1 & 2 READ AS UNDER:- 1. THE CIT(A) ERRED IN NOT DIRECTING THE AO TO TREA T PROFIT REALIZED ON SALE OF FLAT NO. 604 AT LOKHANDWALA COMPLEX AS L ONG-TERM CAPITAL GAINS. HE ERRED IN OBSERVING THAT THE APPEL LANT HAS OBTAINED THE DEPRECIATION ALLOWANCE IN RESPECT OF T HE SAID FLAT. 2. THE CIT(A) ERRED IN NOT DIRECTING THE AO TO ALLO W EXPENDITURE OF RS. 58,224/- INCURRED WHOLLY AND EXCLUSIVELY IN CON NECTION WITH SALE OF FLAT WHILE COMPUTING THE FULL VALUE OF CONS IDERATION. 3. BRIEFLY STATED THE FACTS THE FACTS OF THE CASE A RE THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE SOLD ITS FLAT NO. 604, HERITAGE- B, LOKHANDWALA COMPLEX, ANDHERI (W), MUMBAI, WHICH WAS PURCHASED ON 10/09/1986 AND NET SALE CONSIDERATION IS RS. 24, 41,756/-. THE ASSESSEE HAD RETURNED LONG TERM CAPITAL GAIN OF RS . 7,50,596/- AFTER CONSIDERING AN INDEXED COST OF RS. 16,91,160/-. THE ORIGINAL COST OF THE SAID FLAT WAS RS. 5,29,670/-. ACCORDING TO THE AO, THE TREATMENT GIVEN BY THE ASSESSEE IS NOT CORRECT AND THE CONCER NED ASSET WAS DEPRECIABLE ASSET AND THE ENTIRE BLOCK OF ASSET HAD BEEN SOLD OFF, THEREFORE, PROFIT/GAIN FROM THE SALE OF THE SAID FL AT WAS TO BE TREATED AS SHORT TERM CAPITAL GAIN U/S 50 OF THE ACT. DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE MADE SUBMISSIO NS VIDE ITS LETTER DATED 06/01/05, THE CONTENTS OF WHICH WAS EX TRACTED BY THE AO IN ASSESSMENT ORDER AT PAGES 1 & 2, REPRODUCED BELO W: ASSESSEE COMPANY HAS PURCHASED THE FLAT FOR RS, 5,2 9,670/- IN 1956. THIS FLAT IS SITUATED AT LOKHANDWALA COMPLEX BEING FLAT NO. B-604, 6 TH FLOOR, 4 TH CROSS LANE, ANDHERI (W), MUMBAI 400 053 AND LET OUT SINCE ASSESSMENT YEAR 1998-99. THIS WAS ONLY ASSET ASSESSEE COMPANY IS HAVING & THEY ARE NO ASSE TS. ASSESSEE HAS CLAIMED DEPRECIATION ON THE SAID ASSET IN AY 1995- 06 BUT THE SAME WAS NOT ALLOWED BY DEPARTMENT. IN AY 1996-97 DEPRECIATION WAS CLAIMED AND AS THERE WAS NO POSITIVE INCOME FOR SET OFF OF DEPRECIATION, IT WAS CARRIED FORWARD. AS THE DEPRECIATION WAS NOT ALLOWED BY THE DEPARTME NT IN ASSESSMENT YEAR 1994-95 & 1995-96, THE ASSESSEE HAD NOT CLAIMED SET OFF BROUGHT FORWARD DEPRECIATION OF ASS ESSMENT YEAR 1996-97 IN SUBSEQUENT AY 1997-98 AND ONWARDS. THUS EFFECTIVELY THE DEPARTMENT WAS NOT ACTUALLY ALLOWED IN ANY ASSE SSMENT YEAR. ITA NOS. 2701 & 3654/M/06 MODERN DIE CASTING PVT. LTD. 3 WE DRAW YOUR ATTENTION TO THE SUPREME COURT DECISIO N IN THE CASE OF CIT VS. STRAW PRODUCTS LTD. 60 ITR 156 & IN CASE OF CIT VS. DHARMPUR LEATHER CO. LTD. 60 ITR 165. IN BOTH THE CASES THE SUPREME COURT HELD THAT UNLES S DEPRECIATION IS ACTUALLY ALLOWED & EFFECT OF IT IS GIVEN IT WILL NOT BE TREATED AS DEPRECIATION ALLOWED. THUS AS NO DEPRECIATION IS ALLOWED ON THIS FLAT. IT DOES NOT FALL IN THE BLOCK OF ASSETS AND HENCE SECTION 50 IS NOT APP LICABLE. THE ASSESSEE HAS RIGHTLY OFFERED LONG TERM CAPITAL GAIN ON THE SALE OF THIS FLAT. 4. THE AO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HAD OBSERVED THAT THE ASSESSEE COMPANY HAD ALWAYS SHOWN THE PROPERTY CONCERED AS ITS FIXED ASSET AND DEPRECIATION HAD BE EN PROVIDED FOR YEAR AFTER YEAR, ON THE PRINCIPLE OF BLOCK OF ASSET S. THE ASSESSEES CLAIM FOR DEPRECIATION FOR THE SAID ASSET FROM AY 1 992-93 TO 1995-96 WAS NEGATED ON THE GROUND THAT BUSINESS ACTIVITY HA D NOT COMMENCED. FOR THE AY 1996-97, THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME DECLARING A TOTAL NEGATIVE INCOME OF RS. 42,417/- W HEREIN DEPRECIATION OF RS. 30,341/- HAD BEEN CONSIDERED WHILE COMPUTING A NEGATIVE INCOME OF RS. 42,417/- UNDER THE HEAD INCOME FROM PROFITS & GAINS OF BUSINESS OR PROFESSION, FROM WHICH THE POSITIVE INC OME OF RS. 5,500/- UNDER THE HEAD INCOME FROM CAPITAL GAINS HAD BEEN SET OFF AND THE RETURN OF INCOME HAD BEEN ACCEPTED IN THE ASSESSMEN T U/S 143(1)(A) OF THE ACT AND THE DEPRECIATION HAD BEEN ALLOWED, D EFACTO. ACCORDING TO AO, SECTION 50 IS APPLICABLE TO THE ASSESSEES C ASE AND THE CLAIM OF THE ASSSESSEE OF LONG TERM CAPITAL GAIN WAS DENIED. