DCIT, Ghaziabad V. Saint Mary's Educational & Charitable Society, Ghaziabad

ITA 4648/DEL/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 9709 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 14-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHUTOSH JAIN
• Assessee Lawyers: ASHIMA NEB
• Keywords: Sale consideration of property below Jantri Value; Depreciation; Capital Gains
• Section: 50C

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER I.T.A. NO. 3230/DEL/2015 A.Y. : 2010-11 M/S SAINT MARYS EDUCATIONAL & CHARITABLE SOCIETY, A-BLOCK, SHALIMAR GARDEN, EXTN.-II, SAHIBABAD, GHAZIABAD (PAN: AAETS1945C) VS. ACIT(E), CIRCLE, CGO COMPLEX, GHAZIABAD (APPELLANT) (RESPONDENT) AND I.T.A. NO. 4648/DEL/2015 A.Y. : 2010-11 DY. COMMISSIONER OF INCOME TAX, ROOM NO. 208, 2 ND FLOOR, CGO-1, HAPUR ROAD, GHAZIABAD VS. SAINT MARYS EDUCATIONAL & CHARITABLE SOCIETY, A-BLOCK, SHALIMAR BAGH, EXTN.-II, SAHIBABAD GHAZIABAD (UP) (APPELLANT) (RESPONDENT) ASSESSEE BY : MS. ASHIMA NEB, SR. DR DEPARTMENT BY : SH. ASHUTOSH JAIN, CA DATE OF HEARING : 24.09.2018 DATE OF ORDER : 26-09-2018 ORDER PER K.NARASIMHA CHARY, J.M. THESE APPEALS FILED BY THE ASSESSEE AS WELL AS R EVENUE CHALLENGING THE ORDER DATED 02.04.2015 IN APPEAL NO . 552/2013-14/GZB FOR ASSESSMENT YEAR 2010-11 PASSED BY THE LD. COMMI SSIONER OF INCOME TAX (APPEALS), GHAZIABAD (IN SHORT LD. CIT(A)). 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E WAS A SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, 18 60 AND WAS ENGAGED IN RUNNING A SCHOOL IN THE NAME OF ST. MARYS CHRISTIA N SENIOR SECONDARY SCHOOL AT B-BLOCK, SHALIMAR GARDEN, EXTN.II, SAHIBA BAD. DURING THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE S OLD A PLOT OF LAND SITUATED AT B-BLOCK, SHALIMAR GARDEN, EXTN.II, SAHI BABAD TO SAINT JOSEPH CAPUCHIN SERVICE SOCIETY, GHAZIABAD FOR RS. 4.50 CR ORES. ASSESSEE SAYS THAT THE BUILDING ON THE SAID PLOT OF LAND WAS SOLD FREE OF COST. THE CIRCLE RATE OF PLOT OF LAND AT THE TIME OF SALE WAS RS. 4, 36,44,420/-. THE CIRCLE RATE OF THE BUILDING AS ON THAT DATE WAS RS. 1,55,6 0,580/-. THUS THE AGGREGATE CIRCLE RATE OF THE PROPERTY WAS DETERMINE D AT RS. 5,92,05,000/- ON WHICH STAMP DUTY WAS DULY PAID BY THE ASSESSEE. THE AO, HOWEVER, COMPUTED THE LONG TERM CAPITAL GAINS ON SALE OF LAN D AND BUILDING IN TERMS OF SECTION 50C OF THE INCOME TAX ACT, 1961 (THE AC T) AFTER TAKING INTO ACCOUNT THE AGGREGATE CIRCLE RATE OF RS. 5,92,05,00 0/- AS THE SALES CONSIDERATION AND REDUCING ONLY THE COST OF ACQUISI TION OF THE LAND, AS DECLARED BY THE ASSESSEE. 3. AGAINST THE SAID ACTION OF THE AO, THE ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO UPHELD THE COMPUTATION OF LONG TERM CAPITAL GAINS ON SALE OF LAND DECLARED BY THE ASSESSEE AFTER TAKING INTO ACCOUNT THE ACTUAL SALES CONSIDERATION OF RS. 4.50 CRORES. LD. CIT(A) FURTHE R HELD THAT OUT OF AGGREGATE CIRCLE RATE OF RS. 5,92,05,000/- ADOPTED FOR THE PURPOSE OF SECTION 50C OF THE ACT, RS. 4.50 CRORES WAS ATTRIBU TABLE TO LAND AND THE BALANCE RS. 1,42,05,000/- BE ATTRIBUTED TOWARDS S ALE OF BUILDING AND THE 3 SAME BE REDUCED FROM WDV OF THE BLOCK. SINCE THE BL OCK OF ASSETS DOES NOT CEASE TO EXIST ON SUCH REDUCTION, NO CAPITAL GA INS RAISE ON SALE OF BUILDING. ACCORDINGLY, LD. CIT(A) DISALLOWED THE E XCESS DEPRECIATION OF RS. 15,56,058/- CLAIMED BY THE ASSESSEE IN THIS REG ARD. 4. AGGRIEVED WITH THE LD. CIT(A)S ACTION, THE ASSE SSEE CHALLENGED THE DISALLOWANCE OF EXCESS DEPRECIATION TO THE TUNE OF RS. 15,56,058/- BY PREFERRING THE ITA NO. 3230/DEL/2015 (AY 2010-11). HOWEVER, AT THE TIME OF ARGUMENTS, LD. AR SUBMITTED THAT THE ASSESS EE MAY BE PERMITTED TO NOT PRESS THE APPEAL. REVENUE DOES NOT RAISE AN Y OBJECTION TO THIS PROPOSITION OF THE LD. AR OF THE ASSESSEE. HENCE, THE ITA NO. 3230/DEL/2015 PREFERRED BY THE ASSESSEE STANDS DISM ISSED AS NOT PRESSED. 5. NOW COMING TO THE APPEAL PREFERRED BY THE REVENU E, LD. DR HEAVILY RELIED UPON THE ASSESSMENT ORDER OF THE AO, WHEREAS LD. AR SUBMITTED THAT THE ORDER OF THE LD. CIT(A) DOES NOT SUFFER FR OM ANY ILLEGALITY OR IRREGULARITY AS SUCH THE APPEAL OF THE REVENUE HAS NO MERITS AND FURTHER THAT INASMUCH AS THE FINDINGS OF THE LD. CIT(A) ARE PERFECTLY JUSTIFIED, THOUGH INITIALLY CHALLENGED THE DISALLOWANCE OF RS. 15,56,058/- BEING THE 10% OF THE EXCESS DEPRECIATION, THE ASSESSEE CONC EDES SUCH A FINDING AND NOT PRESSED HIS APPEAL. 6. WE HAVE CAREFULLY GONE THROUGH THE RECORD AND DU LY CONSIDERED THE SUBMISSIONS ON EITHER SIDE. ON THE ISSUE RELATING TO DELETION OF ADDITION OF RS. 1,42,05,000/- OUT OF TOTAL ADDITION OF RS. 5 ,20,38,500/- MADE BY 4 THE AO OUT OF LONG TERM CAPITAL GAIN, IT COULD BE S EEN FROM THE IMPUGNED ORDER THAT LD. CIT(A) OBSERVED AS PER THE CLAIM OF SECTION 50C OF THE ACT, THE DEPRECIABLE ASSETS ARE TO BE SUBJECT TO SHORT C APITAL GAIN OR LOSS IF THE BLOCK OF ASSETS HAS CEASED TO EXIST AND IF NOT THEN THE SALE CONSIDERATION HAS TO BE REDUCED FROM THE WDV AND IN THE PRESENT C ASE IT IS AN ADMITTED FACT THAT THE SAID BUILDING IS PART OF BLOCK OF ASS ETS UNDER THE HEAD BUILDINGS AND THE BLOCK HAS NOT CEASED TO EXIST. TH EREFORE, MERELY BECAUSE THE ASSESSEE DID NOT REDUCE THE SALE CONSID ERATION FROM BLOCK WOULD NOT MEAN THAT THE ASSET WOULD BE SUBJECT TO THE LONG TERM CAPITAL GAIN, THAT TOO, WITHOUT ANY BENEFIT OF COST OF ACQU ISITION. ON THIS PREMISE, LD. CIT(A) HELD THAT THE BUILDING BEING THE PART OF BLOCK OF ASSESSMENT SUBJECTED TO DEPRECIATION, AND PROVISIONS OF SECTIO N 50 OF THE ACT WOULD APPLY IN THIS CASE. ACCORDINGLY, LD. CIT(A) HELD TH AT THE QUESTION OF LONG TERM CAPITAL GAINS DOES NOT ARISE AND IT WOULD BE C ORRECT TO REDUCE THE SALE CONSIDERATION FROM THE WDV OF THE BLOCK BUILD ING OF RS. 1,55,60,580/-. SINCE THE BLOCK DOES NOT CEASE TO E XIST, THE ASSESSEE IS NOT LIABLE FOR ANY SHORT TERM CAPITAL GAIN. LD. CIT(A) ATTRIBUTED A SUM OF RS. 4.50 CRORES TO THE LAND OUT OF THE TOTAL SALE CONSIDERATION OF RS. 5,92,05,000/- U/S. 50C AND THE BALANCE OF RS. 1,42, 05,000/- ATTRIBUTABLE TO THE BUILDING DOES NOT SUFFER ANY CAPITAL GAIN TA X. LD. CIT(A) ON THIS PREMISE, DELETED THE ADDITION ON ACCOUNT OF CAPITAL GAIN TO THE TUNE OF RS. 1,42,05,000/-, BUT AT THE SAME TIME DISALLOWED THE EXCESS DEPRECIATION OF RS. 1,55,60,580/-. 5 7. HAVING CONSIDERED THE MATTER IN ITS ENTIRETY, WE FIND THE ABOVE CONCLUSIONS REACHED BY THE LD. CIT(A) ARE PERFECTLY LEGAL AND JUSTICE AND DO NOT SUFFER ANY ILLEGALITY OR IRREGULARITY. THERE FORE, WE UPHOLD THE IMPUGNED ORDER AND CONSEQUENTLY FIND THAT THE APPE AL BY THE REVENUE IS ALSO LIABLE TO BE DISMISSED. ACCORDINGLY, WE DISMIS S THE SAME. 8. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASS ESSEE AND REVENUE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26/09/2018. SD/- SD/- [N.K. BILLAIYA] [K.NARASIMHA CHARY] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 26/09/2018 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES 6