DCIT 20(2), MUMBAI V. MANISH RAJNIKANT DESAI, MUMBAI

ITA 2928/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4399 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 29-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR SONI
• Assessee Lawyers: PRAKASH K JOTWANI
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Depreciation; Cost of acquisition
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUM BAI BEFORE SHRI JOGINDER SINGH, JM AND SHRI RAJESH KUMA R, AM ./ I.T.A. NO. 2928/MUM/2014 ( / ASSESSMENT YEAR: 2009-10) OFFICE OF THE DCIT-20(2)., 612, PIRAMAL CHAMBERS, LALBAUG, MUMBAI 400 012. / VS. SHRI. MANISH RAJNIKANT DESAI 45, RADHIKA NIWAS, OPP. PRAKASH STUDIO, SIR M.V. ROAD, ANDHERI (EAST) MUMBAI 400 0064. ./ ./PAN/GIR NO. AAAPD 9411E ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI VIJAY KUMAR SONI / RESPONDENT BY : SHRI PRAKASH K. JOTWANI / DATE OF HEARING : 28/10/2015 !'# / DATE OF PRONOUNCEMENT : 08/01/2016 $% / O R D E R PER RAJESH KUMAR, A. M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 22.12.2011 OF COMMISSIONER OF INCOME TAX (APPEALS)-31, MUMBAI (HE REINAFTER CALLED AS THE CIT(A) ) FOR ASSESSMENT YEAR 2009-10.THE ASSESSEE H AS RAISED FOLLOWING GROUNDS OF APPEAL: 2 ITA NO.2928/MUM/2014 DCIT VS. SHRI. MANISH RAJNIKANT DESAI 1. ON THE FACTS OF THE CASE AND IN LAW, THE LEARNED CI T (A) HAS ERRED IN DIRECTING THE A.O TO DELETE THE ADDITION MADE AS SHORT TERM C APITAL GAIN ON SALE OF GALA. 2. ON THE FACTS OF THE CASE AND IN LAW, THE LEARNED CI T (A) HAS ERRED IN NOT CONSIDERING THE FACT THAT THE INDUSTRIAL GALA CEASE D TO BE PART OF BLOCK OF ASSETS THE MOMENTS ASSESSEE TREATED IT AS HOUSE PROPERTY B Y GIVING IT ON RENT. SECONDLY, THE ASSESSEE ON HIS OWN ACCORD HAS NOT CL AIMED DEPRECIATION ON THE GALA FOR THE PAST TWO YEARS. NEEDLESS TO SAY FOR TH IS REASON THE GALA CEASED TO BE PART OF BLOCK OF ASSETS. NOW, WHEN HE HAS ENJOYE D THE FRUIT OF RENTAL INCOME AND DEDUCTION U/S 24 OF INCOME FROM HOUSE PROPERTY. NOW HE WANTS TO SHIFT THE GALA AGAIN BACK TO BLOCK OF ASSETS TO AVAIL THE BEN EFIT OF SECTION 43(6) AND TO GET AWAY FROM THE CLUTCHES OF TAX LIABILITY BY VIRT UE OF SECTION 50 OF THE INCOME- TAX ACT, 1961. 3. THE SOLE ISSUE RAISED BY THE REVENUE IN ALL THE GROUNDS OF APPEAL IS AGAINST THE DELETION OF ADDITION MADE BY CIT(A) ON ACCOUNT OF SHORT TERM CAPITAL ON SALE OF GALA. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSE SSE FILED HIS RETURN OF INCOME FOR THE AY 2009-10 DECLARING TOTAL INCOME OF RS.29,48,0 80/- ON 26.09.2009. THE ASSESSEE HAD PURCHASED A FACTORY GALA BEARING NUMBE R 221/222 AT TANTIA JOGANI INDUSTRIAL ESTATE WHICH WAS SOLD FOR RS. 63,00,000 /- AND REGISTERED AT RS. 66,41,733/-WITH JOINT SUB REGISTRAR MUMBAI CITY. THE ASSESSEE CLAIMED DEPRECIATION ON THIS GALA UPTO AY 2006-07. THEREAFT ER THE GALA WAS GIVEN ON RENT FOR 2 A.Y NAMELY 2007-08 AND 2008-09 AND THE DEPREC IATION WAS NOT CLAIMED 3 ITA NO.2928/MUM/2014 DCIT VS. SHRI. MANISH RAJNIKANT DESAI DURING THESE 2 YEARS AND THE RENTAL INCOME FROM SAI D GALA WAS SHOWN OUT AS INCOME FROM HOUSE PROPERTY. THE ASSESSEE TREATED THE SAID GALA AS PART OF THE BLOCK OF ASSETS OF FACTORY GALA PRIOR TO THE DATE OF SALE. THE SALE PROCEEDS OF THE SAID GALA WAS DEALT WITH IN ACCORDANCE WITH THE PRO VISIONS OF SECTION 50 OF THE ACT BY REDUCING THE SAME FROM THE BLOCK OF ASSET NAM ELY FACTORY GALA AND THE WDV AT THE END OF THE YEAR AS ON 31.03.2009 WAS WO RKED OUT AT RS. 29,33,290/- AFTER MAKING ALL THE NECESSARY ADJUSTMENTS IN RESPE CT OF OPENING BALANCE, ADDITIONS DURING THE YEAR AND SALES OF FACTORY GALA. AS A RES ULT THERE WAS NO SHORT TERM CAPITAL GAIN AS BLOCK OF ASSETS AT THE YEAR END WAS IN EXIS TENCE. 4. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTI NY ON THE BASIS OF THE AIR INFORMATION. THE LD. AO REJECTED THE CONTENTION OF THE ASSESSEE THAT THE FACTORY GALA WAS PART OF THE BLOCK OF ASSET ON THE GROUND T HAT THE ASSESSEE OFFERED INCOME FROM THE SAID GALA FOR 2 YEARS AS INCOME FROM HOUSE PROPERTY OF THE BLOCK ASSET. THE AO ALSO OBSERVED THAT THE ASSESSEE DID NOT CLAI M ANY DEPRECIATION ON THE SAID GALA FOR 2 YEARS AND THE ASSESSE ENJOYED THE FRUIT OF RENTAL INCOME AND DEDUCTION U/S 24 OF THE ACT. THE ASSESSEE COULD NOT BE GALA B Y VIRTUE OF SECTION 50 OF THE INCOME TAX ACT. THE AO COMPUTED THE SHORT TERM CAPI TAL GAIN BY TAKING THE STAMP VALUE OF RS.66,41,733/- AS SALE PRICE AND RE DUCED THE PURCHASED PRICE OF RS. 4 ITA NO.2928/MUM/2014 DCIT VS. SHRI. MANISH RAJNIKANT DESAI 5,99,040/- THEREBY WORKOUT THE GAIN AT RS. 60,42,69 3/- WHICH WAS INCORPORATED IN PARA 5 OF THE ASSESSMENT ORDER DATED 02.12.2011. 4. THE LD. CIT(A) ALLOWED THE APPEAL OF THE ASSESSE E BY REJECTING THE CONCLUSION ARRIVED AT BY THE AO OF NOT TREATING FACTORY GALA AS PART OF BLOCK OF ASSETS PRIMARILY BECAUSE THE SAID GALA WAS LET OUT AND RENTAL INCOME WERE OFFERED UNDER THE HEAD INCOME FROM HOUSE PROPERTY BY HOLDIN G AS UNDER:- 5. I HAVE CAREFULLY CONSIDERED THE FACTS RELATING TO THE GROUNDS RAISED IN APPEAL AS THEY EMANATE FROM THE IMPUGNED ASSESSMENT ORDER AND THE SUBMISSIONS MADE IN APPEAL 5.1 IN GROUND NO.1, THE APPELLANT HAS CHALLENGED TH E COMPUTATION OF SHORT-TERM CAPITAL GAINS IN RESPECT OF THE SALE OF FACTORY GAL A BY THE AO IN THE IMPUGNED ASSESSMENT ORDER. DURING ASSESSMENT PROCEEDINGS THE AO OBSERVED THAT THE APPELLANT HAD CLAIMED DEPRECIATION ON THE SAID FACT ORY GALA TILL A.Y. 2006 - 07 AND THAT RENTAL INCOME FROM THE LETTING OUT OF THIS GAL A HAD BEEN OFFERED TO TAX UNDER THE HEAD' 'INCOME FROM HOUSE PROPERTY' FOR THE SUBS EQUENT A.YRS. 2007 - 08 AND 2008 - 09. ACCORDINGLY THE AO HELD THAT THE SAID FA CTORY GALA CEASED TO BE PART OF THE BLOCK OF ASSETS FOR THE YEAR UNDER CONSIDERATIO N SINCE THE APPELLANT HAD DERIVED RENTAL INCOME FROM THE SAME. 5.2 A PERUSAL OF THE SCHEDULES ENCLOSED WITH THE RE PORT U/S 44AB FOR THE YEAR UNDER CONSIDERATION SHOWS THAT THE VALUE OF THE NET BLOCK OF FACTORY GALA AS ON 31/03/2009 WAS RS. 29,33,290/-. THE SCHEDULE OF DEP RECIATION ENCAPSULATING THE DEPRECIATION CLAIMED ON FIXED ASSETS AND THE PURCHA SE AND SALES UNDER THE RELEVANT BLOCK I.E 'FACTORY BUILDING' SHOWS THAT DU RING THE F.Y. 2008-09, TRANSACTIONS RELATED TO THIS BLOCK WERE AS FOLLOWS: 5 ITA NO.2928/MUM/2014 DCIT VS. SHRI. MANISH RAJNIKANT DESAI OPENING BALANCE : RS. 18,39,880/- ADDED - PURCHASES : RS. 73,68,410/- REDUCED - SALES : RS. 62,75,000/- CLOSING BALANCE : RS. 29,33,290/- THUS IT IS CLEAR THAT THE BLOCK OF 'FACTORY BUILDIN G/GALA' WAS IN EXISTENCE DURING THE RELEVANT FINANCIAL PERIOD. THE AO HAS HELD THAT BY VIRTUE OF THE APPELLANT HAVING OFFERED RENTAL INCOME FROM THE SAME FACTORY GALA TO TAX UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' THE SAID ASSET CANNOT BE HELD TO HAVE BEEN PART OF THE BLOCK OF 'FACTORY BUILDING/GALA.' 5.3 SECTION 50 OF THE ACT READS AS FOLLOWS: '50. SPECIAL PROVISION FOR COMPUTATION OF CAPITAL G AINS IN CASE OF DEPRECIABLE ASSETS NOTWITHSTANDING ANYTHING CONTAINED IN CLAUSE (42A) OF SECTION 2, WHERE THE CAPITAL ASSET IS AN ASSET FORMING PART OF A BLOCK OF ASSETS IN RESPECT OF WHICH DEPRECIATION HAS BEEN ALLOWED UNDER THIS ACT OR UNDER THE INDIAN INCOME-TAX ACT, 1922 (11 OF 1922), THE PROVISIONS OF SECTIONS 48 AND 49 SHALL B E SUBJECT TO THE FOLLOWING MODIFICATIONS:- (1) WHERE THE FULL VALUE OF THE CON SIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE ASSET TOGETHER W ITH THE FULL VALUE OF SUCH CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T HE TRANSFER OF ANY OTHER CAPITAL ASSET FALLING WITHIN THE BLOCK OF THE ASSETS DURING THE PREVIOUS YEAR, EXCEEDS THE AGGREGATE OF THE FOLLOWING AMOUNTS, NAMELY:- (I) EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER OR TRANSFERS; (II) THE WRITTEN DOWN VALUE OF THE BLOCK OF ASSETS AT THE BEGINNING OF THE PREVIOUS YEAR; AND 6 ITA NO.2928/MUM/2014 DCIT VS. SHRI. MANISH RAJNIKANT DESAI (III) THE ACTUAL COST OF ANY ASSET FALLING WITHIN T HE BLOCK OF ASSETS ACQUIRED DURING THE PREVIOUS YEAR, SUCH EXCESS SHALL BE DEEMED TO B E THE CAPITAL GAINS ARISING FROM THE TRANSFER OF SHORT-TERM CAPITAL ASSETS; (2) WHERE ANY BLOCK OF ASSETS CEASES TO EXIST AS SU CH, FOR THE REASON THAT ALL THE ASSETS IN THAT BLOCK ARE TRANSFERRED DURING THE PRE VIOUS YEAR, THE COST OF ACQUISITION OF THE BLOCK OF ASSETS SHALL BE THE WRI TTEN DOWN VALUE OF THE BLOCK OF ASSETS AT THE BEGINNING OF THE PREVIOUS YEAR, AS IN CREASED BY THE ACTUAL COST OF ANY ASSET FALLING WITHIN THAT BLOCK OF ASSETS, ACQUIRED BY THE ASSESSEE DURING THE PREVIOUS YEAR AND THE INCOME RECEIVED OR ACCRUING A S A RESULT OF SUCH TRANSFER OR TRANSFERS SHALL BE DEEMED TO BE THE CAPITAL GAINS A RISING FROM THE TRANSFER OF SHORT- TERM CAPITAL ASSETS. ' 5.4 THE TERM 'BLOCK OF ASSETS' IS DEFINED IN SECTIO N 2(11) AS FOLLOWS: 2(11) 'BLOCK OF ASSETS' MEANS A GROUP OF ASSETS FAL LING WITHIN A CLASS OF ASSETS COMPRISING,- (A) TANGIBLE ASSETS, BEING BUILDINGS, MACHINERY, PL ANT OR FURNITURE; (B) INTANGIBLE ASSETS, BEING KNOW-HOW, PATENTS, COP YRIGHTS, TRADE- MARKS, LICENSES, FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGH TS OF SIMILAR NATURE, IN RESPECT OF WHICH THE SAME PERCENTAGE OF DEPRECIATION IS PRE SCRIBED; 5.5 FROM A PERUSAL OF THE ABOVE PROVISIONS, IT IS S EEN THAT THERE IS NOTHING TO INDICATE THAT AN ASSET WHICH WAS PART OF A BLOCK OF ASSETS ON WHICH DEPRECIATION HAD BEEN CLAIMED, WILL BE EXCLUDED FROM THE: SAID B LOCK MERELY BECAUSE IT HAS SUBSEQUENTLY GIVEN RISE TO INCOME ASSESSABLE UNDER ANOTHER HEAD. 5.6 IN THE DECISION RENDERED IN THE CASE OF CIT V M IS SAKTHI METAL DEPOT REPORTED AT 333 ITR 492, THE KERALA HIGH COURT ADJUDICATED U PON A CASE WHERE THE APPELLANT HAS PURCHASED A. FLAT IN 1974 AND USED IT AS AN OFFICE. DEPRECIATION ON THE ASSET WAS CLAIMED TILL A.Y. 1995-96. NO DEPRECI ATION WAS CLAIMED FOR A.YRS. 1996-97 AND 1997-98. THE FLAT WAS SOLD BY THE ASSES SEE IN A.Y. 1998-99 AND THE PROFIT WAS RETURNED AS LONG TERM CAPITAL GAINS. THE AO APPLIED SECTION 50 AND 7 ITA NO.2928/MUM/2014 DCIT VS. SHRI. MANISH RAJNIKANT DESAI COMPUTED INCOME ARISING FROM THE SALE OF THE FLAT A S SHORT-TERM CAPITAL GAINS. THE CIT(A) UPHELD THE ORDER OF THE AO. THE ITAT ALLOWED THE APPEAL OF THE ASSESSEE OBSERVING THAT THE FLAT HAD BEEN SHOWN AS 'INVESTME NT' IN THE BALANCE SHEET FOR THE YEAR UNDER CONSIDERATION AND HAD BEEN HELD FOR A PE RIOD THAT QUALIFIED IT TO BE CONSIDERED A LONG-TERM CAPITAL ASSET. THE HIGH COUR T HELD AS FOLLOWS: 'IN OUR VIEW SECTION 50 HAS TO BE UNDERSTOOD WITH REFERENCE TO THE GENERAL SCHEME OF ASSESSMENT ON SALE OF CAPITAL ASSETS. THE SCHEME OF THE ACT IS TO CATEGORISE ASSETS BETWEEN SHORT TERM CAPITAL ASSETS AND LONG TERM CAPITAL ASSETS. SECTION, 2(42A) DEFINES SHORT TERM CAPITAL ASSET AS AN ASSET HELD FOR NOT MORE THAN 36 MONTHS. THE NON- OBSTANTE CLAUSE WITH WHICH SECT ION 50 OPENS MAKES IT CLEAR THAT IT IS AN EXCEPTION TO THE DEFINITION OF SHORT TERM CAPITA!' ASSET WHICH MEANS THAT EVEN THOUGH THE DURATION OF HOLDING OF AN ASSE T IS MORE THAN THE PERIOD MENTIONED IN SECTION 2( 42A), STILL THE ASSET REFER RED TO THEREIN WILL BE TREATED AS SHORT TERM CAPITAL ASSET. NO' ONE CAN DOUBT THAT AS SETS COVERED BY SECTION 50 ARE DEPRECIABLE ASSETS FORMING PART OF BLOCK ASSETS AS DEFINED UNDER SECTION 2(11) OF THE ACT. SECTION 50 HAS TWO COMPONENTS; ONE IS AS T O THE NATURE OF TREATMENT OF AN ASSET, THE PROFIT ON SALE OF WHICH HAS TO BE ASSESS ED TO CAPITAL GAINS. THE SECTION MANDATES THAT A DEPRECIABLE ASSET IN RESPECT OF WHI CH DEPRECIATION HAS BEEN ALLOWED WHEN SOLD SHOULD BE ASSESSED TO TAX AS SHOR T TERM CAPITAL ASSET. THE OTHER PURPOSE OF SECTION 50 IS TO PROVIDE COST OF ACQUISI TION AND OTHER ITEMS OF EXPENDITURE WHICH ARE OTHERWISE ALLOWABLE AS DEDUCT ION IN THE COMPUTATION OF CAPITAL GAINS AND COVERED BY SECTIONS 48 AND 49 OF THE ACT. HERE AGAIN SECTION 50 PROVIDES AN EXCEPTION FOR DEDUCTION OF COST OF ACQU ISITION AND OTHER ITEMS OF EXPENDITURE OTHERWISE ALLOWABLE IN THE COMPUTATION OF CAPITAL GAINS UNDER SECTIONS 48 AND 49 OF THE ACT. IN OTHER WORDS, SECT ION 50 PROVIDES FOR ASSESSMENT OF A DEPRECIABLE ASSET IN RESPECT OF WHICH DEPRECIA TION HAS BEEN ALLOWED AS SHORT TERM CAPITAL GAINS AND THE DEDUCTIONS AVAILABLE UND ER SECTIONS 48 AND 49 SHOULD 8 ITA NO.2928/MUM/2014 DCIT VS. SHRI. MANISH RAJNIKANT DESAI BE ALLOWED SUBJECT TO THE PROVISIONS PROVIDED IN SU B-SECTIONS (1) AND (2) OF SECTION 50. SECTION 50A ALSO DEALS WITH ASSESSMENT OF DEPRE CIABLE ASSET THAT TOO AS SHORT TERM CAPITAL' GAINS AND IT ACTUALLY SUPPLEMENTS SEC TION 50. IN OUR VIEW, THE PURPOSE OF SECTION 50A IS TO ENABLE THE ASSESSEE TO CLAIM DEDUCTION OF THE WRITTEN DOWN VALUE OF THE ASSET IN RESPECT OF WHICH DEPRECI ATION WAS CLAIMED IN ANY YEAR AS DEFINED UNDER SECTION 43(6) OF THE ACT TOWARDS C OST OF ACQUISITION WITHIN THE MEANING OF SECTIONS 48 AND 49 OF THE ACT. THE CONDI TION FOR COMPUTATION OF SHORT TERM CAPITAL GAINS IN THE WAY IT IS STATED IN SECTI ON 50A IS THAT THE ASSESSEE SHOULD HAVE ALLOWED DEPRECIATION IN RESPECT OF A DEPRECIAB LE ASSET SOLD IN ANY' PREVIOUS YEAR WHICH OBVIOUS MEANS THAT FOR THE PURPOSE OF AS SESSMENT OF PROFIT ON THE SALE OF A DEPRECIABLE- ASSET, THE ASSESSEE NEED NOT HAVE CLAIMED DEPRECIATION CONTINUOUSLY FOR THE ENTIRE PERIOD UPTO THE DATE OF SALE OF THE ASSET. IN OTHER WORDS, IN OUR VIEW, THE BUILDING WHICH WAS ACQUIRED BY THE ASSESSEE IN 1974 AND IN RESPECT OF WHICH DEPRECIATION WAS ALLOWED TO IT AS A'' BUSINESS ASSET FOR 21 YEARS, THAT IS UPTO THE ASSESSMENT YEAR 1995- 96, STILL CO NTINUED TO BE PART OF THE BUSINESS ASSET AND DEPRECIABLE ASSET, NO MATTER THE NON-USER DISENTITLES THE ASSESSEE FOR DEPRECIATION FOR TWO YEARS PRIOR TO THE DATE OF SAL E. WE DO NOT KNOW HOW A DEPRECIABLE ASSET FORMING PART OF BLOCK OF ASSETS W ITHIN THE MEANING SECTION 2(11} OF THE' ACT CAN CEASE TO BE ART OF BLOCK OF ASSETS. THE DESCRIPTION OF THE ASSET BY T E ASSESSEE IN THE BALANCE SHEET AS AN INVESTMENT ASSE T IN OUR VIEW IS MEANINGLESS AND IS ONLY TO AVOID PAYMENT OF TAX ON SHORT TERM C APITAL GAINS ON SALE OF THE BUILDING. SO LONG AS T E ASSESSEE CONTINUED BUSINES S, THE BUILDING FORMING PART OF THE BLOCK OF ASSETS WILL RETAIN ITS CHARACTER AS SU CH, NO MATTER ONE OR TWO OF THE ASSETS IN ONE OR TWO YEARS NOT USED FOR BUSINESS PU RPOSES DISENTITLES THE ASSESSEE FOR DEPRECIATION FOR THOSE YEARS. IN OUR VIEW, INST EAD OF SELLING THE BUILDING, IF THE ASSESSEE STARTED USING THE BUILDING AFTER TWO YEARS FOR BUSINESS PURPOSES THE AESSESSE CAN CONTINUE TO CLAIM DEPRECIATION BASED O N THE WRITTEN DOWN VALUE 9 ITA NO.2928/MUM/2014 DCIT VS. SHRI. MANISH RAJNIKANT DESAI AVAILABLE AS ON THE DATE OF ENDING OF THE PREVIOUS YEAR IN WHICH DEPRECIATION WAS ALLOWED LAST. ' 5.7 AS NOTED EARLIER, IN THE PRESENT CASE, THE BLOC K OF FACTORY BUILDING/GALA HAS CONTINUED TO EXIST DURING THE YEAR UNDER CONSIDERAT ION. THE FACT THAT DEPRECIATION HAS ALSO BEEN CLAIMED ON THE SAID BLOCK IS ALSO NOT CONTROVERTED BY THE AO. IN VIEW OF THESE REASONS, I FIND THAT THE CONCLUSION O F THE AO THAT THE FACTORY GALA IN QUESTION GOES OUT OF THE BLOCK OF ASSETS AND OF THE PURVIEW OF SECTION 50 SIMPLY BECAUSE RENTAL INCOME THERE FROM HAS BE OFFERED TO TAX UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' IS MISPLACED AND CANNOT BE UPH ELD AND THE GROUND RAISED BY THE APPELLANT IS ALLOWED. 5. THE LD. DR SUBMITTED BEFORE US THAT THE ASSESSEE HAD PURPOSIVELY ADJUSTED THE SALE CONSIDERATION BY ADDING THE SAME FROM THE BLOCK OF ASSETS FACTORY GALA FOR EVADING THE AMOUNT OF TAX ON SHORT TERM CAPIT AL GAIN ON THE SALE OF GALA. THE LD. DR FURTHER SUBMITTED THAT THE ASSESSEE LET OUT THE GALA AND INCOME CONCEIVED FROM BY WAY RENT WAS OFFERED AS INCOME FROM HOUSE P ROPERTY AND DEDUCTION U/S 24 OF THE ACT WAS CLAIMED ACCORDINGLY. CONSEQUENTLY TH E SAID FACTORY GALA CEASED TO BE PART OF THE BLOCKED ASSETS THE MOMENT IT WAS GIV EN ON RENT AND SAID INCOME WAS SHOWN AS PROPERTY INCOME. MOREOVER, NO DEPRECIATIO N WAS CLAIMED FOR 2 YEARS DURING THE PERIOD THE GALA WAS GIVEN ON RENT AND TH EREFORE THE ASSESSE COULD NOT BE ALLOWED THE BENEFIT OF BLOCKED ASSETS TO AVAIL THE BENEFIT OF PROVISION OF SECTION 43(6) AND PROVISIONS 50 OF THE ACT AND SUBMITTED TH AT AO HAD RIGHTLY COMPUTED THE SHORT TERM CAPITAL GAIN. THE LD. DR PRAYED THAT THE ORDER OF THE CIT(A) BE REVERSED 10 ITA NO.2928/MUM/2014 DCIT VS. SHRI. MANISH RAJNIKANT DESAI AND THAT OF AO BE RESTORED. PER CONTRA, THE LD. AR FOR THE ASSESSEE RELIED ON THE ORDER OF THE CIT(A) AND PRAYED THAT THE ORDER OF TH E CIT(A) BE UPHELD. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE FACTORY GALA SOLD BY THE ASSESSEE WAS PART OF THE BLOCKED ASSETS IN THE BUSINESS OF THE ASSESSEE WHO WAS ENGAGED IN THE BUS INESS OF MANUFACTURING OF SELF ADHESIVE LABELS AND STICKERS. THE SAID GALA REMAINE D THE PART OF THE BLOCK OF FIXED ASSETS OF THE ASSESSEE. HOWEVER, THE ASSESSEE DID N OT CLAIM AND DEPRECIATION ON THE SAID GALA BECAUSE THE SAME WAS GIVEN ON RENT DURING THE 2 YEARS I.E. AY 2007-08 AND AY 2008-09. IN THE AY 2009-10 THE SAID GALA W AS SOLD AND THE SALE PROCEEDS IN RESPECT OF THE SAID GALA WAS TREATED IN ACCORDAN CE WITH THE PROVISIONS OF SECTION 50 OF THE ACT BY REDUCING THE SAID CONSIDERATION FR OM THE BLOCK OF ASSET PERTAINING TO FACTORY GALA AND NO SHORT TERM CAPITAL GAIN HAD RESULTED FROM THE SAID SALE AS THE WDV AT THE YEAR END WORKED OUT AT RS. 29,33,290/- B EFORE DEPRECIATION AND AFTER TAKING OPENING WDV PLUS ADDITIONS AND SALE DURING THE YEAR. WE ALSO FIND THAT THE LD. AO TREATED THE SALE OF GALA AS SALE OF SHORT TE RM ASSET AND DENIED THE BENEFIT OF BLOCKED OF ASSETS U/S 43(6) AND OF SPECIAL PROVISIO NS U/S 50 FOR CALCULATING CAPITAL GAIN IN CASE OF DEPRECIABLE ASSETS. THE SHORT TERM CAPITAL GAIN WAS CALCULATED AT RS. 60,42,693/- BY APPLYING THE PROVISION OF 50C OF THE ACT. IN OUR OPINION THE LD. 11 ITA NO.2928/MUM/2014 DCIT VS. SHRI. MANISH RAJNIKANT DESAI CIT(A) HAD RIGHTLY REVERSED THE ACTION OF AO BY HOL DING THAT SALE OF GALA WAS PART OF RELEVANT BLOCK OF ASSETS AS PER THE PROVISIONS OF SECTION 43(6) AND SHORT TERM CAPITAL GAIN WAS TO BE COMPUTED IN ACCORDANCE WITH SECTION 50 OF THE ACT . THUS WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY TH E CIT(A). WE, THEREFORE, DISMISS THE APPEAL OF THE REVENUE BY UPHOLDING THE ORDER OF CIT(A). IN THE RESULT, THE REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08TH JANUARY, 2016 SD/- SD/- (JOGINDER SINGH) (RAJESH KUMAR) &' $ / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER ( ) MUMBAI; *$ DATED :08.01.2016 PS. ASHWINI GAJAKOSH / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT CONCERNED 5. ./0 ''12 , 12# , ( ) / DR, ITAT, MUMBAI 6. 045 6 / GUARD FILE 12 ITA NO.2928/MUM/2014 DCIT VS. SHRI. MANISH RAJNIKANT DESAI / BY ORDER, / !'# (DY./ASSTT. REGISTRAR) #$ %, ( ) / ITAT, MUMBAI