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CI T(A). 5. IT WAS SUBMITTED BEFORE THE CIT(A) THAT THE ABOV E SAID CONCERNED FLAT WAS SOLD DURING THE YEAR AND THE PRO FIT WHERE FROM WAS OFFERED FOR TAX AS LONG TERM CAPITAL GAINS WAS DISC LOSED AS FIXED ASSET IN THE ASSESSEES BALANCE SHEET AND DEPRECIATION WA S PROVIDED IN THE BOOKS OF ACCOUNT ON THE COST THEREOF EVERY YEAR. HO WEVER, IN THE INCOME TAX PROCEEDINGS, DEPRECIATION WAS NOT ALLOWE D IN THE ASSESSMENT YEARS 1992-03 TO 1995-96 ON THE GROUND O F NON- COMMENCEMENT OF BUSINESS BY THE ASSESSEE. IT WAS F URTHER SUBMITTED ITA NOS. 2701 & 3654/M/06 MODERN DIE CASTING PVT. LTD. 4 THAT FROM AY 1998-99, INCOME ARISING FROM LETTING O UT OF THE FLAT WAS OFFERED FOR TAX UNDER THE HEAD INCOME FROM HOUSE PR OPERTY, THEREFORE, NO DEPRECIATION WAS CLAIMED OR ALLOWED ON THE WRITT EN DOWN VALUE THEREOF. THE LEARNED CIT(A) AFTER CONSIDERING THE SUBMISSIONS OBSERVED THAT THE ASSESSEES CLAIM OF DEPRECIATION HAD BEEN ALLOWED DEDUCTION IN RESPECT THEREOF IN THE ASSESSMENT YEAR 1996-97. IN THE ASSESSMENT YEARS PRECEDING TO THAT ALSO, THE ASSESS EE HAD CLAIMED DEPRECIATION BUT WAS NOT ALLOWED AND THE ACTION OF THE AO IN THIS RESPECT WAS UPHELD IN APPEAL. HE FURTHER OBSERVED T HAT SECTION 50 OF THE ACT REFERS TO CAPITAL ASSETS AND NOT LONG TER M OR SHORT TERM CAPITAL ASSET. THE LANGUAGE OF THE SECTION IN THIS REGARD IS VERY CLEAR AND THERE IS NO AMBIGUITY THEREIN. HENCE FOR THE PU RPOSE OF THIS SECTION, THERE IS NO DISTINCTION BETWEEN THE SHORT TERM AND LONG TERM ASSET, THEREFORE, IN SUCH SITUATION WHERE IT IS CLE ARLY PROVIDED THAT WHERE DEPRECIATION IS ALLOWED IN RESPECT OF THE CO ST/WRITTEN DOWN VALUE OF THE ASSET, SURPLUS ARISING ON TRANSFER THE REOF AND COMPUTED IN THE MANNER PROVIDED THEREIN IS TO BE CHARGED TO TAX AS SHORT TERM CAPITAL GAIN. WITH THE ABOVE OBSERVATIONS, THE CIT( A) CONFIRMED THE ORDER OF THE AO. AGGRIEVED BY THE ORDER OF THE CIT( A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT SIMPLY BECAUSE THE ASSESSEE CLAIMED DEPRECIATION IN RESPECT OF WRITTEN DOWN VALUE OF THE FLAT IN AY 1996-97, IT CANNOT BE DENIED BENEFIT OF LONG TERM CAPITAL GAIN ON ACCOUNT OF PROVISIONS OF SECTION 50 OF THE ACT. FOR THIS PROPOSITION, THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF THE TRIBUNAL, MUMBAI BENCH IN TH E CASE OF PRABODH INVESTMENT & TRADING COMPANY IN ITA NO. 6557/MUM/20 08 DATED 28 TH FEBRUARY, 2011. HE ALSO RELIED ON THE DECISION OF COCHIN BENCH OF TRIBUNAL IN THE CASE OF SAKHI METAL DEPOT VS. IT O, [2005] 3 SOT 368 (COCHIN). ITA NOS. 2701 & 3654/M/06 MODERN DIE CASTING PVT. LTD. 5 7. ON THE OTHER HAND, THE LEARNED DR STRONGLY SUPPO RTED THE ORDERS OF THE REVENUE AUTHORITIES. 8. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES, PERUSED THE RECORD AND GONE THROUGH THE ORDERS OF T HE AUTHORITIES BELOW AS WELL AS DECISIONS CITED. THE ASSESSEE HAS PURCHASED FLAT ON 10/09/1986 FOR A CONSIDERATION OF RS. 5,29,670/-, W HICH WAS SOLD DURING THE YEAR UNDER CONSIDERATION FOR RS. 24,41,7 56/ - AND COMPUTED THE LONG TERM CAPITAL GAIN AT RS. 7,50,596 /- AFTER CONSIDERING AN INDEXED COST OF RS. 16,91,160/-. IT IS NOT DISPUTED THAT THE PERIOD OF HOLDING THE ASSET WAS MORE THAN 36 MO NTHS. ACCORDING TO THE AO, THE ASSESSEE HAS CLAIMED DEPRECIATION ON THE SAID FLAT IN AY 1996-97. THE AO OBSERVED THAT AS PER SECTION 50 OF THE ACT, THE ASSESSEE IS ONLY ELIGIBLE FOR SHORT TERM CAPITAL G AINED AND NOT LONG TERM CAPITAL GAIN, THEREFORE, HE DENIED THE CLAIM OF THE ASSESSEE OF LONG TERM CAPITAL GAIN. THE CIT(A) CONFIRMED THE ORDER OF THE AO. WHILE CONFIRMING THE ORDER OF THE AO, THE CIT(A) OB SERVED THAT THE ASSESSEE CLAIMED DEPRECIATION ON THE SAID FLAT FROM AY 1996-97 AND THE SAME WAS ALLOWED. BEFORE US, THE POINT FOR CONS IDERATION IS ONCE DEPRECIATION WAS ALLOWED ON THE ASSET, WHICH WAS CO MPLETED THE HOLDING PERIOD OF 36 MONTHS, IN VIEW OF THE SECTION 50, THE CLAIM OF THE ASSESSEE HAS TO BE ALLOWED AS SHORT TERM CAPITA L GAIN OR LONG TERM CAPITAL GAIN. IN THIS CONTEXT, IN THE CASE OF PRAB ODH INVESTMENT & TRADING CO. (SUPRA), THE TRIBUNAL CONSIDERING THE DECISION OF COCHIN BENCH OF TRIBUNAL IN THE CASE OF SAKHI MENTAL DEPOT , OBSERVED AS UNDER:- 7. THE NEXT CONTENTION OF THE ASSESSEE IS THE ONE BASED ON THE ORDER OF THE COCHIN BENCH OF THE TRIBUNAL CITED SUP RA. IN THAT CASE THE ASSESSEE STOPPED CLAIMING DEPRECIATION ON THE FLAT FROM THE ASSESSMENT YEAR 1995-96 ONWARDS ON THE GROUND T HAT IT WAS NO MORE USED FOR THE PURPOSE OF THE BUSINESS. IN TH E BOOKS OF ACCOUNT THE FLAT WAS SHOWN AS AN INVESTMENT FROM 01 .04.1995. IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 1 998-99, THE FLAT WAS SOLD AND THE SURPLUS WAS DECLARED AS LONG TERM CAPITAL GAINS. THE INCOME TAX AUTHORITIES HELD THAT THE CAP ITAL GAINS SHOULD BE ASSESSED AS SHORT TERM CAPITAL GAINS ON T HE FOOTING THAT THE FLAT MIGHT HAVE BEEN USED FOR BUSINESS PUR POSES EVEN IN ITA NOS. 2701 & 3654/M/06 MODERN DIE CASTING PVT. LTD. 6 THE ASSESSMENT YEARS 1996-97 AND 1997-98. ON FURTHE R APPEAL TO THE TRIBUNAL, IT WAS HELD THAT THE FLAT CEASED TO B E A BUSINESS ASSET OR DEPRECIABLE ASSET ON AND WITH EFFECT FROM 01.04.1995 AND ITS CHARACTER DURING THE ACCOUNTING YEAR ENDED ON 31.03.1998 WAS THAT OF A LONG TERM CAPITAL ASSET AN D, THEREFORE, THE CAPITAL GAINS SHOULD BE COMPUTED AS LONG TERM C APITAL GAINS. IN THIS ORDER THE PROVISIONS OF SECTION 50A WERE RE FERRED TO. THIS SECTION MAKES SPECIAL PROVISION FOR COST OF ACQUISI TION IN THE CASE OF DEPRECIABLE ASSET. IT SAYS THAT WHERE THE CAPITA L ASSET IS ONE IN RESPECT OF WHICH DEPRECIATION WAS ALLOWED IN ANY PREVIOUS YEAR; THE PROVISIONS OF SECTIONS 48 AND 49 SHALL AP PLY SUBJECT TO THE MODIFICATION THAT THE WRITTEN DOWN VALUE OF THE ASSET, AS ADJUSTED, SHALL BE TAKEN AS THE COST OF ACQUISITION . RELYING ON THIS PROVISION THE TRIBUNAL HELD THAT BUT FOR THE D IFFERENCE IN THE COST OF ACQUISITION, A PAST CLAIM OF DEPRECIATION D OES NOT CHANGE THE CHARACTER OF THE ASSET AS SUCH. THIS ORDER OF T HE TRIBUNAL SUPPORTS THE ASSESSEES CASE BEFORE US. IN THE PRES ENT CASE ALSO THE ASSESSEE HAD STOPPED CLAIMING DEPRECIATION IN T HE INCOME TAX RETURN FOR THE ASSESSMENT YEARS 1992-93 AND 1993-94 . IT HAD CLAIMED DEPRECIATION IN RESPECT OF THE FLAT ONLY IN THE ASSESSMENT YEARS 1990-91 AND 1991-92. FOR THE ASSESSMENT YEAR 1994-95 AND ALL SUBSEQUENT YEARS THE ASSESSEE HAD MADE A NO TE IN ITS ACCOUNTS FILED WITH THE RETURNS CLARIFYING THAT NO DEPRECIATION WAS PROVIDED IN RESPECT OF THE FLAT AS THE SAME WAS NOT USED DURING THE YEAR FOR THE PURPOSE OF THE BUSINESS. FR OM THE ASSESSMENT YEAR 1994-95 UP TO THE ASSESSMENT YEAR 2 004-05, THE FLAT WAS CLASSIFIED IN THE BALANCE SHEET AS A F IXED ASSET AND SHOWN AT COST LESS DEPRECIATION. THESE FACTS ARE RE CORDED IN PARAGRAPH 8 OF THE ASSESSMENT ORDER. IN THE ASSESSM ENT YEARS 2000-01 AND 2001-02, THE FLAT HAD BEEN LET OUT AND THE RENTAL INCOME WAS SHOWN UNDER THE HEAD INCOME FROM HOUSE P ROPERTY. IT WOULD THUS APPEAR THAT AFTER THE ASSESSMENT YEAR 1993-94 NO DEPRECIATION WAS PROVIDED EVEN IN THE BOOKS OF ACCO UNT AND NO DEPRECIATION HAD BEEN CLAIMED OR ALLOWED IN THE RET URN OR IN THE ASSESSMENTS. IN THIS FACTUAL SITUATION THE ORDER OF THE COCHIN BENCH OF THE TRIBUNAL CITED SUPRA IS APPLICABLE, IN WHICH IT WAS HELD THAT IF NO DEPRECIATION HAD BEEN CLAIMED OR AL LOWED IN RESPECT OF THE ASSET, EVEN THOUGH FOR AN EARLIER PE RIOD DEPRECIATION WAS CLAIMED AND ALLOWED, FROM THE YEAR IN WHICH THE DEPRECIATION CLAIMED WAS DISCONTINUED, THE ASSE T WOULD CEASE TO BE A BUSINESS OR DEPRECIABLE ASSET AND IF THE ASSET HAD BEEN ACQUIRED BEYOND THE PERIOD OF THIRTY SIX MONTH S FROM THE DATE OF SALE, IT WOULD BE A CASE OF LONG TERM CAPIT AL GAINS. IN OUR HUMBLE UNDERSTANDING, THE RATIO OF THE ORDER APPEAR S TO BE THAT THE ASSET HAD CEASED TO BE A BUSINESS ASSET AND HAD BECOME AN INVESTMENT. 