SYNERGY PROPERTIES & INVESTMENT INDIA P.LTD, CHENNAI V. DCIT CIR 3(3)(2), MUMBAI

ITA 683/MUM/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1254 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: Not Allotted
• Assessment Year: 2013-2014
• Appeal Filed On: 31-01-2017
• Court: TRIBUNAL
• Department Lawyers: VISHWAS MUNDHE
• Assessee Lawyers: J PRABHAKAR
• Keywords: Capital asset; Depreciation; Principle of natural justice; Additional evidence
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA NO.683/M/2017 (AY 2013 - 2014) M/S. SYNERGY PROPERTIES & INVESTMENT INDIA PVT LTD., 6/19, II FLOOR, GRANTS BUILDING, ARTHUR BUNDER ROAD, COLABA, MUMBAI 400 005. / VS. DCIT, CIRCLE - 3(3)(2), MUMBAI. ./ PAN : AAACS 5222P ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI J. PRABHAKAR / RESPONDENT BY : SHRI VISHWAS MUNDHE, DR / DATE OF HEARING : 02.03 .2017 / DATE OF PRONOUNCEMENT : 21 .04.2017 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 31.1.2017 IS AGAINST THE ORDER OF THE CIT (A) - 8, MUMBAI DATED 28.11.2016 FOR THE ASSESSMENT YEAR 2013 - 2014. 2. IN THIS APPEAL, ASSESSEE RAISED EIGHT GROUNDS IN TOTO. BRINGING OUR ATTENTION TO THE GROUNDS, LD COUNSEL FOR THE ASSESSEE DEMONSTRATED THAT THE GROUND NOS. 1 TO 5 RELATE TO THE INVOKING OF THE PROVISIONS OF SECTION 50 OF THE ACT WHEN THE ASSETS IN QUESTION IS NOT A DEPRECIABLE ONE. REGARDING THE ALLOWABILITY OF THE PMS OF RS. 12,38,612/ - AND THE ADDITIONAL G ROUNDS FURNISHED BY THE ASSESSEE BEFORE THE CIT (A). IT IS THE SUBMISSION OF THE LD AR THAT THE GROUNDS NO.6 TO 8 ARE REQUIRED TO BE REMANDED TO THE FILE OF THE AO FOR FRESH ADJUDICATION. 3. REFERRING TO THE FIRST ISSUE, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE OWNS A RESIDENTIAL HOUSE ON LAND AND THE SAME WAS SOLD IN THE YEAR UNDER CONSIDERATION. THE SAID ASSET WAS NEVER CLAIMED A S DEPRECIABLE ASSET AS EVIDENT FROM THE DEPRECIATION SCHEDULE PREPARED FOR INCOME TAX PURPOSES. A COPY O F THE SAME IS PLACED AT PAGE 21 OF THE PAPER BOOK. AS PER THE SAID PAGE ONLY THE FURNITURE 2 AND THE MOTOR CARS ARE THE DEPRECIABLE ASSETS AND NOTHING ELSE. HOWEVER, THE ASSESSING OFFICER BORROWED THE DATA AVAILABLE IN THE FIXED ASSETS SCHEDULES PREPARED FO R MEETING THE REQUIREMENT UNDER THE COMPANY ACT AND CONSIDERED THE SAID PROPERT Y FOR THE PURPOSE OF SECTION 50 OF THE ACT. IN THE PROCESS, AO IGNORED THE FACT THAT THE ASSESSEE NEVER CLAIMED DEPRECIATION ON THIS ASSET U/S 32 OF THE ACT. IT IS ALSO A FACT THAT THE ASSESSING OFFICER NEVER THRUST THE DEPRECIATION ON THE ASSESSEE IN ANY OF THE ASSESSMENT YEARS IN THE PAST COMMENCING FROM THE AY 2001 - 2002 ONWARDS. IN THIS FACTUAL MATRIX OF THE ASSESSEE, LD AR MENTIONED THAT THE GAINS EARNED ON SUCH SALE OF THE PROPERTY SHOULD NOT BE TAXED APPLYING THE PROVISIONS OF SECTION 50 OF THE ACT. IT IS A STRAIGHT CASE OF COMPUTING THE CAPITAL GAINS APPLYING THE LOWER TAX RATE OF 20% AND NOT 30% TAX RATE WHICH IS APPLICABLE TO THE SHORT TERM CAPITAL GAINS. 4. AFTER HEARING BOTH THE PARTIES, WE FIND, THE ASSET IN QUESTION IS LONG TERM CAPITAL ASSET AND THE SAME WAS NEVER TREATED OR ASSESSED AS DEPRECIABLE ASSET IN THE PAST OR NOW. THEREFORE, WE ARE OF THE OPINION, INVOKING THE PROVISIONS OF SECTION 50 OF THE ACT RELA TING TO SPECIAL PROVISIONS FOR COMPUTATION OF CAPITAL GAINS IN CASE OF DEPRECIABLE ASSETS IS NOT PROPER AND VALID. FURTHER, IT IS A DECIDED ISSUE THAT THE APPLICABLE TAX RATE, IF ANY, IN RESPECT OF THE ASSETS SOLD IS DEPENDENT ON THE PERIOD OF HOLDING O F SUCH ASSET BY THE ASSESSEE. IF THE ASSET IN QUESTION IS LONG TERM CAPITAL ASSET, THE TAX RATE APPLICABLE TO THE LONG TERM CAPITAL GAINS SHOULD ONLY BE APPLIED. IN OUR VIEW, THE CIT (A) MISSED THIS PART OF THE ADJUDICATION. THEREFORE, WE DIRECT THE CIT (A) TO READJUDICATE THE ISSUE AFRESH AFTER CONSIDERING THE ABOVE SETTLED LEGAL PROPOSITION. CIT (A) SHOULD NOTE THAT THIS IS A CASE OF NON - DEPRECIABLE ASSET WHICH DOES NOT ATTRACT THE PROVISIONS OF SECTION 50 OF THE ACT. CIT (A) SHALL GRANT A REASONABLE O PPORTUNITY OF BEING HEARD TO THE ASSESSEE AS PER THE SET PRINCIPLES OF NATURAL JUSTICE. THUS, RELEVANT GROUNDS ARE ALLOWED FOR STATISTICAL PURPOSES. 5. REGARDING THE OTHER ISSUE RELATING TO THE ALLOWABILIY OF THE PMS PAYMENTS TO ALCHEMY CAPITAL MANAGEMENT (P) LTD AND THE RELATED ADDITIONAL EVIDENCES, WE FIND IT IS AN UNDISPUTED FACT THAT THE CIT (A) DID NOT REMAND THESE ADDITIONAL EVIDENCES TO THE FILE OF THE AO BEFORE THE SAME WERE REJECTED AND IGNORED WHILE ADJUDICATING THE ISSUE. WE FIND, IT IS IN THE INTEREST OF JUSTICE, AN OPPORTUNITY SHOULD BE GRANTED TO THE ASSESSEE AND CALL FOR REMAND REPORT ON THE ADDITIONAL EVIDENCES FURNISHED BY THE ASSESSEE. WE ORDER ACCORDINGLY. THUS, RELEVANT GROUNDS RAISED BY THE ASSESSEE 3 (GROUNDS NO.6 TO 8) ARE ALLOWED FO R STATISTICAL PURPOSES. REGARDING GROUNDS NO. 9 AND 10, THE SAID GROUNDS ARE GENERAL IN NATURE AND THEY ARE DISMISSED AS SUCH. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOU NCED IN THE OPEN COURT ON 2 1 S T APRIL , 2017. S D / - S D / - ( SANDEEP GOSAIN) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 21.04.2017 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI