JASANI TEXTILE PROCESSORS PVT LTD, MUMBAI V. THE DCIT -6(3) (1) , MUMBAI

ITA 5881/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8861 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2015-2016
• Appeal Filed On: 12-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: USHA GAIKWADLD
• Assessee Lawyers: VIRENDRA JARIWALA LD
• Keywords: Capital asset; Cost of acquisition; Capital Gains

Judgement Text

M/S JASANI TEXTILE PROCESSORS PVT. LTD. ASSESSMENT YEAR: 2015 - 16 1 IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI , , BEFORE HONBLE SHRI AMARJ I T SINGH , JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM (HEARING THROUGH VIDEO CONFERENCING MODE) ./ I.T.A. NO. 5881 /MUM/201 9 ( / ASSESSMENT YEAR : 2015 - 16 ) M/S JASANI TEXTILE PROCESSORS PVT. LTD. 264, MADHAV M A NSION, SAMUEL STREET, VADGADI, MUMBAI - 400 003 / VS. DCIT - 6(3)(1) R. NO. 506, 5 TH FLOOR, AAYAKAR BHAVAN M. K. ROAD, MUMBAI - 400 020. ./ ./ PAN/GIR NO . A AACJ - 1227 - F ( / APPELLANT ) : ( / RESPONDENT ) ASSESSEE BY : SHRI VIRENDRA JARIWALA LD. AR REVENUE BY : MS. US HA GAIKWAD LD. D R / DATE OF HEARING : 28 /07 /2021 / DATE OF PRONOUNCEMENT : 02/08/2021 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AF ORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR (AY) 2015 - 16 ARISES OUT OF THE OR DER OF LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) - 12 , MUMBAI [CIT(A)], DATED 04/06 /20 19 IN THE MATTER OF ASSESSMENT FRAMED BY LD. ASSESSING OFFICER (AO) U/S 14 3(3) OF THE ACT ON 26/12/2017 . THE GROUNDS OF APPEAL READ AS UNDER: - M/S JASANI TEXTILE PROCESSORS PVT. LTD. ASSESSMENT YEAR: 2015 - 16 2 1. ON FACTS AND IN THE CI RCUMSTANCES OF THE CASE AND IN LAW LEARNED CIT (APPEALS) FAILED TO APPRECIATE THAT THE CAPITAL ASSETS WERE TRANSFERRED ALONG WITH ALL ADVANTAGES, BENEFITS, CLAIMS, APPURTENANCES, USE AND RIGHTS ETC AND HENCE THE COST OF ASSETS TRANSFERRED ALSO INCLUDES T HE COST OF ACQUIRING SUCH ADVANTAGES, BENEFITS, CLAIMS, APPURTENANCES, USE AND RIGHTS SUCH AS WATER SUPPLY AND ELECTRIC SUPPLY FOR WHICH DEPOSITS OF RS . 1,49,256/ - WERE GIVEN TO MIDC, MSEB ETC. 2. ALTERNATIVELY ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW LEARNED CIT (APPEALS), HAVING FOUND THAT ASSESSE E HAD GIVEN DEPOSITS OF RS. 1,49,256/ - TO MIDC, MSEB ETC FOR SUPPLY OF WATER AND ELECTRICITY ETC IN OR UPON THE CAPITAL ASSET TRANSFERRED, OUGHT TO HAVE ALLOWED THE DEDUCTION THEREOF AS COST OF IMPRO VE MENT OF SUCH CAPITAL ASSET. 3. LEARNED CIT (APPEALS) HAVING HELD THAT WRITTEN DOWN VALUE (WDV) OF RS. 4,78,083/ - OF FIXED ASSETS DISCARDED AND WRITTEN OFF IN BOOKS IS NOT DEDUCTIBLE WHILE COMPUTING CAPITAL GAINS AS IT DOES NOT FORM PART OF COST OF ACQUIS ITI ON OR COST OF IMPROVEMENT OF ASSETS SOLD AND HAVING FURTHER OBSERVED THAT DEDUCTION OF WDV OF THESE ASSETS IS ALLOWABLE U/S 32(I)(III) OF THE I.T.ACT, LEARNED CIT (APPEALS) OUGHT TO HAVE ALLOWED THE SAME U/S 32(I)(III) BECAUSE THE APPELLANT IS ENTITLED TO THE SAME AND IT WAS ALSO CLAIMED BEFORE CIT (APPEALS). 4. THE APPELLANT CRAVES LEAVE FOR PERMISSION TO ADD, AMEND OR ALTER ANY GROUND OF APPEAL AT THE TIME OF HEARING. AS EVIDENT, THE SUBJECT MATTER OF DISPUTE IS COMPU TATION OF CAPITAL GAINS. HAVI N G HEARD RIVAL SUBMIS SIONS, OUR ADJUDICATION WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPHS. 2. THE MATERIAL FA CTS ARE THAT THE ASSESSEE BEI NG RESIDENT CORPORATE ASSESSEE SOLD PLOT AND SHED FOR AGG REGATE CONSIDERATION OF RS.225 LACS DURING THE YEAR. IN THE DEED OF AGR EEMENT, THE VALUE ASSIGNED TO LAND WAS RS.51.47 LACS WHEREAS THE VALUE ASSIGNED TO SHED WAS RS.173.5 3 LACS. THE AGREE MENT IS COMPOSITE AGREEMENT BY WHICH TH E ASSESSEE HAS TRANSFERRED I TS INTEREST IN LAND AS WELL AS BUILT UP SHED AD MEASURING 972.81 SQUARE METER S TOGETHER WITH OUTHOUSE S, OFFICE , BUILDING, C OURTYARD, AREAS COMPOUND, SWEAR DITCHE S FENCES, TREES, DRAINS, WAYS , P ATHS, PASSAGES , PRIV IL EGES , EASEMENTS ETC. ATTACHED WITH THE LEAS E HOLD LAND A S WELL AS WITH SHED. 3. THE SHED FORMED PART OF DE PRECIAB LE FIXED ASSETS . WHILE COMPUTING SHORT - TERM CAPITAL GAINS FROM SHED, THE ASSESSEE DEDUCTED NOT ONLY THE M/S JASANI TEXTILE PROCESSORS PVT. LTD. ASSESSMENT YEAR: 2015 - 16 3 WDV OF SHED BUT ALSO DEDUCTED W DV OF OTHER AS SET S AND DEPOS ITS AS PER MIDC (AUTHORITY) FOR RS. 13.21 LAC S. TH ESE INCLUDE ASSETS WRITTEN - OFF FOR RS. 4 . 78 L ACS AND DEPOSITS WRITTEN - OFF FOR RS .1.49 LACS. THE DE D UCTION OF THESE TWO COMP ONENTS WAS DENIED BY LD. AO. 4. DURING APPELLATE PRO CEEDINGS, THE ASSESSEE SUBM ITTED THAT IT HAD GIVEN VARIOUS DEP OSITS TO MIDC TOWARDS WA TER, ADDITIONAL WATER E TC . THESE DEP OSIT S WERE PART AND PARCEL OF AL L OTTED LAND WHICH ALSO GOT AS SIGNED I N FAVO R OF ASSIGNEE. THE MIDC W OULD NO T REFUND THE DEPOSITS AS LONG AS THE SAID PREMISES WERE OCCUPIED BY ASSIGNEE. THE ASSESSEE RECEIVED COMPOSIT E CONSIDERATION FOR ASSIGNMENT OF LAND A LONG W ITH D E POSITS & CLAIMS . HOWE VER , LD. C IT(A) REJECTED THE SAME SINCE THE WRITE - O FF DO NOT CONSTITUTE COST OF ACQUISITION O R COST OF IMP ROVEMENT O F THE PROPERTY. 5. REG ARDING OTHER ASSETS WRITTE N - OFF , THE POSITION W AS SUMMA RIZED AS UNDER: - NO. PARTICU LARS W D V AS ON 31/03/2014 REMA RKS 1. AIR CONDITIONER 990 REM AINING USEFUL LIFE WAS LESS 2. COMPUTER 135 NO SC RAP VALUE 3. ELECTRIC INSTALLATION 81 , 361 IT COULD NOT BE REMOVED AS IT WAS FITTED 4. F AX MACHINE 2,088 REM AINING USEFUL LIFE WAS LESS 5 . F U R NITURE & FIXTURE 35,769 IT COULD NOT BE REMOVED AS IT WAS FITTED 6. PLANT & MACHINERY 3,49,006 IT WAS O UTDATE D AND EMBEDDED IN EART H 7. TE LECOM SYSTEM 1,28 4 REM AINING USEFUL LIFE WAS LESS 8. TYPEWRITERS 542 REM AINING USEFUL LIFE WAS LESS 9. VEHICLES 1,290 REM A INING USEFUL LIFE WAS LESS 10. WEIGHING MACHINERY 3,091 REM AINING USEFUL LIFE WAS LESS 11. REFRIGERATOR 2,527 REM AINING USEFUL LIFE WAS LESS TOTAL 4,78,083/ - REM AINING USEFUL LIFE WAS LESS IT WAS SUBMITTED THAT THE LEASE OF LAND WAS GRANTED BY MIDC I N THE Y E AR 1984 AND THE ABOVE ASSETS INSTALLED AT THE LAND & SHED WERE OUTDATED OR COULD NOT BE REMOVED. THE COST OF REMOVING WOULD BE MORE THAN COST OF M/S JASANI TEXTILE PROCESSORS PVT. LTD. ASSESSMENT YEAR: 2015 - 16 4 SCRAP. SINCE THESE ASSETS WERE DISCAR DED, THE DEDUCTION OF THE SAME SHOULD BE ALLOWED U/S 32(1)(III). T HOU GH LD. CIT(A) CONCURRED THAT THE DE DUCTION COULD BE ALLOWED U/S 32(1) (III ) BUT THE SAME COULD NOT BE A PART OF COST OF ACQUISITION. AGGRIEVE D, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 6. SO FAR AS THE WRITE - OFF OF DEPOSITS IS CONCERNED, WE FIND THA T THE RIGHTS IN LAND AND SHED HAVE BEEN ASSIGNED ALONG WITH ALL THE RIGHTS , PRIVILEG E S ETC. THROUGH COMPO SIT E AGREEMENT . THE DEPOSITS HAVE BEEN PA ID TO MIDC FOR VARIOUS PURPOSES IN CONNECTION WITH LEASE OF LAND AND THEREFORE, THE SE FORM PART & PARCE L OF TH E LAND & SHED. SINCE, THE RI GHTS HAVE BEEN TRAN SFERRED, TH ESE WOULD ALSO STAND TRANSFERRED TO THE ASS IGNEE. THIS BEING SO, THERE IS NO REASON AS TO WHY THE DE DUCTION OF THE S AME IS NOT AVAILABLE TO THE ASSESSEE WHILE COMPUTING THE CAPITAL GAINS. THEREF ORE, WE DIRECT LD . A O TO ALL OW THE DEDUCTION OF THE SAME. SO FAR AS THE WRITE - OFF OF OTHER ASSETS IS CONCERNED, WE FIND THAT FIXED AS SETS HAVE BEEN REDUCED TO NIL AT Y EAR - END WHICH IS EVIDENT FROM ASSESSEE S BALANC E SH EET AS PLACED ON RECORD. HENCE, T HE FIXED ASSET BL OCK HAS CEASED TO EXIST. THEREFORE, T HE DEDUCTION OF WDV OF A SSETS AS ATTACHED TO ABOVE LAND & SHED WOULD BE AVAILABL E TO THE ASSESSEE. WE ORDER SO. THE LD. AO IS DIRECTED TO ALLOW THE SAME. 7. THE APPEAL STAND S ALLOWED . ORDER PRONOUNCED ON 2 ND AUGUST, 2021. SD/ - SD/ - ( AMARJIT SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 02/08/2021 SR.PS, DHANANJAY M/S JASANI TEXTILE PROCESSORS PVT. LTD. ASSESSMENT YEAR: 2015 - 16 5 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPO NDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMB AI.