8. THE ORDER OF THE COCHIN BENCH IN THE CASE OF SAK THI METAL DEPOT (SUPRA) HAS BEEN DISTINGUISHED BY THE CIT(A) ON THE GROUND THAT IN THAT CASE THE PROPERTY WAS SPECIFICALLY TRE ATED IN THE ITA NOS. 2701 & 3654/M/06 MODERN DIE CASTING PVT. LTD. 7 BOOKS AS AN INVESTMENT WHEREAS IN THE ASSESSEES C ASE THE FLAT HAS BEEN SHOWN IN THE BALANCE SHEET AS A FIXED ASSE T AND NOT AS AN INVESTMENT. THIS HOWEVER DOES NOT MAKE ANY DIFFE RENCE TO THE RATIO OF THE SAID ORDER FOR THE REASON THAT IN THE CASE BEFORE THE COCHIN BENCH THE ASSESSEE WAS A PARTNERSHIP FIRM AN D COULD THEREFORE SHOW THE ASSET AS AN INVESTMENT IN THE BA LANCE SHEET WHEREAS IN THE CASE BEFORE US THE ASSESSEE IS A PRI VATE LIMITED COMPANY AND THE COMPANIES ACT PROVIDES THAT THE FLA T SHOULD BE SHOWN AS FIXED ASSET, EVEN IF IT IS NOT HELD AS A B USINESS ASSET AND IS HELD AS AN INVESTMENT. THE CHARACTER OF THE ASSET HAS BEEN CHANGED FROM THAT OF A BUSINESS ASSET TO AN IN VESTMENT SHOWN AS FIXED ASSET IN THE BALANCE SHEET. EVEN OTH ERWISE, THE MANNER IN WHICH THE ASSET IS SHOWN IN THE ACCOUNTS OF THE ASSESSEE MAY NOT BE CONCLUSIVE IF THERE ARE FACTS T O SHOW THAT FOR A LONG PERIOD OF TIME THE ASSET HAD CEASED TO BE A BUSINESS ASSET AND NO DEPRECIATION WAS CLAIMED OR ALLOWED THEREON. IN THE PRESENT CASE NOT ONLY WAS THE CLAIM OF DEPRECIATION IN RESPECT OF THE FLAT DISCONTINUED BY THE ASSESSEE AFTER THE ASS ESSMENT YEAR 1993-94, BUT THE FLAT HAD BEEN LET OUT FOR RENT FRO M THE ASSESSMENT YEAR 1994-95. FOR A FEW YEARS, I.E. FROM THE ASSESSMENT YEARS 1994-95 TO 1999-2000, THE RENTAL I NCOME WAS OFFERED AS BUSINESS INCOME. HOWEVER, FROM THE ASSES SMENT YEAR 2000-01, THE RENTAL INCOME WAS OFFERED FOR ASSESSME NT UNDER THE HEAD PROPERTY. THERE IS NOTHING TO SHOW THAT IT W AS ONE OF THE BUSINESSES OF THE ASSESSEE, AS PER ITS OBJECT CLAUS E IN THE MEMORANDUM OF ASSOCIATION, TO LET OUT FLATS ON RENT . EVEN IF THAT WERE TO BE SO, WHEN THERE IS A SPECIFIC HEAD UNDER WHICH THE RENT HAS TO BE ASSESSED, NAMELY, INCOME FROM HOUSE PROP ERTY, THE FACT THAT IT WAS ASSESSED FOR SOME YEARS AS BUSINES S INCOME CANNOT BE HELD AGAINST THE ASSESSEE. THE QUESTION I S WHETHER THE CHARACTER OF THE ASSET DID CHANGE AND THE ASSET BEC AME A FIXED ASSET OR INVESTMENT AND CEASED TO BE A BUSINESS ASS ET. IN OUR OPINION, THE MOMENT THE ASSESSEE STOPPED CLAIMING D EPRECIATION IN RESPECT OF THE FLAT AND EVEN LET OUT THE SAME FO R RENT; IT CEASED TO BE A BUSINESS ASSET. ACCORDINGLY THE ORDER OF TH E COCHIN BENCH IN SAKTHI METAL DEPOT (SUPRA) APPLIES IN FAVOUR OF THE ASSESSEE. 9. IN THE CASE OF SAKTHI METAL DEPOT, THE COCHIN BE NCH HELD AS UNDER:- 14. BUT ON A PERUSAL OF THE ORDERS OF THE LOWER AUT HORITIES, WE FIND THAT THE AO HAS NOT BROUGHT ANY MATERIAS ON RE CORD TO DISBELIEVE THE CONTENTION OF THE ASSESSEE-FIRM SUPP ORTED BY ITS BOOKS OF ACCOUNT AND BALANCE-SHEETS. IF THE ASSESS ING AUTHORITY WAS WILLING TO ACCEPT THE STATE OF AFFAIRS PRIOR TO THE SALE OF THE FLAT, WHOLLY ON THE BASIS OF THE BOOKS OF ACCOUNT M AINTAINED BY THE ASSESSEE-FIRM, IT IS ONLY JUST AND PROPER AND R EASONABLE THAT AO ALSO ACCEPTS THE STATE OF AFFAIRS AFTER THE SALE OF THE FLAT, AS REFLECTED IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE ITA NOS. 2701 & 3654/M/06 MODERN DIE CASTING PVT. LTD. 8 FIRM. THE AO CAN REJECT THE STATE OF AFFAIR AS PER THE BOOKS OF ACCOUNT AFTER THE SALE OF THE FLAT ONLY IF THE AO I S HAVING IN HIS POSSESSION ANY OTHER SPECIFIC INFORMATION OR EVIDEN CE TO REBUT THE STATE OF AFFAIRS AS REFLECTED IN THE BOOKS OF ACCOU NT OF THE ASSESSEE FIRM. IN THE PRESENT CASE THE AO HAS NOT C OLLECTED ANY SUCH INFORMATION OR EVIDENCE AGAINST THE STATEMENT OF ACCOUNTS MAINTAINED BY THE ASSESSEE FIRM. THE CIT(A), ON THE OTHER HAND, HAS OBSERVED THAT THE ASSESSEE FIRM HAS NOT PRODUCE D ANY EVIDENCE TO SHOW THAT THE FLAT WAS NOT USED FOR ITS BUSINESS PURPOSE AFER 31/3/95. IT IS TO BE SEEN THAT IT IS O NE OF BASIC RULES OF EVIDENCE THAT A PERSON CANNOT BE CALLED UPON TO PROVE THE NEGATIVE. 15. THEREFORE, IT IS OUR CONSIDERED VIEW THAT THE LOWER AUTHORITIES HAVE ERRED IN COMING TO A CONCLUSION TH AT THE ASSESSEE FIRM HAD IN FACT USED THE FLAT FOR ITS BUS INESS PURPOSES EVEN AFTER 31/3/95. THERE IS NO BASIS FOR ARRIVING AT SUCH A FACTUAL CONCLUSION. THE SAID CONCLUSION HAS BEEN AR RIVED AT BY THE LOWER AUTHORITIES ONLY ON THE BASIS OF INTELLIG ENT PRESUMPTION. 16. WE HAVE TO THEREFORE ACCEPT THE CONTENTION OF THE ASSESSEEFIRM THAT THE FLAT WAS NOT USED FOR ITS BUS INESS PURPOSE AFTER 31/3/95. THEREFORE IT IS TO BE ACCEPTED THAT THE BOMBAY FLAT CEASED TO BE A BUSINESS ASSET DEPRECIABLE ASSE T ON AND WITH EFFECT FROM 31/3/95. THE FLAT WAS ACQUIRED BY THE A SSESSEE FIRM WAY BACK IN 1974. THEREFORE THE CHARACTER OF THE FL AT DURING THE ACCOUNTING YEAR ENDING ON 31/3/98 WAS THAT OF LONG TERM CAPITAL ASSET. THIS CHARACTER OF THE ASSET DOES NOT CHANGE ONLY FOR THE REASON THAT THE FLAT WAS USED AS A BUSINESS ASSET/D EPRECIABLE ASSET IN THE PAST. A LONG TERM CAPITAL ASSET EVEN T HOUGH USED AS A DEPRECIABLE ASSET IN THE PAST STILL COULD BE A LO NG TERM CAPITAL ASSET FOR THE PURPOSE OF TAXATION, IF THE PROPERTY WAS NOT TREATED AS A DEPRECIABLE ASSET AT THE TIME OF SALE. IT IS A LWAYS POSSIBLE THAT A PARTICULAR ASSET CAN BE A PERSONAL ASSET FOR SOME TIME AND A BUSINESS ASSET FOR SOME OTHER TIME. IT ENTIRELY D EPENDS UPON THE INTENTION OF THE OWNERS OF THE PROPERTY IN WHIC H WAY IT SHOULD BE USED. 17. IN THE PRESENT CASE, THE NATURE OF THE FLAT BE ING A LONG TERM CAPITAL ASSET HAS NOT BEEN CHANGED ONLY FOR THE REA SON THAT IN THE PAST THE PROPERTY WAS CONSIDERED AS A BUSINESS ASSE T AND DEPRECIATION WAS CLAIMED THEREON. THE PROVISIONS OF SECTION 50A TAKES CARE OF A SITUATION LIKE THIS. THE EFFECT OF THE PROVISIONS OF SECTION 50A IS THAT IF DEPRECIATION WAS ALLOWED ON A PARTICULAR ASSET IN THE PAST, THE COST OF ACQUISITION IF THE S AID ASSET SHALL BE REDUCED TO THAT EXTENT. BUT FOR THE DIFFERENCE IN T HE COST OF ACQUISITION, A PAST CLAIM OF DEPRECIATION DOES NOT CHANGE THE CHARACTER OF THE ASSET AS SUCH. THEREFORE, IN THE F ACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE ASSESSE E FIRM WAS HOLDING THE FLAT SINCE 1974 AND AT THE TIME OF SALE OF THE FLAT, THE ITA NOS. 2701 & 3654/M/06 MODERN DIE CASTING PVT. LTD. 9 PROPERTY WAS A PERSONAL PROPERTY CHARACTERIZED AS I NVESTMENT, EVEN THOUGH DEPRECIATION WAS CLAIMED PRIOR TO THE A SSESSMENT YEAR 1996-97. 18. THEREFORE, THE CAPITAL GAINS COMPUTED BY THE A O IN THIS CASE NEED TO BE TREATED AS LONG TERM CAPITAL GAINS. THE LONG TERM CAPITAL GAINS IN THIS CASE IS TO BE WORKED OUT ON T HE BASIS OF THE WRITTEN DOWN VALUE OF THE FLAT AS ON 31/3/95 WITH E FFECT FROM WHICH DATE THE FLAT WAS CEASED TO BE A BUSINESS ASS ET. 10. IN VIEW OF THE ABOVE DECISIONS OF THE TRIBUNAL, IT IS CLEAR THAT SIMPLY BECAUSE THE ASSESSEE CLAIMED DEPRECIATION ON THE FLAT, THE CLAIM OF THE ASSESSEE OF LONG TERM CAPITAL GAIN CAN NOT BE DENIED U/S 50 OF THE ACT, OF OTHERWISE, FULFILLED ALL THE COND ITIONS. IN THE PRESENT CASE, THE ASSESSEE CLAIMED DEPRECIATION IN AY 1996- 07 AND THE SAME WAS ALLOWED. THE LONG TERM CAPITAL GAIN, IN THIS CA SE, HAS TO BE WORKED OUT ON THE BASIS OF WRITTEN DOWN VALUE WITH EFFECT FROM WHICH DATE THE FLAT WAS CEASED TO BE A BUSINESS ASSET. IT IS NOT CLEAR FROM THE EITHER OF THE AUTHORITIES BELOW THAT FROM WHICH DATE THE FLAT WAS CEASED TO BE A BUSINESS ASSET. THEREFORE, WE SET AS IDE THE ORDER OF CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF TH E AO WITH A DIRECTION TO VERIFY THE ABOVE FACT AND DECIDE THE ISSUE IN VI EW OF THE ABOVE OBSERVATIONS AND IN THE LIGHT OF THE DECISIONS OF T HE TRIBUNAL IN THE CASE SAKTHI METAL DEPOT. (COCHIN) (SUPRA), AFTER GI VING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN THE M ATTER. ACCORDINGLY, GROUND NO.1 & 2 ARE TREATED AS ALLOWED FOR STATISTI CAL PURPOSES. 11. GROUND NO. 3 IS REGARDING THE ACTION OF THE CI T(A) IN CONFIRMING THE ACTION OF THE AO ON ATTRACTING PROVISIONS OF SE CTION 50C OF THE ACT, HAS NOT PRESSED BY THE LEARNED COUNSEL FOR THE ASSE SSEE AT THE TIME OF HEARING BEFORE US, THEREFORE, THIS GROUND IS DISMIS SED AS NOT PRESSED. 12. GROUND NOS. 4 & 5 READS AS UNDER:- 4. THE CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN ASSESSING THE INCOME FROM HOUSE PROPERTY IN RESPECT OF THE FLAT NO. 9 IN MERRY NIKETAN AT RS. 1,81,244 AGAINST INCO ME OF RS. 41,244/- DECLARED IN THE RETURN OF INCOME. ITA NOS. 2701 & 3654/M/06 MODERN DIE CASTING PVT. LTD. 10 5. THE CIT(A) ERRED IN NOT DIRECTING THE AO TO INVO KE PROVISIONS OF SECTION 23(1)(B) OF THE ACT SINCE THE FLAT NO. 9 IN MERRY NIKETAN WAS LET OUT. HE FURTHER ERRED IN NOT DIRECTING THE AO TO ADOPT THE ACTUAL RENT RECEIVED WHICH IS MORE THAN THE RATABLE VALUE AS ASSESSED BY THE MUNICIPAL AUTHORITIES. 13. BEFORE THE AO, THE ASSESSEE HAD CLAIMED THAT TH E ANNUAL LETTING VALUE OF THE PROPERTY BEING FLAT NO. 9, MERRY NIKET AN, BANDRA (W), MUMBAI IS TO BE DETERMINED ON THE BASIS OF LICENSE FEES OF RS. 6,000/- PER MONTH RECEIVED BY IT ON THE GROUND THAT THE SAI D VALUE IS TO BE DETERMINED U/S 23(1)(B) OF THE ACT. THE AO DID NOT ACCEPT THE CLAIM OF THE ASSESSEE FOR THE REASON THAT APART FROM THE LIC ENSE FEE, THE ASSESSEE HAD ALSO RECEIVED INTEREST FREE DEPOSIT OF RS. 10 LAKHS. THE AO FOUND THAT THE RENT IN THAT AREA WAS MUCH HIGHER . TO ARRIVE AT THE ANNUAL LETTING VALUE, THE AO CONSIDERED IT APPROPRI ATE TO MAKE UPWARD ADJUSTMENT OF LICENSE FEE BY A SUM EQUAL TO 2% PER MONTH ON THE INTEREST FREE DEPOSITS. ACCORDINGLY HE WORKED O UT THE ANNUAL LETTING VALUE TAKING NOTIONAL RENTAL OF RS. 26,000/ - PER MONTH. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEA L BEFORE THE CIT(A). BEFORE THE CIT(A), THE AR OF THE ASSESSEE SUBMITTED THAT THE ACTION OF THE AO IS NOT CORRECT FOR THE REASON THAT THE PROVI SIONS OF SECTION 23(1)(B) ARE APPLICABLE TO THE CASE OF THE ASSESSEE . HE PLACED RELIANCE ON THE DECISIONS IN THE CASES OF DEEWAN DAULAT RAJ KAPOOR VS. NEW DELHI MUNICIPAL COMMITTEE 122 ITR 700 (SC) AND MRS. SHEILA KAUSHISH VS. CIT, 131 ITR 435 (SC) AND CIT VS. JK I NVESTOR (BOM.) LTD., 248 ITR 723 (BOM.). IT WAS SUBMITTED BY TAKI NG INTO THE FACTS OF THE CASE THE AO BE DIRECTED TO TAKE ACTUAL LICENSE FEE RECEIPT AS THE ANNUAL LETTING VALUE FOR THE COMPUTATION OF INCOME CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY. IT WAS F URTHER SUBMITTED THAT THE AO ERRED IN CALCULATING GROSS RENT FOR THE PERIOD OF 10 MONTHS AS CONCERNED PROPERTY WAS LEASED OUT ONLY FOR THE P ERIOD OF 4 MONTHS AND, THEREFORE, EVEN IF THE INCOME FROM HOUSE PROPE RTY IS TO BE COMPUTED, IT IS TO BE FOR A PERIOD OF 4 MONTHS ONLY . AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE CIT(A) HELD TH AT FOR THE DETERMINATION OF THE ANNUAL LETTING VALUE, IT IS TO BE SAID THAT FOR THE ITA NOS. 2701 & 3654/M/06 MODERN DIE CASTING PVT. LTD. 11 PURPOSE OF SECTION 22 OF THE ACT IS THE BASIS OF CH ARGING OF INCOME FROM HOUSE PROPERTY, THE ANNUAL LETTING VALUE IS TO BE FIRST DETERMINED IN TERMS OF SECTION 23(1)(A) OF THE ACT. IN TERMS OF THIS CLAUSE, THE ANNUAL VALUE OF ANY PROPERTY IS TO BE DEEMED AS ONE FOR WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO BE LET OUT FROM YEAR TO YEAR. HE FURTHER HELD THAT SINCE THE PERIOD OF LEASE IS A N ASPECT THAT IS ONLY A MATTER OF VERIFICATION, THE AO IS DIRECTED TO VER IFY THE CLAIM AND IF FOUND CORRECT, RESTRICT THE COMPUTATION ONLY FOR TH E PERIOD CLAIMED BY THE ASSESSEE. STILL AGGRIEVED, THE ASSESSEE IS IN A PPEAL BEFORE THE TRIBUNAL. 14. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF TH E PARTIES AND PERUSED THE RECORD AS WELL AS GONE THROUGH THE ORDE RS OF THE AUTHORITIES BELOW. WITH REGARD TO FAIR RENT, THE HO NBLE DELHI HIGH COURT IN THE CASE OF CIT VS. MONI KUMAR SUBBA [2011 ] 333 ITR 38 (DEL.) HELD AS UNDER:- IN THE PRESENT CASE, THE ASSESSING OFFICER ADDED N OTIONAL INTEREST ON THE INTEREST FREE SECURITY FOR ARRIVING AT ANNUAL LETTING VALUE SINCE THAT WAS NOT PERMISSIBLE, THE EFFECT WO ULD BE THAT SUCH ASSESSMENT WAS RIGHTLY SET ASIDE BY THE COMMIS SIONER OF INCOME TAX (APPEALS) AND THE TRIBUNAL. THEREFORE, THE ORDERS WOULD NOT CALL FOR ANY INTERFERENCE. THESE APPEALS ARE THUS, DISMISSED ON THIS GROUND. ONCE WE HOLD THIS, THE V ERY BASIS ADOPTED BY THE ASSESSING OFFICER TO FIX ANNUAL LETT ING VALUE WAS WRONG AND THEREFORE, NO FURTHER EXERCISE IN FACT IS REQUIRED BY US IN THESE APPEALS. HOWEVER, WE MAY OBSERVE THAT NO PARTICULAR TEST CAN BE LAID DOWN AND IT WOULD DEPEND ON THE FACTS OF EACH CASE. WE WOULD DO NOTHING MORE THAN TO EXTRACT THE FOLLOWING PASSA GE FROM THE SUPREME COURT JUDGMENT IN THE CASE OF MOTICHAND V. BOMBAY MUNICIPAL CORPORATION, AIR 1968 SC 441, 442: IT IS WELL-RECOGNIZED PRINCIPLE IN RATING THAT BOT H GROSS VALUE AND NET ANNUAL VALUE ARE ESTIMATED BY REFER ENCE TO THE RENT AT WHICH THE PROPERTY MIGHT REASONABLY BE EXPECTED TO LET FROM YEAR TO YEAR. VARIOUS METHODS OF VALUATION ARE APPLIED IN ORDER TO ARRIVE AT SUCH HY POTHETICAL RENT, FOR INSTANCE, BY REFERENCE TO THE ACTUAL RENT PAID FOR THE PROPERTY OR FOR OTHERS COMPARABLE TO IT OR WHER E THERE ARE NO RENTS BY REFERENCE TO THE ASSESSMENTS OF COM PARABLE ITA NOS. 2701 & 3654/M/06 MODERN DIE CASTING PVT. LTD. 12 PROPERTIES OR TO THE PROFITS EARNED FROM THE PROPER TY OR TO THE COST OF CONSTRUCTION. WE HAVE ALSO TAKEN NOTE OF THE JUDGMENT OF THE BOMB AY HIGH COURT IN THE CASE OF J.K. INVESTORS [2001] 248 ITR 723 WHEREIN THE COURT HINTED THAT VARIOUS FACTORS MAY BECOME RE LEVANT IN DETERMINING THE FAIR RENT. THE PRECISE OBSERVATI ONS OF THE COURT IN THE SAID JUDGMENT ARE AS UNDER (PAGE 727): AT THE COST OF REPETITION IT MAY BE MENTIONED THAT UNDER SECTION 23(1)(A), THE ASSESSING OFFICER HAS TO DECI DE THE FAIR RENT OF THE PROPERTY. WHILE DECIDING THE FAIR RENT , VARIOUS FACTORS COULD BE TAKEN INTO ACCOUNT. IN SUCH CASES VARIOUS METHODS LIKE THE CONTRACTORS METHOD COULD BE TAKEN INTO ACCOUNT. IF ON COMPARISON OF THE FAIR RENT WITH TH E ACTUAL RENT RECEIVED, THE ASSESSING OFFICER FINDS THAT THE ACTUAL RENT RECEIVED IS MORE THAN THE FAIR RENT DETERMINAB LE AS ABOVE, THEN THE ACTUAL RENT SHALL CONSTITUTE THE AN NUAL VALUE UNDER SECTION 23(1)(B) OF THE ACT. NOW, APPL YING THE ABOVE TEST TO THE FACTS OF THIS CASE, WE FIND A CAT EGORICAL FINDING OF THE FACT RECORDED BY THE TRIBUNAL THAT T HE ACTUAL RENT RECEIVED BY THE ASSESSEE WAS MORE THAN THE FAI R RENT. UNDER THE ABOVE CIRCUMSTANCES, IN VIEW OF THE SAID FINDING OF THE FACT, WE DO NOT SEE ANY REASON TO INTERFERE . 15. IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE D ELHI HIGH COURT IN THE SAID CASE, RESPECTFULLY FOLLOWING THE SAME, WE SET ASIDE THE ORDER OF THE CIT(A) AND ALLOW THE GROUNDS RAISED BY THE A SSESSEE ON THIS COUNT. 16. GROUND NOS. 5 TO 9 ARE GENERAL IN NATURE, THERE FORE, THE SAME ARE NOT REQUIRED TO BE ADJUDICATED BY US. 17. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATE D AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 3654/M/06 APPEAL BY THE REVENUE 18. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) ERRED IN QUANTIFYING THE SALE CONSIDERAT ION. HE FAILED TO APPRECIATE THAT THE ASSESSEE HAD ERRONEOUSLY CLA IMED THAT THE ITA NOS. 2701 & 3654/M/06 MODERN DIE CASTING PVT. LTD. 13 VALUE AS PER THE READY RECKONER OF 2002 WAS RS. 25, 40,166/-. THE CIT(A) MAY BE DIRECTED TO QUANTIFY THE RELIEF I NSTEAD OF LEAVING IT TO THE AO. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE CIT(A) ERRED IN NOT GIVING A FINDING ABOUT THE EXAC T PERIOD OF LEASE (STATED AS 10 MONTHS IN THE ASSESSMENT ORDER) SINCE , THE ASSESSEE HAD ERRONEOUSLY CLAIMED THE LEASE PERIOD T O BE FOR FOUR MONTHS. THE CIT(A) MAY BE DIRECTED TO GIVE A FINDIN G ABOUT THE PERIOD OF LEASE. 19. THE GRIEVANCE OF THE ASSESSEE IS THAT THE AO HA D TAKEN THE NOTIONAL VALUE OF THE FLAT AT RS. 34,09,770/- ON TH E BASIS OF STAMP DUTY READY RECKONER OF 2005, AS AGAINST THE AMOUNT OF RS. 25 LAKHS ACTUALLY RECEIVED BY IT. . BEFORE THE CIT(A), IT WA S SUBMITTED THAT THE AO WAS IN TAKING THE NOTIONAL VALUE ON THE BASIS OF STAMP DUTY READY RECKONER OF 2005 INSTEAD OF 2002. IT WAS FURTHER SU BMITTED THAT THE FULL VALUE OF CONSIDERATION FOR THE PURPOSE OF SECT ION 50 OF THE ACT SHOULD BE ADOPTED AS PER THE STAMP DUTY READ RECKON ER OF 2002 AND NOT OF 2005. AS PER THE READY RECKONER 2002, FULL V ALUE CONSIDERATION IS RS. 25,40,166/- AND, THEREFORE, THE SAME IS TO B E ADOPTED FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS. AFTER CONS IDERING THE SUBMISSIONS OF THE ASSESSEE, THE CIT(A) HELD AS UND ER:- 17. THE SUBMISSION MADE BY THE APPELLANTS REPRESEN TATIVE HAS BEEN CONSIDERED. THERE IS MERIT IN THE CLAIM MADE I N THIS RESPECT. WHERE THE FLAT IS SOLD IN 2002 EVEN IN TERMS OF SEC TION 50C OF THE ACT, SALE CONSIDERATION CANNOT BE TAKEN ON THE BASI S OF STAMP DUTY READY RECKONER OF 2005. IT IS TO BE AS PER THE STAMP DUTY READH RECKONER OF 2002 ONLY. THE APPELLANTS REPRES ENTATIVE HAS GIVEN THE FIGURE THERE OF AS RS. 25,40,166/-. THE A O IS DIRECTED TO VERIFY THE CORRECT OF THE FIGURE FROM STAMP DUTY RE ADY RECKONER OF 2002 AND IF IT IS FOUND CORRECT, ADOPT THE SAID FIG URE IN THE COMPUTATION OF SHORT TERM CAPITAL GAINS. 20. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVEN UE IS IN APPEAL BEFORE THE TRIBUNAL. 21. THE LEARNED DR HAS PLACED RELIANCE ON THE ORDER OF THE AO WHEREAS THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE ORDER OF THE CIT(A). ITA NOS. 2701 & 3654/M/06 MODERN DIE CASTING PVT. LTD. 14 22. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF T HE PARTIES AND PERUSED THE RECORD AS WELL AS GONE THROUGH THE ORDE RS OF THE AUTHORITIES BELOW. IT IS OBSERVED THAT THE ASSESSEE SOLD THE FLAT IN 2002 FOR A CONSIDERATION OF RS. 25 LAKHS. THE AO HA D TAKEN THE NOTIONAL VALUE OF THE SALE PROCEEDS OF THE FLAT AT RS. 34,09,770/- AS AGAINST THE SAID AMOUNT OF RS. 25 LAKHS ON THE BASI S OF STAMP DUTY READY RECKONER OF 2005 INSTEAD OF READY RECKONER OF 2002. THE CIT(A) HELD THAT THERE IS MERIT IN THE CLAIM MADE BY THE A SSESSEE IN THIS RESPECT AS THE FLAT IS SOLD IN 2002 AND EVEN IN TER MS OF THE SECTION 50C OF THE ACT, SALE CONSIDERATION CANNOT BE TAKEN ON THE BASIS OF STAMP DUTY READY RECKONER OF 2005 AND IT IS TO BE T AKEN AS PER THE STAMP DUTY READY RECKONER OF 2002 ONLY. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) IN DIRECTING T HE AO TO VERIFY THE CORRECTNESS OF THE FIGURE FROM STAMP DUTY READY REC KONER OF 2002 AND IT IF IS FOUND CORRECT, ADOPT THE SAID FIGURE IN TH E COMPUTATION OF SHORT TERM CAPITAL GAIN. ACCORDINGLY, WE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE GROUND RAISED BY THE REVENUE IN THIS RE GARD. 23. IN THE RESULT, APPEAL OF THE REVENUE IS DISM ISSED. 24. TO SUM UP, APPEAL OF THE ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THE APPEAL OF THE REVE NUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF AUGUST, 2011. SD/- SD/- (R.S. SYAL) (V. D URGA RAO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI, DATED: 30 TH AUGUST, 2011 KV ITA NOS. 2701 & 3654/M/06 MODERN DIE CASTING PVT. LTD. 15 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, E BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI.