KIKIMAL K. CHHABRIA, MUMBAI V. ACIT 18(2), MUMBAI

ITA 6669/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92864 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 01-07-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 04-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Opportunity of being heard

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE S/SHRI I.P. BANSAL, (JM) AND B.R.BASKARAN (AM) . . , . . , ./ I.T .A. NO. 6669 / MUM/20 1 1 ( / ASSESSMENT YEAR : 2008 - 09) SHRI KIKIMAL K CHHABRIA, 268,A - Z INDUSTRIAL ESTATE, GANPATRAO KADAM MARG, LOWER PAREL, MUMBAI - 400013 / VS. ASSTT. COMMISSIONER OF INCOME TAX 18(2), PIRAMAL CHAMBERS, MUMBAI - 40001 2 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AAAPC6123E / APPELLANT BY SHRI K K RAMANI / RSPONDENT BY SHRI ASGHAR ZAIN / DAT E OF HEARING : 0 1. 7 . 201 5 / DATE OF PRONOUNCEMENT : 01. 7. 201 5 / O R D E R PER B.R. BASKARAN (AM) THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 30.6 .201 1 PASSED BY LD CIT(A) - 29 , MUMB AI AND IT RELATES TO ASSESSMENT YEAR 2008 - 09. 2. AT THE TIME OF HEARING, THE LD. COUNSEL APPEARING FOR THE ASSESSEE PRESSED ONLY GROUND NO.2. AND DID NOT PRESS THE REMAINING GROUNDS. ACCORDINGLY, THE REMAINING GROUNDS URGED BY THE ASSESSEE ARE DISMISS ED AS NOT PRESSED. ITA NO. 6669 / MUM/20 1 1 2 3. IN THE GROUND NO.2, THE ASSESSEE HAS CHALLENGED THE DECISION OF THE LD. CIT(A) IN HOLDING THAT THE ENTIRE PROFIT ON SALE OF PROPERTY IS ASSESSABLE AS SHORT TERM CAPITAL GAIN AND THEY CANNOT BE BIFURCATED INTO LONG TERM AND SHORT TERM CAPITAL GAIN. 4. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS UNDERTAKING THE INTERIOR DECORATION WORKS UNDER THE NAME AND STYLE OF M/S CREATIONS. DURING THE YEAR UNDER CONSIDERATION , THE ASSESSEE HAS SOLD A PROPERT Y LOCATED IN A TO Z INDUSTRIAL ESTATES FOR A CONSIDERATION OF RS.1.03 CRORES. THE SAID PROPERTY WAS USED BY THE ASSESSEE AS OFFICE - CUM - WORKSHOP. THE ASSESSEE DIVIDED THE SALE CONSIDERATION INTO TWO CATEGORIES NAMELY SALE CONSIDERATION RELATED TO LAND AND SALE CONSIDERATI ON RELATED TO BUILDING STRUCTURE. THE ASSESSEE COMPUTED THE LTCG ON SALE OF LAND AND STCG ON SALE OF BUILDING STRUCTURE. THE AO EXAMINED THE AGREEMENT FOR SALE AND NOTICED THAT THE AGR EE MENT NOWHERE MENTION ED THAT THE UNIT SOLD BY THE ASSESSEE INCLUDED LAND ALSO. FURTHER, THE B ALANCE SHEET FILED BY THE ASSESSEE DISCLOSE D THE ASSETS AS WORKSHOP PREMISES AND DEPRECIATION WAS ALLOWED ON IT. IT APPEARS THAT THE PROPERTY SOLD BY THE ASSESSEE WAS IN THE SECOND FLOOR. ACCORDINGLY, THE AO TOOK THE VIEW THAT IT IS NOT CLEAR AS TO HOW THE LAND WOULD BECOME A PART OF UNIT , WHEN THE UNI T SOLD IS ON THE SECOND FLOOR OF THE BUILDING. ACCORDINGLY, THE AO HELD THAT THE ENTIRE SALE CONSIDERATION PERTAINS TO THE UNIT ON WHICH DEPRECIATION WAS ALLOWED. ACCORDINGLY HE COMPUTED STCG AS PER THE PROVISIONS OF SECTION 50 OF THE INCOME TAX ACT, 1961. THE LD. CIT(A) ALSO CONFIRMED THE SAME AND HENCE THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 5. THE LD. COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED THAT THE TAX AUTHORIT IES ARE NOT CORRECT ON FACT S IN HOLDING THAT THE PROPERTY SOLD BY THE ASSESSEE DID NOT INCLUDE LAND. THE LD. COUNSEL FURNISHED A COPY OF THE SALE ITA NO. 6669 / MUM/20 1 1 3 AGREEMENT AND SUBMITTED THAT THE SALE CONSIDERATION R ECEIVED BY THE ASSESSEE INCLUDED THE SALE CONSIDERATION RECEIVED FOR LAND ALSO . HE FURTHER SUBMITTED THAT THE DEPRECIATION IS NOT ADMISSIBLE ON THE COST OF LAND AN D HENCE THE PROVISIONS OF SECTION 50 OF THE ACT ARE NOT APPLICABLE TO THE SALE OF LAND. ACCORDINGLY , HE CONTENDED THAT CAPITAL GAIN ARISING FROM TH E SALE OF LAND SHOULD BE ASSESSEE AS LTCG. 6 . ON THE CONTRARY, THE LD. DR SUBMITTED THAT THE ASSESSEE COULD NOT PROVE BEFORE THE TAX AUTHORITIES THAT T HE SALE CONSIDERATION RECEIVED BY T HE ASSESSEE INCLUDE D THE SALE CONSIDERATION RELATING TO LAND. 7 . HAVING HEARD THE RIVAL CONTENTIONS, WE ARE IN AGREEMENT WITH THE CONTENTION OF THE LD. AR WITH REGARD TO THE PRINCIPLE THAT CAPITAL GAINS ARISING ON SALE OF LAND IS ASSESSABLE AS LTCG , SINCE THE SALE OF LAND WOULD NOT FALL UNDER THE PURVIEW OF PROVISI ONS OF SECTION 50 OF THE ACT AS DEPRECIATION IS NOT ADMISSIBLE ON LAND . NOW THE LIMITED CONTROVERSY IS WHETHER THE SALE OF CONSIDERATION RECEIVED BY T HE ASSESSEE INCLUDE D CONSIDERATION RECEIVED TOWARDS THE LAND OR NOT. IT IS SUBMITTED BY THE ASSESSEE T HAT HE CAN PROVE THAT THE SALE CONSIDERATION RECEIVED INCLUDED THE CONSIDERATION RECEIVED TOWARDS SALE OF LAND AND SATISFY THE TAX AUTHORITIES , IF AN OPPORTUNITY IS PROVIDE D TO HIM. HENCE , WE ARE OF THE VIEW THAT THE A S SE S SEE, IN THE INTEREST OF JUSTICE , SHOULD BE PROVIDE D ONE MORE OPPORTUNITY OF BEING HEARD. ACCORDINGLY , WE SET ASIDE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND RESTORE T H E SAME TO THE FILE OF THE AO WITH THE DIRECTION TO EXAMINE THE SAME A FRESH BY DULY CONSIDERING THE EVIDENCES AND EXPLANAT ION THAT MAY BE FURNISHED BY THE AS SE S SEE. THE ASSESSEE IS ALSO DIRECTED TO FURNISH ALL THE RELEVANT DOCUMENTS AND EXPLANATION TO PROVE HIS CONTENTION . ITA NO. 6669 / MUM/20 1 1 4 8 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ACCORDINGLY ON 01 ST JULY , 2015. 01 ST JULY , 2015 SD SD ( . . / I.P. BANSAL ) ( . . / B.R. BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI: 01 ST JUL ,2015 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI