TOYO AUTO ENGINEERS, MUMBAI V. ITO WD 22(2)(4), MUMBAI

ITA 2995/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2212 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 29-07-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 18-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation; Principle of natural justice
• Section: 143(3); 10

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 2995 /MUM/2013 ( / ASSESSMENT YEAR : 2008-09) M/S TOYO AUTO ENGINEERS, C/O M/S MERCHANT & BABARIA, CHARTERED ACCOUNTANTS, 802, ARCADIA, NCPA ROAD, NARIMAN POINT, MUMBAI - 400021. / V. ITO WARD 22(2)(4), MUMBAI. ./ PAN : AAAFT0939R ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY SHRI FIROZE B. ANDHYARUJINA REVENUE BY : SHRI SUNIL KUMAR AGARWAL (D.R.) / DATE OF HEARING : 10-08-2016 / DATE OF PRONOUNCEMENT : 31.10.2016 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL FILED BY THE ASSESSEE BEING ITA NO. 29 95/MUM/2013, IS DIRECTED AGAINST THE APPELLATE ORDER DATED 11 TH MARCH, 2013 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 33, M UMBAI (HEREINAFTER CALLED THE CIT(A)), FOR THE ASSESSMENT YEAR 2008- 09, THE APPELLATE PROCEEDINGS BEFORE THE LEARNED CIT(A) ARISING FROM THE ASSESSMENT ORDER DATED 28 TH DECEMBER, 2010 PASSED BY THE LEARNED ASSESSING OFF ICER (HEREINAFTER CALLED THE AO) U/S 143(3) OF THE INC OME TAX ACT,1961 (HEREINAFTER CALLED THE ACT). ITA 2995/MUM/2013 2 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN THE MEMO OF APPEAL FILED WITH THE INCOME TAX APPELLATE TRIBUNAL, MUMBA I (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- A. THE CIT (APPEALS)- 33, MUMBAI HAS ERRED IN CONF IRMING THE ADDITION MADE BY LEARNED A.O. ON ACCOUNT OF PROFIT ON SALE OF OFFICE PREMISES AS SHORT TERM CAPITAL GAIN - RS.9,25,880/-(A DDITION NO.3 OF THE A.O.) FOR THE A. Y. 2008-09 AND THE ASSESSEE PRAYS TO DELETE THE SAID ADDITIONS ON THE FOLLOWING GROUNDS:- A. THE CIT(A) ERRED IN APPRECIATING THE FACT THAT THE BLOCK OF ASSET UNDER THE HEAD 'OFFICE PREEMIES' & UNDER THE HEAD 'INDUS TRIAL PREMISES' ARE UNDER THE SAME BLOCK OF ASSET CLAIMING DEPRECIATION @10%. B. THE CIT(A) ERRED IN APPRECIATING THE FACT THAT THE OPENING BALANCE OF THE BLOCK OF ASSET CLAIMING DEPRECIATION @ 10% UNDER THE HEAD 'OFFICE PREMISES AND INDUSTRIAL PREMISES' COLLECTI VELY AS ON 1/4/2007 WAS RS. 72,76,169.50 AND AFTER DEDUCTING RS .25,25,000/- ON ACCOUNT OF SALE OF THE OFFICE PREMISES AND AFTER ADDI TIONS OF ASSETS AND DEDUCTIONS ON ACCOUNT OF DEPRECIATION THERE WAS STILL A BALANCE LEFT OF RS.78,78,179.50 AS CLOSING W.D.V. AS ON 31/3/2008 A ND THAT THERE WAS NO SURPLUS SO AS TO HAVE 'SHORT CAPITAL GAINS'. C. THE CIT(A) ERRED IN APPRECIATING THE FACT THAT THE RE ARE TWO TYPES OF PREMISES UNDER THE COLLECTIVE BLOCK UNDER THE HEAD 'OFFICE PREMISES AND INDUSTRIAL PREMISES'. D. THE CIT(A) ERRED BY ISOLATING OFFICE PREMISES FR OM INDUSTRIAL PREMISES AND TAXED THE SURPLUS OF OFFICE PREMISES IN -SPITE OF THE FACT THAT THERE IS ENOUGH WDV IN THE A/C HEAD OF INDUSTRIAL P REMISES. E. THE CIT(A) ERRED IN APPRECIATING THE FACT THAT THE ITAT VIDE IN APPEAL NO. 3992/MUM/2010 HAS ACCEPTED THE SAID OFFIC E PREMISES TO BE A DEPRECIABLE ASSET AND HAS UPHOLD THE RELIEF GIV EN BY CIT(A)-33 IN APPEAL NO. CIT(A)- 33/IT/1347/09-10 TO THE APPELLANT FIRM. F. CIT(A) ERRED IN CONCLUDING THAT THE ASSET BOUGHT D URING THE P.Y. 2007-08 FOR RS. 16,27,010/- WAS NOT PUT TO USE AND THE REFORE WRONGLY CONCLUDED THAT THERE WAS NO ASSET LEFT FOR SETTING OFF T HE SALE OF THE ASSETS UNDER THE HEAD 'OFFICE PREMISES' G. CIT(A) ERRED IN MAKING THE SAID ADDITION WITHOUT AP PRECIATING THE ITA 2995/MUM/2013 3 FACT THAT THE SAID BLOCK OF ASSET WAS NEVER EMPTY. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FIRM IS ENGAGED IN THE BUSINESS OF TRADING IN FOUNDRY CHEMICALS. DURING TH E COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) READ WITH SECTION 143(2) OF THE ACT, THE A.O. OBSERVED THAT THE ASSESSEE HAS SOLD OFFICE PREMISES NO. 605, 6 TH FLOOR, MAITHILI'S SIGNET, PLOT NO.39/4, SECTOR-30A, VASHI, NAVI MUMBAI TO M/S HI-TECH INFRA PROJECTS (INDIA) PVT LTD. FOR A CONSIDERATION OF RS. 25,25,0 00/- ON 19 TH DECEMBER, 2007. THE SAID OFFICE PREMISES WERE PURCHASED BY TH E ASSESSEE ON 21 ST FEBRUARY, 2007 FOR A TOTAL CONSIDERATION OF RS. 15, 99,120/-. DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2007- 08, THE A.O DISALLOWED THE DEPRECIATION CLAIMED BY THE ASSESSEE AMOUNTING TO RS.79,956/ ON THE SAID OFFICE PREMISES NO.605 , 6 TH FLOOR, MAITHILI'S SIGNET, PLOT NO.39/4, SECTOR- 30A, VASHI, NAVI MUMBAI STATING THAT THE SAID PREMI SES WERE NOT UTILIZED FOR BUSINESS PURPOSE. THE ASSESSEE GOT RELIEF FROM THE LD. CIT(A) WITH RESPECT TO THE SAME , BUT THE REVENUE PREFERRED APPEAL BEFORE THE TRIBUNAL . IN THIS REGARD, THE A.O. OBSERVED THAT THE ASSESSEE HAS NOT UTILIZED THE SAID PREMISES FOR BUSINESS PURPOSE AND HENCE, IT CANNOT BE SAID T HAT THE SAME IS PART OF BLOCK OF ASSETS, HENCE, THE ASSESSEE IS LIABLE FOR TAX ON TRANSACTION OF SALE OF OFFICE PREMISES ON SHORT TERM PROFIT ON SALE OF THE SAID OFFICE PREMISES AMOUNTING TO RS. 9,25,880/- (RS. 25,25,000 (-) RS. 15,99,120/-). ON BEING ASKED, IT WAS SUBMITTED BY THE ASSESSEE THAT THE AS SESSEE HAS PURCHASED ANOTHER OFFICE BEARING SHOP NO. 8(A), PLOT NO. 260, SECTOR 10, KHARGHAR, NAVI MUMBAI WHICH WAS USED DURING THE YEAR FOR THE PURPO SE OF BUSINESS AND CLAIMED DEPRECIATION ON OFFICE 8(A), PLOT NO. 260, SECTOR 10, KHARGHAR, NAVI MUMBAI FOR WHICH THE ASSESSEE PRODUCE EVIDENCE FOR TRANSFER OF FILES TO OFFICE 8(A) PLOT NO. 260, SECTOR 10, KHARGHAR, NAVI MUMBAI SUPPORTED BY AN AFFIDAVIT OF SH. VINOD SHANKAR MORE, PEON STATING T HAT THE FILES HAVE BEEN TRANSFERRED BY HIM TO THE OFFICE 8(A), PLOT NO. 260 , SECTOR 10, KHARGHAR, NAVI MUMBAI AND HENCE IT WAS CLAIMED THAT THE SAID OFFI CE 8(A), PLOT NO. 260, ITA 2995/MUM/2013 4 SECTOR 10, KHARGHAR, NAVI MUMBAI WAS PART OF BLOCK OF ASSET FOR THE YEAR UNDER CONSIDERATION. IT WAS SUBMITTED THAT THERE WA S A DISPUTE WITH THE DEVELOPER AND THE ASSESSEE, HOWEVER, THE ASSESSEE H AS TAKEN FORCEFUL POSSESSION OF THE SAID SHOP IN THE YEAR 2007-08 AND THE OWNERSHIP WAS CLAIMED IN THE BOOKS OF ACCOUNT, WHILE NO FORMAL CO NVEYANCE OR AGREEMENT WAS EXECUTED BETWEEN THE ASSESSEE AND THE DEVELOPER . IT WAS SUBMITTED THAT IN FINANCIAL YEAR 2007-08, THE BUILDING WAS UNDER CONSTRUCTION AND THERE WAS NO LIGHT OR ELECTRICITY IN THE BUILDING. THE S AID PREMISE WAS SITUATED IN THE GROUND FLOOR AND FORCEFUL POSSESSION WAS TAKEN BY THE ASSESSEE FROM THE DEVELOPER TO CREATE PRESSURE ON THE DEVELOPER TO EX ECUTE CONVEYANCE OF THE SAID PROPERTY. THE ASSESSEE COULD NOT AFFORD THE C OSTLY CIVIL SUIT PROCEEDINGS FOR THE SAID PROPERTY AND HENCE TOOK THE ROUTE OF F ORCEFUL POSSESSION. THE A.O. AFTER VERIFYING THE CONTENTION OF THE ASS ESSEE OBSERVED THAT THE ASSESSEE EARNED PROFIT OF RS. 9,25,880/- ON TRANSFE R OF OFFICE 605, 6 TH FLOOR, MAITHILIS SIGNET, PLOT NO. 39/4, SECTOR-30A, VASHI , NAVI MUMBAI WHICH WAS NOT OFFERED FOR TAXATION BY THE ASSESSEE. THE PREM ISE WAS NOT USED FOR THE BUSINESS PURPOSE AND HENCE THE DEPRECIATION WAS NOT ALLOWED TO THE ASSESSEE FOR THE ASSESSMENT YEAR 2007-08. IT WAS ALSO OBSER VED BY THE A.O. THAT EVEN IF THE CONTENTION OF THE ASSESSEE IS ACCEPTED THAT THE BLOCK OF ASSETS I.E. OFFICE PREMISES DO NOT EXIST DURING THE ASSESSMENT YEAR 20 08-09, THE ASSESSEE HIMSELF TRANSFERRED THE BLOCK OF ASSET I.E. OFFICE PREMISES TO INDUSTRIAL PREMISES, THE DETAILS ARE AS UNDER:- DESCRIPTIO N OF ASSETS RATE OF DEPRECI ATION WDV AS ON 1.4.2007 ADDITION S APR- SEP ADDITION S OCT- MAR SALES DEPRECIAT ION ALLOWABLE WDV AS ON 31.3.08 A B C D E F G H OFFICE PREMISES (2006-07) 10% 129839 0 7529610 0 389464 7269985 OFFICE PREMISES (2007-08) 10% 7269986 115400 1500000 84,55,490 21493 408401 ITA 2995/MUM/2013 5 IT WAS OBSERVED BY THE AO THAT THE SALE DECLARED OF RS. 84,55,490/- IN OFFICE PREMISES IN THE ASSESSMENT YEAR 2008-09 WAS NOT ACT UAL SALE AS SUBMITTED BY THE ASSESSEE VIDE ITS LETTER DATED 16 TH NOVEMBER, 2010. THE CONTENTS OF THE SAID SALE ARE AS UNDER:- 01.04.2007 TRANSFERRED TO INDUSTRIAL PREMISES A/C R S. 59,30,490/- 13.12.2007 SALE OF OFFICE NO. 605 TO HI TECH INFRA RS. 10,00,000/- 01.02.2008 SALE OF OFFICE NO. 605 RS. 10,00,000/ - 01.02.2008 SALE OF OFFICE NO. 605 RS. 5,25,000 /- TOTAL RS. 84,55,490/- IT WAS OBSERVED THAT SUBSEQUENT TO TRANSFER OF OFF ICE PREMISES TO INDUSTRIAL PREMISES, THE BLOCK OF ASSETS SHOWN BY THE ASSESSE E ARE AS UNDER:- DESCRIPTIO N OF ASSETS RATE OF DEPRECI ATION WDV AS ON 1.4.2007 ADDITION S APR- SEP ADDITION S OCT- MAR SALES DEPRECIAT ION ALLOWABLE WDV AS ON 31.3.08 A B C D E F G H OFFICE PREMISES (2006 - 07 ) 10% 6871 0 0 0 687 6184 OFFICE PREMISES (2007-08) 10% 6184 6210850 1231250 0 683266 6765018 IT WAS OBSERVED BY THE A.O. THAT THE ASSESSEES INT ENTION TO TRANSFER THE VALUE OF RS. 59,30,490/- DURING FINANCIAL YEAR 2006-07 WA S PURPOSELY MADE TO OFFICE PREMISES TO EVADE TAX ON PROFITS ON SALE O F SHOP NO. 605, 6 TH FLOOR, MAITHILIS SIGNET, PLOT NO. 39/4, SECTOR-30A, VASHI , NAVI MUMBAI IN SUBSEQUENT ASSESSMENT YEAR. IT WAS ALSO OBSERVED T HAT TO KEEP THE BLOCK OF ASSETS OF OFFICE PREMISES ALIVE, THE ASSESSEE HAS M ADE ADDITIONS TO OFFICE PREMISES OF RS. 15 LACS SHOWING PURCHASE OF OFFICE NO. 8(A), PLOT NO. 260, SECTOR 10, KHARGHAR,NAVI MUMBAI AND THE DETAILS OF PAYMENTS ARE AS UNDER:- ITA 2995/MUM/2013 6 17-12-2007 RS. 10,00,000/- 04.02.2008 RS. 5,00,000/- IT WAS OBSERVED THAT THE ASSESSEE HAD TRIED TO SHOW THE TRANSACTION AS BUSINESS IN ORDER TO CLAIM DEPRECIATION IN RESPECT OF OFFICE NO. 8A, PLOT NO. 260, SECTOR 10 , KHARGHAR ,NAVI MUMBAI BY PRODUCING THE EVIDENCE OF TRANSFER OF FILES TO OFFICE NO. 8A, PLOT NO. 260, S ECTOR 10, KHARGHAR,NAVI MUMBAI AND TO THIS EFFECT AFFIDAVIT OF MR. VINOD SH ANKAR MORE,PEON WAS ALSO FURNISHED STATING THAT THE FILES HAVE BEEN TRANSFER RED BY HIM TO KHARGHAR OFFICE. TO VERIFY THE SAME, A.O. ISSUED SUMMONS TO MR. VINOD SHANKAR MORE BUT THE CONCERNED PERSON DID NOT ATTENDED BEFORE TH E AO AND COULD NOT BE PRODUCED BY THE ASSESSEE BEFORE THE A.O. SUMMONS WE RE ALSO ISSUED BY THE AO TO M/S HI-TECH INFRA PROJECT INDIA LIMITED TO VE RIFY THE HANDING OVER OF POSSESSION OF OFFICE NO. 8(A), PLOT NO. 260, SECTOR 10, KHARGHAR, NAVI MUMBAI TO THE ASSESSEE WHEREBY M/S HI-TECH INFRA PROJECTS LIMITED SUBMITTED A LETTER DATED 27 TH DECEMBER, 2010 ENCLOSING COPY OF COMMENCEMENT CERT IFICATE DATED 19-03-2008 ISSUED BY THE CIDCO. THE A.O. WONDERED HOW THE ASSESSEE HAS TAKEN THE POSSESSION OF A PREMISES WHICH IS NOT EXI STING ON 06.02.2008 AND MISLED THE DEPARTMENT BY PRODUCING THE AFFIDAVIT OF PEON STATING THAT THE FILES HAVE BEEN TRANSFERRED TO SAID OFFICE AND THUS OFFIC E IS IN EXISTENCE AND CLAIMED DEPRECIATION WHICH CLEARLY INDICATED THE INTENTION BEHIND ALL THESE MISLEADING STATEMENTS WAS ONLY TO AVOID THE CAPITAL GAIN TAX. THE ASSESSEE HAS NOT PRODUCED THE COPY OF AGREEMENT FOR PURCHASE OF SAID OFFICE PREMISES I.E. OFFICE NO. 8(A) , PLOT NO. 260, SECTOR 10, KHARGHAR,NAVI M UMBAI BY CONTENDING THAT THERE IS DISPUTE, HOWEVER, THE BUILDER M/S HI-TCCH INFRAPROJECTS LTD. HAS DENIED ANY DISPUTE. THE STORY OF DISPUTE HAS BEEN C REATED BY THE ASSESSEE. THE ASSESSEE HAS SOLD SHOP AT 605, 6 TH FLOOR, MAITHILI SIGNET, PLOT NO. 39/4, SECTOR 30-A, VASHI, NAVI MUMBAI FOR A CONSIDERATION OF RS. 25,25,000/- WHILE THE ASSESSEE HAS ALSO BOOKED SHOP FROM THE SAME BUI LDER AND MADE FURTHER ITA 2995/MUM/2013 7 PAYMENTS THROUGH BANKING CHANNEL WHEREIN LAST PAYM ENT WAS MADE ON 04- 02-2008 WHICH ALSO PROVE THE THEORY OF FORCEFUL POS SESSION IS A COOKED STORY . IT WAS OBSERVED BY THE AO THAT AS PER THE ARCHITECT S CERTIFICATE , THE FIRST SLAB OF THE BUILDING AT 8(A), PLOT NO. 260, SECTOR 10, K HARGHAR,NAVI MUMBAI KHARGHAR WAS COMPLETED ON 26 TH JUNE, 2008, THE AO OBSERVED THAT THEN HOW THE ASSESSEE HAS OCCUPIED FORCEFUL POSSESSION BEFOR E THE COMMENCEMENT OF THE BUILDING AND BEFORE 1 ST SLAB IS COMPLETED. THE AO OBSERVED THAT THE ASSESSEE HAS TRIED TO GIVE A COLOUR OF DEPRECIATION TO THE TRANSACTION , SO AS TO INCLUDE THE SAID ASSET IN BLOCK OF ASSETS UNDER OF FICE PREMISES . IT WAS OBSERVED BY THE AO THAT IN THE CASE ABOVE ALLEGED P URCHASE OF PREMISES OF 8(A), PLOT NO. 260, SECTOR 10, KHARGHAR,NAVI MUMBAI IS NOT CONSIDERED, THEN THERE IS NEGATIVE BLOCK OF ASSETS UNDER OFFICE PRE MISES AS UNDER:- DESCRIPTIO N OF ASSETS RATE OF DEPRECI ATION WDV AS ON 1.4.2007 ADDITION S APR- SEP ADDITION S OCT- MAR SALES DEPRECIAT ION ALLOWABLE WDV AS ON 31.3.08 A B C D E F G H OFFICE PREMISES (2006-07) 10 129839 0 7529610 0 389464 7269985 OFFICE PREMISES (2007-08) 10% 7269986 115400 - 84,55,490 - (1070104) THUS, IT WAS HELD BY THE AO THAT THERE IS NO BLOCK OF ASSETS OFFICE PREMISES EXISTED AS ON THE DATE OF SALE OF OFFICE NO. 605, 6 TH FLOOR, MAITHILI'S SIGNET, PLOT NO.39/4, SECTOR-30A, VASHI, NAVI MUMBAI AND AS SUCH THE ASSESSEE IS LIABLE TO PAY SHORT TERM CAPITAL TAX ON THE SAID TRANSACTI ON AND THE A.O. WORKED OUT THE SAME AS UNDER , VIDE ASSESSMENT ORDER DATED 28- 12-2010 PASSED U/S 143(3) OF THE ACT:- SALE CONSIDERATION (19-12-2007) RS. 25,25,000/- LESS: PURCHASED VALUE (21-10-2007) RS. 15,99,120/ - SHORT TERM CAPITAL GAINS RS. 9,25,880/- ============= ITA 2995/MUM/2013 8 4. AGGRIEVED BY THE ASSESSMENT ORDER DATED 28-12-20 10 PASSED BY THE A.O. U/S. 143(3) OF THE ACT , THE ASSESSEE FILED FIRST A PPEAL BEFORE THE LD. CIT (A). 5. BEFORE THE LD. CIT(A) , THE ASSESSEE SUBMITTED T HAT THE ITAT HAS DECIDED THE APPEAL VIDE ORDER IN ITA NO. 3992/MUM/2010 AND ACCEPTED THE OFFICE PREMISES TO BE A DEPRECIABLE ASSET AND UPHELD THE R ELIEF GIVEN BY THE LD. CIT(A). IT WAS SUBMITTED THAT THE SAID OFFICE PREM ISES WERE PUT TO USE IN THE ASSESSMENT YEAR 2007-08 AND WAS PART OF BLOCK OF A SSET ON WHICH DEPRECIATION WAS ALLOWED ON THE SAID PREMISES. THU S IT WAS SUBMITTED THAT THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND HENCE THE ADDITIONS BE DELETED . THE LD. COUNSEL ALSO REFERR ED THE DECISION OF ITAT IN ITA NO. 4662/MUM/2010 , WHEREIN IT WAS OBSERVED BY LEARNED CIT(A) THAT THE TRIBUNAL UPHELD THE DISALLOWANCE MADE BY THE LD. CI T(A) OF RS. 84,000/-. IN THE APPELLATE ORDER PASSED BY THE LEARNED CIT(A) , FOR DEPRECIATION ON OFFICE PREMISES, THE SAME WAS TAKEN AS PUT TO USE ONLY AFT ER 21 ST FEBRUARY, 2007 AND THIS VIEW WAS UPHELD BY THE TRIBUNAL. HOWEVER, IT WAS OBSERVED BY THE LD. CIT(A) THAT THE ASSESSEE HAS PURCHASED A NEW OF FICE PREMISES I.E. SHOP NO. 8(A), PLOT NO. 260, SECTOR 10, KHARGHAR, NAVI MUMBA I FOR WHICH PAYMENT OF RS. 15 LACS WAS MADE AND HAD GOT THE COMMENCEMENT CERTIFICATE ON 19 TH MARCH, 2008 ONLY AND THUS THERE WAS NO QUESTION OF POSSESSION OF PREMISES ON 6 TH FEBRUARY, 2008 OF THE SAID PREMISES BECAUSE THE BU ILDING GOT COMMENCEMENT CERTIFICATE ONLY ON 19 TH MARCH, 2008. THE ASSESSEE HAS SHOWN ADDITION TO THE BLOCK OF ASSET OF RS. 16,27,0 10/- WHICH WAS NEVER CLAIMED BEFORE THE AO. THIS WAS A NEW CLAIM MADE B Y THE ASSESSEE BEFORE THE LEARNED CIT(A) WHICH WAS NEVER CLAIMED BEFORE T HE A.O. DURING ASSESSMENT PROCEEDINGS. IN FACT NO APPLICATION U/R 46A OF INCOME TAX RULES, 1962 WAS FILED BEFORE THE LEARNED CIT(A) FOR ADDIT ION OF RS. 16,27,010/-. THE ASSESSEE SIMPLY STATED THAT THEY ARE REPAIRS BY NAT URE . THUS, THE LEARNED CIT(A) AGREED WITH THE AO THAT SHORT TERM CAPITAL G AIN OF RS. 9,25,880/- WAS ITA 2995/MUM/2013 9 TO BE BROUGHT TO TAX AND UPHELD THE ASSESSMENT ORDE R OF THE A.O. .THE ENHANCED AMOUNT OF RS. 16,27,010/- TO THE COST OF BLOCK OF ASSET WAS REJECTED BY THE LD. CIT(A) BY APPELLATE ORDERS DATE D 11.03.2013. 6. AGGRIEVED BY THE APPELLATE ORDERS DATED 11-03-20 13 PASSED BY THE LD. CIT(A), THE ASSESSEE FILED APPEAL BEFORE THE TRIBUN AL. 7. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE WAS A SALE OF OFFICE PREMISES NO. 605, 6 TH FLOOR, MAITHILI'S SIGNET, PLOT NO.39/4, SECTOR-30A , VASHI, NAVI MUMBAI TO M/S HI-TECH INFRA PROJECTS (I NDIA) PVT. LTD. FOR A CONSIDERATION OF RS. 25,25,000/- ON 19 TH DECEMBER, 2007. THE SAID OFFICE PREMISES WERE PURCHASED BY THE ASSESSEE ON 21 ST FEBRUARY, 2007 FOR A TOTAL CONSIDERATION OF RS. 15,99,120/- , AND THE GAIN ARI SING FROM THE SALE OF THE SAID OFFICE WAS BROUGHT TO TAX AS SHORT TERM CAPITA L GAIN BY THE REVENUE . THE LD. COUNSEL SUBMITTED THAT THE SAID ASSET BEING OFF ICE PREMISES WAS USED FOR BUSINESS PURPOSES ON WHICH DEPRECIATION OF 10% IS A VAILABLE BEING A BUILDING NOT USED FOR RESIDENTIAL PURPOSES AND SINCE THE BL OCK OF ASSET IS CONTINUING EVEN AFTER THE SALE OF THE SAID OFFICE AND THE BLOC K OF ASSET IS NOT EMPTY, HENCE, NO INCOME CAN BE BROUGHT TO TAX ON THE DEPRE CIABLE ASSET AS IT FORMS PART OF THE BLOCK OF ASSET OF BUILDINGS WHICH ARE N OT USED FOR THE PURPOSES OF RESIDENTIAL . IT WAS SUBMITTED THAT IN THE PRECEDI NG YEAR , THE SAID ASSET WAS ACQUIRED WHICH WAS PUT TO USE AND THE TRIBUNAL IN I TA NO. 4662/MUM/2010 FOR THE ASSESSMENT YEAR 2007-08 VIDE ORDERS DATED 2 4.02.2012 , WHEREBY THE TRIBUNAL UPHELD THE DISALLOWANCE MADE BY THE LD. CI T(A) OF RS. 84,000/-. THUS, IT WAS SUBMITTED THAT THE TRIBUNAL ALLOWED TH E DEPRECIATION ON THE SAID ASSET BEING PART OF BLOCK OF ASSET ON WHICH RATE OF DEPRECIATION PRESCRIBED IS 10% BEING BUILDING NOT USED FOR RESIDENTIAL PURPOSE S. IT WAS SUBMITTED THAT THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2008-0 9 WAS PASSED ON 28 TH DECEMBER, 2010 , WHICH WAS PRIOR TO THE AFORE-STATE D ORDER OF THE TRIBUNAL DATED 24.02.2012. IT WAS SUBMITTED THAT THE LEARNE D CIT(A) HAS REFERRED TO THE TRIBUNAL ORDER BUT RELIED ON THE AO ORDER WHILE PASSING THE APPELLATE ITA 2995/MUM/2013 10 ORDER. WITH RESPECT TO THE ANOTHER PREMISES, IT WAS SUBMITTED THAT FORCEFUL POSSESSION WAS TAKEN OF THE NEW OFFICE PREMISES BEI NG SHOP NO. 8(A), PLOT NO. 260, SECTOR 10, KHARGHAR, NAVI MUMBAI AND THIS IS A PART OF BLOCK OF ASSET AND HENCE ASSESSEE IS ENTITLED TO TREAT THE SAME AS BLOCK OF ASSET AS IT IS A PART OF BUILDING WHICH WAS NOT RESIDENTIAL BUILDING , ALTHOUGH CONVEYANCE DEED HAS NOT BEEN EXECUTED. THE LD. COUNSEL RELIED ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN ITA NO. 601 & 602/201 1 IN THE CASE OF CIT V. ANSAL PROPERTIES AND INFRASTRUCTURE LIMITED TO CON TEND THAT OFFICE PREMISES AND INDUSTRIAL PREMISES ARE BUILDINGS WHICH ARE NOT USED FOR RESIDENTIAL PURPOSES ON WHICH SAME RATE OF DEPRECIATION IS PRES CRIBED BEING 10% AND HENCE CONSTITUTE SAME BLOCK OF ASSET THUS , KEEPING IN VIEW BALANCE CARRIED FORWARD FROM THE PRECEDING YEAR OF OFFICE PREMISES AND INDUSTRIAL PREMISES, THE SAID BLOCK OF ASSET WAS NEVER EMPTY AFTER THE S ALE OF OFFICE PREMISES BEING 605,PLOT NO. 39/4, SECTOR 30-A, VASHI, MUMBAI AND H ENCE AS PER SCHEME OF ACT RELATED TO GAIN ARISING FROM SALE OF DEPRECIABL E ASSET FORMING PART OF SAME BLOCK OF ASSET AS CONTAINED IN SECTION 50 OF THE AC T, THERE IS NO PROFIT ARISING ON SALE OF SAID OFFICE PREMISES WHICH CAN BE BROUGH T TO TAX. IT WAS CONTENDED THAT THE HONBLE DELHI HIGH COURT I THE AFORE-STATE D CASE OF ANSAL PROPERTIES AND INFRASTRUCTURE LIMITED (SUPRA) HAS HELD THAT TH E DEPRECIATION IS RATE SPECIFIC AND NOT DIVISION/ ASSET SPECIFIC. THE LEAR NED COUNSEL REFERRED TO THE DEFINITION OF BLOCK OF ASSET AS IS CONTAINED IN SEC TION 2(11) OF THE ACT. THE LD. COUNSEL ALSO DREW OUR ATTENTION TO THE TAX AUDIT RE PORT WHEREBY THE DEPRECIATION WAS ALLOWED @ 10% UNDER THE HEAD OFFI CE PREMISES AND INDUSTRIAL PREMISES. IT WAS SUBMITTED THAT EVEN I F THE SAID OFFICE PREMISES I.E. SHOP NO. 8(A), PLOT NO. 260, SECTOR 10, KHARGHAR, N AVI MUMBAI IS EXCLUDED TO BE INCLUDED IN BLOCK OF ASSET, STILL NO CAPITAL GAI N CAN BE BROUGHT TO TAX AS PER SCHEME OF THE ACT AS CONTAINED IN PROVISIONS OF SEC TION 50 OF THE ACT BECAUSE THERE WILL STILL BE POSITIVE FIGURE IN THE BLOCK OF ASSETS. IT WAS SUBMITTED THAT THE FINDINGS OF AUTHORITIES WITH RESPECT TO HOLDING THAT REPAIR IS INCLUDED IN BLOCK OF ASSET IS PERVERSE, AS THE SAME IS STAMP DU TY PAID ON TRANSFER OF ASSET. ITA 2995/MUM/2013 11 8. THE LD. D.R. SUBMITTED THAT THE ASSESSEE HAS PUR CHASED NEW ASSET BEING OFFICE PREMISES I.E. SHOP NO. 8(A), PLOT NO. 260, SECTOR 10, KHARGHAR, NAVI MUMBAI FOR WHICH PAYMENT OF RS. 15 LACS WAS MA DE AND THE COMMENCEMENT CERTIFICATE WAS RECEIVED ON 19 TH MARCH, 2008 ONLY AND THUS THERE WAS NO QUESTION OF FORCEFUL POSSESSION OF SAI D PREMISES ON 6 TH FEBRUARY, 2008 OF THE SAID PREMISES BECAUSE THE BUILDING GOT COMMENCEMENT CERTIFICATE FOR CONSTRUCTION ONLY ON 19 TH MARCH, 2008. THE ASSESSEE HAS SOLD OFFICE PREMISES NO. 605, 6 TH FLOOR, MAITHILIS SIGNET, VASHI NAVI MUMBAI TO M/S HI- TECH INFRA PROJECTS ON 19 TH DECEMBER, 2007. THE SHORT TERM CAPITAL GAIN WAS RIGHTLY BROUGHT TO TAX BY THE AUTHORITIES BELOW AND HE RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 9. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED I N THE REJOINDER THAT EVEN IF THE SAID OFFICE PREMISES I.E. SHOP NO. 8(A) , PLOT NO. 260, SECTOR 10, KHARGHAR, NAVI MUMBAI IS EXCLUDED TO BE INCLUDED IN BLOCK OF ASSET, STILL NO CAPITAL GAIN CAN BE BROUGHT TO TAX AS PER SCHEME OF THE ACT AS CONTAINED IN PROVISIONS OF SECTION 50 OF THE ACT BECAUSE THERE W ILL STILL BE POSITIVE FIGURE IN THE BLOCK OF ASSETS. 10. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND A LSO PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING THE CASE LAWS RELIED UPON. WE HAVE OBSERVED THAT THE ASSESSEE HAS SOLD OFFICE PREMISES NO. 605, 6 TH FLOOR, MAITHILI'S SIGNET, PLOT NO.39/4, SECTOR-30A, VASHI, NAVI MUMBAI TO M/S HI-TECH INFRA PROJECTS (INDIA) PVT. LTD. FOR A CONSIDERATION OF RS. 25,25, 000/- ON 19 TH DECEMBER, 2007. THE SAID OFFICE PREMISES WERE PURCHASED BY TH E ASSESSEE ON 21 ST FEBRUARY, 2007 FOR A TOTAL CONSIDERATION OF RS. 15 ,99,120/- AND GAINS ARISING THEREON SALE OF THE SAID OFFICE PREMISES WAS BROUGH T TO TAX BY THE REVENUE AS SHORT TERM CAPITAL GAIN. THE TRIBUNAL IN ITS ORDER IN ITA NO. 4662/M/2010 AND 3992/MUM/2010 FOR THE ASSESSMENT YEAR 2007-08 V IDE ORDERS DATED 24 TH FEBRUARY, 2012 HAS GIVEN A CATEGORICAL FINDING THAT THE ASSESSEE HAS BEEN ITA 2995/MUM/2013 12 ABLE TO ESTABLISH THAT THE SAID OFFICE PREMISES WAS PUT TO USE IN THE YEAR UNDER CONSIDERATION BEFORE THE TRIBUNAL I.E. ASSESS MENT YEAR 2007-08 FOR BUSINESS PURPOSES. RESPECTFULLY FOLLOWING THE ORDE R OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2007-08 , WE HOLD THAT OFFICE PREMISES NO. 605, 6 TH FLOOR, MAITHILI'S SIGNET, PLOT NO.39/4, SECTOR-30A , VASHI, NAVI MUMBAI WAS ALSO BEING PUT TO USE DURING THE RELEVANT ASSESSMENT YEAR I.E. 2008-09 IN THE ABSENCE OF ANY CONTRARY FINDINGS BY THE REVENUE AND THIS ASSET SHALL FORM PART OF BLOCK OF ASSET BEING BUILDING NOT USED FOR RESIDENTIAL PURPOSES ON WHICH DEPRECIATION @10% IS PROVIDED. SECONDLY, WITH RESPECT TO THE CONTENTION OF THE ASS ESSEE THAT THE BLOCK OF ASSET WHICH SHALL CONSTITUTES AND INCLUDE OFFICE P REMISES AND INDUSTRIAL PREMISES BOTH AS THE BUILDINGS WHICH ARE NOT USED FOR RESIDENTIAL PURPOSES ON WHICH DEPRECIATION @ 10% IS PROVIDED AND HENCE SHALL BE PART OF THE SAME BLOCK OF ASSETS AS DEFINED U/S 2(11) OF THE ACT, WE AGREE WITH THE ASSESSEE THAT THE ASSESSEE HAS RIGHTLY INCLUDED THE SAME IN THE BLOCK OF ASSET OF BUILDING WHICH IS NOT USED FOR RESIDENTIAL PURPOSES CARRYING DEPRECIATION @ 10%. OUR VIEW IS FURTHER FORTIFIED BY THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF ANSAL PROPERTIES AND INFRASTRUCTURE LIMITED(SUPRA). THIRDLY, WITH RESPECT TO THE CONTENTION OF THE ASSESSEE THAT ASSESSEE HAS PAID RS. 15 LACS FOR THE PURCHASE OF OFFICE SHOP NO. 8(A), PLOT NO. 260, SECTOR 10, KHARGHAR, NAVI MUMBAI, WHEREBY THE POSSESSION WAS FORCEFULLY TAKEN BY THE ASSESSEE ON 06-02-2008 AGAINST WHICH BUILDING COMME NCEMENT CERTIFICATE TO START CONSTRUCTION WAS RECEIVED BY THE BUILDER HI-T ECH INFRA PROJECTS (INDIA) PRIVATE LIMITED ON 19 TH MARCH, 2008 AND NO CONVEYANCE DEED WAS EXECUTED BY THE BUILDER IN FAVOUR OF THE ASSESSEE, RATHER THE ASSESSEE HAS TREATED THE SAID OFFICE PREMISES I.E. SHOP NO. 8(A), PLOT NO. 260, SECTOR 10, KHARGHAR, NAVI MUMBAI AS PART OF THE BLOCK OF ASSET BEING THE BUIL DING WHICH IS NOT USED FOR RESIDENTIAL PURPOSES ON WHICH DEPRECIATION @ 10% WA S PROVIDED UNDER THE SCHEME OF THE ACT AGAINST WHICH THE DEPRECIATION WA S CLAIMED BY THE ASSESSEE AS IT WAS CLAIMED THAT THE SAID ASSET WAS PUT TO US E BY THE ASSESSEE, WE REJECT ITA 2995/MUM/2013 13 THE AFORE-STATED CONTENTION OF THE ASSESSEE AS THE SAID ASSET I.E. OFFICE PREMISES I.E. SHOP NO. 8(A), PLOT NO. 260, SECTOR 10, KHARGHAR, NAVI MUMBAI HAS NOT BEEN PROVED BY THE ASSESSEE TO BE CONSTRUCT ED PRIOR TO THE END OF THE FINANCIAL YEAR AND THERE IS NO QUESTION OF HAVING A NY PHYSICAL POSSESSION WITH THE ASSESSEE WITH RESPECT TO THE SAID OFFICE PREMIS ES I.E. SHOP NO. 8(A), PLOT NO. 260, SECTOR 10, KHARGHAR, NAVI MUMBAI WHICH WAS NOT EVEN BUILT PRIOR TO END OF THE FINANCIAL YEAR, NO DEPRECIATION CAN BE A LLOWED ON THE SAID OFFICE PREMISES AS THE SAME IS NOT PROVED TO BE PUT TO USE PRIOR TO THE END OF FINANCIAL YEAR AND HENCE SHALL NOT FORM PART OF THE BLOCK OF ASSETS KEEPING IN VIEW PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, AS THE BUILDER ITSELF HAS RECEIVED COMMENCEMENT CERTIFICATE TO START CONSTRUC TION ON 19-03-2008 ONLY. THE ONUS WAS ON THE ASSESSEE TO PROVE THAT THE SAID OFFICE PREMISES WAS EXISTING PRIOR TO 31-03-2008 AND ALSO PUT TO USE DU RING THE PREVIOUS YEAR RELEVANT TO THE IMPUGNED ASSESSMENT YEAR WHICH THE ASSESSEE IN THE INSTANT CASE COULD NOT PROVE AS PER OUR DETAILED DISCUSSION S ABOVE. THE ASSESSEE HAS BROUGHT ON RECORD AFFIDAVIT OF MR. VINOD SHANKAR MO RE, PEON STATING THAT THE FILES HAVE BEEN TRANSFERRED BY HIM TO THE AFORE-STA TED OFFICE PREMISES I.E. SHOP NO. 8(A), PLOT NO. 260, SECTOR 10, KHARGHAR, NAVI M UMBAI DURING THE PREVIOUS YEAR AND THE ASSET WAS PUT TO USE. THE A.O. WANTED TO VERIFY THE SAID CONTENTIONS OF THE ASSESSEE AND ACCORDINGLY ISSUED SUMMONS TO SAID SH. VINOD SHANKAR MORE,PEON TO APPEAR BEFORE HIM , BUT THE SAID PERSON SH. VINOD SHANKAR MORE DID NOT APPEARED BEFORE THE AO A ND ALSO COULD NOT BE PRODUCED BY THE ASSESSEE BEFORE THE A.O. NO EVIDENC E HAS BEEN BROUGHT ON RECORD THAT THE ASSESSEE HAS PUT THE SAID OFFICE PR EMISES TO USE PRIOR TO END OF THE FINANCIAL YEAR, HENCE, WE REJECT THE CONTENTION S OF THE ASSESSEE. WITH RESPECT TO THE FINDING OF THE LD. CIT(A) THAT THE A SSESSEE HAS ADDED RS. 16,27,010/- TO THE BLOCK OF ASSETS WHICH ARE IN THE NATURE OF REPAIRS, THIS IS A NEW CLAIM MADE BY THE ASSESSEE BEFORE THE LEARNED CIT(A) WHICH WAS NEVER CLAIMED BEFORE THE A.O. DURING ASSESSMENT PROCEEDIN GS. IN FACT NO APPLICATION U/R 46A OF INCOME TAX RULES, 1962 HAS B EEN FILED BEFORE THE ITA 2995/MUM/2013 14 LEARNED CIT(A) WITH RESPECT TO SAID CLAIM OF RS. 1 6,27,010/-. THE ASSESSEE HAS ONLY STATED THAT THEY WERE REPAIRS BY NATURE AN D THE LEARNED CIT(A) REJECTED THE CONTENTIONS OF THE ASSESSEE FOR INCLUS ION OF RS.16,27,010/- TO THE BLOCK OF ASSET, AND HENCE SHORT TERM CAPITAL GAIN OF RS. 9,25,880/- WAS BROUGHT TO TAX BY THE LD. CIT(A) WHILE THE ASSESSEE HAS CONTENDED THAT THE SAME BEING THE PAYMENT OF STAMP DUTY FOR PURCHASE O F OFFICE, THIS HAS TO BE FURTHER ENQUIRED AND VERIFIED BY THE AUTHORITIES BE LOW AND FINDING OF THE FACTS HAS TO BE RECORDED BY THE A.O. ON MERITS AFTER DUE ENQUIRY /VERIFICATIONS FOR WHICH WE DEEM IT FIT AND PROPER TO SET ASIDE AND RE STORE THIS ISSUE BACK TO THE FILE OF THE A.O. FOR NECESSARY VERIFICATION AND ENQ UIRY SO THAT THE AO CAN RECORD HIS FINDING OF FACT. NEEDLESS TO SAY PROPER AND ADEQUATE OPPORTUNITY OF HEARING SHALL BE PROVIDED BY THE AO TO THE ASSESSEE IN ACCORDANCE WITH THE PRINCIPLES OF NATURAL JUSTICE AND IN ACCORDANCE WIT H LAW. WE ALSO DIRECT THE A.O. TO COMPUTE THE SHORT TERM CAPITAL GAIN , IF AN Y CHARGEABLE ON THE SALE OF OFFICE PREMISES NO. 605, 6 TH FLOOR, MAITHILI'S SIGNET, PLOT NO.39/4, SECTOR-30A , VASHI, NAVI MUMBAI BEING DEPRECIABLE ASSET IN ACCOR DANCE WITH PROVISIONS AND SCHEME OF ACT IN ACCORDANCE WITH THE DIRECTION S AS CONTAINED IN THIS ORDER. WE ORDER ACCORDINGLY. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO. 2995/MUM/2013 FOR THE ASSESSMENT YEAR 2008-09 IS PA RTLY ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST OCTOBER, 2016. # $% &' 31-10-2016 ( ) SD/- SD/- (C.N. PRASAD) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 31-10-2016 [ ITA 2995/MUM/2013 15 .9../ R.K. R.K. R.K. R.K. , EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI E BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI