M/s. Raj Woollen Industries, V. ACIT, Panipat

ITA 331/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3923 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 05-05-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 29-01-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation; Tangible material; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 147; 148; 54; 154; 139

Judgement Text

ITA NO. 331/DEL/2009 A.Y. 2002-03 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 331/DEL/2009 (A.Y. 2002-03) M/S RAJ WOOLEN INDUSTRIES, VS. ASSTT. COM MISSIONER OF INCOME TAX, G.T. ROAD, PANIPAT PANIPAT CIRCLE, PALIKA BAZAR, (PAN: AADFR6675H) PANIPAT [APPELLANT] (RESPONDENT) ASSESSEE BY : SH. SATISH KUMAR GOEL, ADV. DEPARTMENT BY : SH. H.K. LAL, SR. DR PER SHAMIM YAHYA: AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 02.09.20 08 AND PERTAINS TO ASSESSMENT YEAR 2002-03. 2. THE GROUNDS RAISED READ AS UNDER:- THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLANT, THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IN UPHOLDING THE VALIDITY OF INITIATION OF REASSESSMENT PROCEEDINGS U/S 148 WHICH WAS MERE CHANGE OF OPINION IS ALTOGETHER ILLEGAL, VOID AND U NCALLED FOR. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLANT, THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) IN CONFIRMING THAT ITA NO. 331/DEL/2009 A.Y. 2002-03 2 SHORT TERM CAPITAL GAIN AROSE IN SALE OF LAND IS AL TOGETHER, ARBITRARY, ILLEGAL, VOID AND UNCALLED FOR. 3. IN THIS CASE THE ASSESSEE HAD FILED RETURN OF IN COME ON 30.10.2002 DECLARING TOTAL INCOME AT RS. 813270/- WHICH WAS PROCESSED U/ S 143(1) OF THE IT ACT ON 29.1.2003. SUBSEQUENTLY ON PERUSAL OF THE RECORD S IT WAS NOTICED THAT ASSESSEE HAD SHOWN LONG TERM CAPITAL GAIN ON THE DEPRECIABLE ASSETS AFTER APPLYING COST INFLATION INDEX METHOD AFTER CLAIMING EXEMPTION U/S 54EC OF THE IT ACT INSTEAD OF SHORT TERM CAPITAL GAIN AS PER THE PROVISIONS OF SE CTION 50 OF THE IT ACT. ACCORDINGLY, THE NOTICE TO REASSESS THE INCOME WAS ISSUED U/S 148 OF THE ACT ON 03.08.2006. 3.1 IN THE COURSE OF ASSESSMENT THE ASSESSING OFFIC ER OBSERVED THAT THE ASSESSEE IS A MANUFACTURE OF CARPET YARN AND SHODDY YARN. HE FURTHER OBSERVED THAT ON PERUSAL OF THE RECORDS IT WAS NOTICED THAT THE ASSESSEE HAS RETURN LONG TERM CAPITAL GAINS OF RS. 18,292/- ON THE SALE OF D EPRECIABLE ASSETS NAMELY SHED GODOWN BMK PREMISES, WHICH WERE SOLD FOR RS. 9,00,0 00/- ON 07.03.2002, BY APPLYING COST INFLATION INDEX METHOD AND AFTER CLA IMING EXEMPTION U/S 54EC OF THE IT ACT. AS THE SALE / TRANSFER OF DEPRECIABLE ASSETS RESULT IN SHORT TERM CAPITAL GAIN AS PER THE PROVISIONS OF SECTION 50 OF THE IT ACT AND EXEMPTION U/S 54 EC OF THE IT ACT IS NOT ALLOWABLE FROM SUCH SHORT TERM CA PITAL GAIN, THEREFORE, THE SHORT ITA NO. 331/DEL/2009 A.Y. 2002-03 3 TERM CAPITAL GAINS OF RS. 8,57,227/- WAS NOT SUBJECT TO TAX AND THE INCOME OF THE ASESSEE WAS UNDER ASSESSED. THE ASSESSING OFFICER ASKED THE ASSESSEE TO JUSTIFY ITS CLAIM OF LONG TERM CAPITAL GAIN ON THE TRANSFER OF DEPRECIABLE ASSETS INSTEAD OF CLAIMING SHORT TERM CAPITAL GAIN. 3.2 IN THE EXPLANATION ASSESSEE SUBMITTED THAT EVEN FOR THE SAKE OF ARGUMENT IT IS ASSUMED THAT THE ASSESSING OFFICER S PROPOSITI ON WAS CORRECT, IT WOULD NOT GIVE RISE TO SHORT TERM CAPITAL GAIN BECAUSE IN THAT CA SE THE ENTIRE BUILDING BLOCK HAS TO BE DEPLETED AND IN THE CASE OF ASSESSEES CASE CERTAIN BUILDINGS BLOCKS STILL SUBSIST ON 31.3.2002. HENCE ASSESSEE CLAIMED THAT THE EFFECT OF ANY SALE OUT OF THE BLOCK WOULD REDUCE THE VALUE OF BLOCK ONLY WHIC H WOULD EFFECT DEPRECIATION CLAIM ONLY . ASSESSING OFFICER PRINCIPALLY ACCEP TED THIS PROPOSITION. ASSESSING OFFICER OBSERVED THAT ON THE SCHEDULE OF FIXED ASS ETS IT WAS NOTICED THAT THE ASSESSEE WAS CLAIMING DEPRECIATION @5% ON SHOPWOOL MARKET ACCOUNT AND ON SHED GODOWN BMK PREMISES. THEREFORE, HE HELD THAT SHOPWOOL MARKET ACCOUNT AND SHED GODOWN BMK PREMISES CONSTITUTE BLOCK OF AS SETS ON WHICH DEPRECIATION IS CLAIMED @5%. THE ASSESSING OFFICER FOUND THAT WDV (WRITTEN DOWN VALUE) OF SHOPWOOL MARKET ACCOUNT AS ON 1.4.2001 WAS RS. 4,19 ,553/- AND THE WDV OF SHED GODOWN BMK PREMISES AS ON 1.4.2001 WAS RS. 42,772/- , THEREFORE, THE OPENING WDV OF THE BLOCK OF ASSETS ON WHICH DEPRECIATION WA S ALLOWABLE @5% AS ON ITA NO. 331/DEL/2009 A.Y. 2002-03 4 1.4.2001 WAS RS. 462325/-. THE ASSESSEE HAD SOLD SHED GODOWN BMK PREMISES IN FY 2001-02 ON 7.3.2002 FOR RS. 9,00,000/-. THER EAFTER THE ASSESSING OFFICER REFERRED THE PROVISION OF SECTION 50 OF THE IT ACT AND HELD AS UNDER:- IN THE PRESENT CASE, THE FULL VALUE OF CONSIDERATI ON (RS. 9,00,000/-) RECEIVED AS THE RESULT OF THE TRANSFER OF THE SHED GODOWN BMK PREMISES (FORMING PART OF A BLOCK OF ASSETS OF SHOP WOOL MARKET ACCOUNT AND SHED GODOWN BMK PREMISES IN RESPECT OF WHICH DEPRECIATION @5% HAS BEEN ALLOWED UNDER THE IT ACT) FALLING WITHIN THE BLOCK OF THE ASSETS DURING THE PREVIOUS YEAR 2 001-02, EXCEEDS THE WDV OF THE BLOCK OF ASSETS AT THE BEGINNING OF PREVIOUS YEAR (RS. 4,62,325/-), THEREFORE, AS PER THE PROVISIONS OF THE SECTION 50 OF THE IT ACT, DIFFERENCE OF RS. 4,37,675/- IS THE SHO RT TERM CAPITAL GAIN IN THE HANDS OF THE ASSESSEE ON WHICH NO EXEMPTION U/S 54EC OF THE IT ACT IS ALLOWABLE AS EXEMPTION U/S 54EC OF THE IT AC T IS ALLOWABLE IN RESPECT OF THE CAPITAL GAIN ARISING FROM THE TRANS FER OF LONG TERM CAPITAL ASSETS. FURTHER, DEPRECIATION OF RS. 20,97 8/- CLAIMED BY THE ASSESSEE @5% ON SHOPWOOL MARKET ACCOUNT IN THE FY 2 001-02 IS NOT ALLOWABLE AS THE WDV OF THE BLOCK OF ASSETS CONSIS TING OF SHOPWOOL MARKET ACCOUNT AND SHED GODOWN BMK PREMISES AS ON 3 1.3.2002 IS NIL AS ALREADY DISCUSSED ABOVE. SUBJECT TO DISCUSSION ABOVE, SHORT TERM CAPITAL GAI N OF RS. 4,37,675/- IS TO BE TAXED IN THE HANDS OF THE ASSESSEE INSTEA D OF LONG TERM CAPITAL GAIN OF RS. 8,292/- AS RETURNED BY THE ASSE SSEE IN ITS RETURN OF INCOME AND DEPRECIATION OF RS. 20,978/- CLAIMED BY THE ASSESSEE ON SHOPWOOL MARKET ACCOUNT IN THE FY 2001-02 IS TO BE DISALLOWED. 4. ASSESSEE APPEALED BEFORE THE LD. COMMISSIONER O F INCOME TAX (APPEALS) CHALLENGING THE JURISDICTION AS WELL AS MERITS OF TH E CASE. ASSESSEE CLAIMED THAT FINDING OF THE ASSESSING OFFICER WERE CONTRARY TO THE FACTS A) THAT ONLY LAND HAS BEEN SOLD AS PER AGREEMENT. ITA NO. 331/DEL/2009 A.Y. 2002-03 5 B) THAT ON SALE OF LAND ONLY LONG TERM GAIN ARISES WHICH WAS HELD SINCE 1993-94. C) THAT EXEMPTION U/S 54EC WAS RIGHTLY CLAIMED AND ALLOWED BY PRECEDING ASSESSING OFFICER U/S 143(1). D) THAT IN THE ALTERNATIVE REMEDY ASSESSING OFFICER HAS ILLEGALLY TAKEN THE ASSET INTO 5% BLOCK WHILE AS PER RECORD THE ASS ESSEE HAD BEEN CLAIMING DEPRECIATION @10%. THAT THE APPELLANT HAD RIGHTLY DECLARED CAPITAL GA IN ON SALE OF LAND AND THE ILLEGAL ACTION OF ASSESSING OFFICER NEEDS TO BE DE LETED. 4.1 AS REGARDS THE JURISDICTION LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT RETURN WAS MERELY PROCESSED U/S 143(1) AND THE REFORE, THERE IS NO CHANGE OF OPINION OF ASSESSING OFFICER IN ISSUING NOTICES U /S 147/148. THEREFORE, HE REJECTED THIS GROUND OF APPEAL BY THE ASSESSEE. ON MERITS THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD AS UNDER:- I HAVE CONSIDERED THE FACTS OF THE CASE AND THE S UBMISSIONS OF THE ASSESSEE. THE ASSESSEE HAD PURCHASED THE SAID ASSE T AS SHED AND GODOWN, NATURALLY WITH THE LAND ON WHICH THE SUPER STRUCTURE WAS EXISTING AND THE SAME WAS USED AS BUSINESS ASSET TI LL THE DATE IT IS SOLD BECAUSE DEPRECIATION HAS BEEN CLAIMED AND ALL OWED @10% TILL A.Y. 2001-02. THEREFORE, THE SALE OF THE SAID ASSET , LAND AND SHED AMOUNT TO SALE OF BUSINESS ASSET AND THEREFORE, THE CONSIDERATION RECEIVED ON SALE OF THE BUSINESS ASSETS, SHED AND L AND, RS. 9 LAC WILL BE REDUCED FROM THE WDV OF THE BLOCK OF ASSETS CONSIST ING OF BUILDING BECAUSE AS SUBMITTED BY THE ASSESSEE, THE SAID BLOC K OF ASSETS CONSISTING BUILDINGS HAS SUFFICIENT WDV AND ACCORD INGLY, THERE WILL BE NO CAPITAL GAIN ON TRANSFER OF THE SAID SHED AND BU ILDING. IN RESULT, THE GROUNDS OF APPEAL OF THE ASSESSEE ARE ALLOWED. 5. AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BEF ORE US. ITA NO. 331/DEL/2009 A.Y. 2002-03 6 6. LD. COUNSEL OF THE ASSESSEE SUBMITTED BEFORE US THAT IN THIS CASE THE ASSESSING OFFICER HAS ALSO INITIATED RECTIFICATION PROCEEDINGS U/S 154 OF THE IT ACT VIDE NOTICED DATED 29.10.2003. IN THE SAID NOTICE I T WAS INTER-ALIA MENTIONED THAT ON SALE OF SHED GODOWN, NO INDEXATION IS PERMISSIB LE. HENCE CAPITAL GAIN IS TO BE ARISED IN EXCESS AND EXEMPTION U/S 54EC IS NOT ADMI SSIBLE SINCE THERE IS SHORT TERM CAPITAL GAIN ON DEPRECIABLE ITEM, WHICH REBUTTED I N SHORT COMPUTATION OF CAPITAL GAIN. THE SAME IS PROPOSED TO ADD BACK ALONGWITH IN T. CHARGEABLE U/S 234-B. 6.1 LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE PROCEEDINGS U/S 154 WERE LATER ON DROPPED AND FOR THE SAME REASON THE REASS ESSMENT WAS REOPENED. HENCE HE CLAIMED THAT IN THESE CIRCUMSTANCES AS HE LD BY JURISDICTIONAL HIGH COURT IN 321 ITR 526 IN THE CASE OF C.I.T. VS. BATR A BHATTA CO. AND HONBLE HIGH COURT OF CALCUTTA IN THE CASE OF BERGER PAINTS INDI A LTD. V.S ACIT & ORS. 322 ITR 369 THE REOPENING IS NOT JUSTIFIED. 6.2 LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND SUBMITTED THAT THE RETURN WAS INITIALLY PROCESSED U/S 143(1) OF THE I T ACT, WHEREIN THERE WAS NO QUESTION OF FORMATION OF OPINION. LD. COMMISSIONE R OF INCOME TAX (APPEALS) IN ITA NO. 331/DEL/2009 A.Y. 2002-03 7 THIS REGARD RELIED UPON THE CASE LAW OF RAJESH JHAV ERI FROM THE APEX COURT 291 ITR 500. 6.3 WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. WE CAN GAINFULLY REFER THE PROVISION OF SECTION 147 OF THE IT ACT. INCOME ESCAPING ASSESSMENT - 147. IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSE SS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS E SCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENT LY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS T HE CASE MAY BE, FOR THE ASSESSMENT YEAR CONCERNED (HEREAFTER IN THI S SECTION AND IN SECTIONS 148 TO 153 REFERRED TO AS THE RELEVANT ASS ESSMENT YEAR). PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER T HE EXPIRY OF FOUR YEAR FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSE E TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB- SECTION(1) OF SECTION 142 OR SECTION 148 OR TO DISC LOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FO R THAT ASSESSMENT YEAR.' 6.4 AS PER THE ADMITTED FACTS OF THE CASE THE INITI AL PROCESSING OF THE RETURN WAS DONE U/S 143(1) OF THE IT ACT AND THE ASSESSMEN T NOTICE HAS BEEN ISSUED WITHIN 4 YEARS FORM THE END OF RELEVANT ASSESSMENT YEAR. HONBLE APEX COURT ITA NO. 331/DEL/2009 A.Y. 2002-03 8 HAS EXPOUNDED IN THE DECISION OF C.I.T. VS. KELVINATOR INDIA 32 0 ITR 561 THAT REOPENING CAN BE DONE PROVIDED THERE IS TANGIBLE MA TERIAL TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASONS MUST HAVE A LIVE LINK WITH THE FORMATION OF BELIEF. 6.5 FURTHER THE HONBLE APEX COURT IN THE CASE OF A CIT VS. RAJESH JHAVERI HAS HELD THAT THE INTIMATION U/S 143(1) CANNOT BE T REATED TO BE AN ORDER OF ASSESSMENT. IT WAS FURTHER HELD THAT THE ASSESSME NT AFTER PROCESSING U/S 143(1) WAS POSSIBLE AS THERE IS NO QUESTION OF CHAN GE OF OPINION IN SUCH CASE. IN PARA 16 OF THE SAID ORDER THE HONBLE AP EX COURT HAD EXPOUNDED THAT SECTION 147 AUTHORISES AND PERMITS THE ASS ESSING OFFICER TO ASSESS AND REASSESS INCOME CHARGEABLE TO TAX, IF HE HAS REASON TO BELIEVE THAT INCOME FOR ANY ASSESSMENT YEAR AS ESCAPED ASSESSMEN T. THE WORD REASON IN THE PHRASE REASON TO BELIEVE WILL MEAN CAUSE OR JUSTIFICATION. IF THE ASSESSING OFFICER HAS CAUSE OR JUSTIFICATION TO K NOW OR SUPPOSE THAT INCOME HAS ESCAPED ASSESSMENT, IT CAN BE SAID TO HAVE REA SON TO BELIEVE THAT AN INCOME HAS ESCAPED ASSESSMENT. THE SAID EXPRESSI ON CANNOT BE READ TO MEAN THAT THE ASSESSING OFFICER SHOULD HAVE FINALL Y ASCERTAINED THE FACT BY LEGAL EVIDENCE OR CONCLUSION. 6.6 IN C.I.T. VS. BATRA BHATTA COMPANY THE JURISDICT IONAL HIGH HAD HELD THAT IT IS NOT A JUST BELIEF OF ASSESSING OFFICER THAT IS MAT ERIAL FOR INVOKING SECTION 147. BUT SUCH A BELIEF MUST BE BASED UPON CERTAIN REASONS; M ERELY BECAUSE ASSESSING OFFICER FEELS THAT ISSUE REQUIRES MUCH DEEPER SCRU TINY IS NOT ENOUGH GROUND FOR INVOKDING SECTION 147. ITA NO. 331/DEL/2009 A.Y. 2002-03 9 6.7 IN BERGER PAINTS LTD. VS. ACIT HONBLE CACUTTA HIGH COURT HAS HELD THAT IN THAT CASE THE REASSESSMENT NOTICE HAS BEEN ISSUED F OR WHICH THE SAME REASON FOR RECTIFICATION PROCEEDINGS HAS BEEN INITIATED AND DR OPPED. ASSESSING OFFICER HAS NOT DISCLOSED ANY MATERIAL FOR REOPENING ASSESSMENT . ASSESSMENT CANNOT BE REOPENED ON MERE CHANGE OF OPINION AS HAS BEEN APPA RENTLY DONE IN THE CASE. 6.8 NOW IN THIS CASE WE FIND THAT THE ASSESSMENT HA S BEEN REOPENED AS THE ASSESSING OFFICER ON PERUSAL OF THE RECORDS NOTICE D THAT THE ASSESSEE HAS SHOWN LONG TERM CAPITAL GAIN ON THE DEPRECIABLE ASSETS A FTER APPLYING COST INFLATION INDEX METHOD, AFTER CLAIMING EXEMPTION U/S 54EC OF THE IT ACT INSTEAD OF SHOWING SHORT TERM CAPITAL GAIN, AS PER THE PROVISION OF SE CTION 50 OF THE IT ACT. WE FIND THAT THE ABOVE REASON FOR REOPENING CAN BE SAID TO BE A TANGIBLE MATERIAL FOR REOPENING THE ASSESSMENT. MOREOVER, INITIAL PRO CESSING OF THE RETURN WAS DONE U/S 143(1) OF THE IT ACT WHICH CANNOT BE SAID TO BE AN ASSESSMENT ORDER PASSED. HENCE ON THE ANVIL OF THE ABOVE APEX COURT DECISION S THE REASSESSMENT IS QUITE JUSTIFIED IN THIS CASE. IT IS ALSO SETTLED LAW THA T RECTIFICATION U/S 154 IS NOT POSSIBLE, UNLESS THERE IS MISTAKE APPARENT FROM RECORD. INITI ATION AND DROPPING OF PROCESSING U/S 154 ALSO CAN NOT BE EQUATED WITH PAS SING OF AN ASSESSMENT ORDER. THE DECISIONS CITED BY THE LD. COUNSEL OF THE ASSES SEE ARE NOT APPLICABLE ON THE FACTS OF THE PRESENT CASE BECAUSE THE REASON MENTIO NED FOR REOPENING IS QUITE COGENT AND TANGIBLE ONE. FURTHERMORE THE REOPENIN G HERE CANNOT BE SAID TO BE RESULT OF CHANGE OF OPINION AS THERE WAS NO FORMATI ON OF OPINION IN THE FIRST PLACE, AS THE PROCESSING OF RETURN WAS DONE U/S 143(1) OF THE IT ACT. 6.9 HENCE IN THE BACKGROUND OF THE AFORESAID DISCU SSION THE ASSESSEE GROUND THAT REASSESSMENT IS MERE CHANGE OF OPINION AND HEN CE NOT SUSTAINABLE IS LIABLE ITA NO. 331/DEL/2009 A.Y. 2002-03 10 TO BE DISMISSED. RESPECTFULLY FOLLOWING THE PREC EDENT FROM THE APEX COURT DECISIONS AS ABOVE, WE UPHOLD THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ON THE ISSUE OF JURISDICTION AND DISMISS T HE GROUND RAISED BY THE ASSESSEE ON THIS ACCOUNT. 6.10 AS REGARDS THE MERIT OF THE CASE LD. COUNSEL O F THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS PURCHASED THE SHED GODOWN WHI CH ALSO INCLUDED THE VALUE OF LAND. HE CLAIMED THAT THE SAID SHED WAS COMPLETE LY DEMOLISHED AND THE LAND WAS SOLD FOR RS. 900,000/-. HE CLAIMED THAT SECTION 2(11) WHICH DEFINES THE CLASS OF ASSET UNDER THE BLOCK OF ASSET DOES NOT REFER TO ANY LAND. HENCE THE VALUE OF THE SALE OF LAND CANNOT BE FALLING UNDER THE AMBI T OF SECTION 50 OF THE IT ACT AND HENCE THE CLAIM OF ASSESSEE FOR EXEMPTION U/S 50EC SHOULD ALSO NOT BE DENIED. 6.11 LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND SUBMITTED THAT THE ASSESSEE HAD PURCHASED SHED GODOWN ORIGINALLY AND WAS CLAIMING DEPRECIATION ON THE SAME. THERE WAS NO BIFURCATION OF THE VA LUE OF LAND AND BUILDING IN THE ASSESSEES BOOKS AND THE ASSESSEE WAS CLAIMING DEPR ECIATION ON THE SAME FROM EARLIER YEARS. HE CLAIMED THAT THERE WAS NO EVIDEN CE THAT ASSESSEE HAS SOLD LAND ALONE. HENCE HE CLAIMED WHEN ADMITTEDLY THE ASSESS EE HAD CLAIMED DEPRECIATION ON THE SAID ASSET ON THE ANVIL OF SECTION 50 OF THE IT ACT, ASSESSEE CANNOT CLAIM LONG TERM CAPITAL GAIN ON THE SAME. HE FURTHER SUBM ITTED THAT THE ORDER OF THE ASSESSING OFFICER HOLDING THAT THE SAID ASSET FELL UNDER THE GROUP OF 5% DEPRECIATION AS WAS CORRECT AND SHOULD BE SUSTAINED . 6.12 AS PER THE SUBMISSION BEFORE US, THE ASSESSEE HAD SHOWN THE IMPUGNED ASSET AS SHED GODOWN BMK PREMISES. THE IMPUGNED A SSET WAS PURCHASED ON 26.2.1992 FOR RS. 87755/- AND ASSESSEE HAS CLAIMED DEPRECIATION ON THE SAME ITA NO. 331/DEL/2009 A.Y. 2002-03 11 @10% FROM ASSESSMENT YEAR 1993-94 UPTO TO ASSESSME NT YEAR 2001-02. THE WDV ASSET AS ON 31.3.2004 WAS RS. 42772/-, THE CONC ERNED ASSET WAS SOLD FOR RS. 900,000/- ON 7.3.2002. 6.13 A READING OF SECTION 32 WHICH PROVIDES FOR ALL OWANCE OF DEPRECIATION. SECTION 50 WHICH PROVIDES FOR COMPUTATION OF CAPITA L GAINS IN CASE OF SALE OF DEPRECIATION ASSETS, MAKES IT CLEAR THAT WHEN DEPR ECIABLE ASSET IS SOLD, THE AMOUNT REALIZED IS ADJUSTED AGAINST WDV (WRITTEN DOW N VALUE) OF THE CONCERNED GROUP/ BLOCK OF ASSET. NOW THE ASSESSEE HAS ITSELF SUBMITTED BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) THAT FOR THE IMPUGNED ASSETS, AS PER THE RECORDS OF THE ASSESSEE, THE ASSESSEE HAS BEEN CLAI MING DEPRECIATION @10%. HENCE, IT IS CLEAR THAT ASSESSEE HAS SOLD ITS DEPRE CIABLE ASSET, THE SALE OF VALUE OF WHICH HAS TO BE ADJUSTED AGAINST THE CONCERNED BLOCK OF ASSET. 6.14 ASSESSEES CLAIM THAT THERE WAS ONLY LAND WHIC H WAS SOLD REMAINS UNSUBSTANTIATED AND THE SAME IS CONTRARY TO FACTS O N RECORD. ADMITTEDLY ASSESSEE HAD SHOWN THE LAND AND BUILDING FIGURE IN A COMPOS ITE MANNER AND HAD BEEN CLAIMING DEPRECIATION ON THE SAME FROM A.Y. 1993-94 TO A.Y. 2001-02 FOR 9 YEARS. NOW IN THESE CIRCUMSTANCES ASSESSEE CANNOT PLEAD TH AT THE ASSET SOLD, WAS NOT DEPRECIABLE ASSET, WHICH IS COMPLETELY CONTRARY TO THE FACTS BORNE OUT OF THE RECORDS. UNDER SUCH CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY OR ILLEGALITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) AND ACCORDINGLY WE UPHOLD THE SAME. ITA NO. 331/DEL/2009 A.Y. 2002-03 12 7. IN THE RESULT, THIS APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14/05/2010. SD/- SD/- [RAJPAL YADAV] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 14/05/2010 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES