Rathi Brothers Madras Limited, Pune V. Asst. CIT, Circle-6, Pune

ITA 707/PUN/2013

• Counselvise Citation: 70724514 RSA 2013
• Duration Of Justice: 1 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 19-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P S NAIK
• Keywords: Capital asset; Depreciation; Cost of acquisition
• Section: 2

Judgement Text

INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 707/PN/2013 (ASSESSMENT YEAR : 2008-09) RATHI BROTHERS MADRAS LIMITED, 162, WELLESLEY ROAD, PUNE - 411 001 .. APPELLANT PAN NO. AABCR6102Q VS. ACIT, CIRCLE-6, PUNE .. RESPONDENT ASSESSEE BY : SHRI C.H. NANIWADEKAR DEPARTMENT BY : SHRI P.S. NAIK ORDER PER R.S. PADVEKAR, JM : THIS APPEAL IS FILED BY THE ASSESSEE CHALLENGING TH E IMPUGNED ORDER OF THE LD.CIT(A)-III, PUNE DATED 15- 09- 2011 FOR THE A.Y. 2008-09. THE ASSESSEE HAS TAKEN THE FOLLOWING EFFECTIVE GROUNDS : WITHOUT PREJUDICE TO EACH OTHER 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT (A) ERRED IN UPHOLDING THE DECISION OF THE ASSESSING OFFICER OF COMPUTING TAX AT THE RATE 30% AT RS.28,02,240/- INSTEAD OF 20% AT RS. 18,68,160/- ON CAPITAL GAIN OF RS.93,40,800/- IN RE SPECT OF SALE OF OFFICE PREMISES WHICH WAS A LONG TERM CA PITAL ASSETS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LEARNED CIT (A) WAS NOT JUSTIFIED IN HO LDING THAT THE TAX RATE SPECIFIED IN SECTION 112 FOR LONG TERM CAPITAL GAIN WAS NOT APPLICABLE TO THE CAPITAL GAIN COMPUTED UNDER SECTION 50 IN RESPECT OF LONG TERM A SSET. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LEARNED CIT (A) HAS FAILED TO APPRECIAT ED THAT: A) THE ASSET SOLD BY THE APPELLANT WAS A LONG TER M CAPITAL ASSET. 2 B) SECTION 50 MODIFIED THE PROVISIONS OF SECTION 48 AND 49 ONLY DID NOT MODIFY THE PROVISIONS OF SECTION 45 OR 112. 4. REASONS ASSIGNED FOR VARIOUS ADDITIONS AND DISALLOWANCES ARE WRONG, INSUFFICIENT AND CONTRARY TO FACTS AND LAW. 2. THE FACTS PERTAINING TO THE ISSUE IN CONTROVERSY ARE IN NARROW COMPASS WHICH CAN BE CULLED OUT FROM THE IMPUGNED ORDER. THE ASSESSEE COMPANY IS ENGAGED IN TRADING/RESALE OF PIGMENTS ETC., THE ASSESSEE FILED ITS RETURN OF INCOME ON 24/09/2008 DECLARING INCOME OF RS.1,30,24,145/- WHICH INTER-ALIA CONSISTED OF INCOME FROM CAPITAL GAINS. IT WAS NOTED BY THE ASSESSING O FFICER THAT DURING THE YEAR, THE ASSESSEE HAD SOLD ITS OFF ICE PREMISES SITUATED AT BLOCK NO.2, 2 ND FLOOR, RAJA ANNAMALAI BUILDING, MARSHALL ROAD, EGMORE, CHENNAI, ON 17 TH OCTOBER, 2007 FOR A CONSIDERATION OF RS.98,37,000/- . THE SAID OFFICE PREMISES WERE BEING SHOWN BY THE ASSESS EE IN EARLIER YEARS AS FIXED ASSETS ON WHICH DEPRECIATION WAS ALSO CLAIMED. IT WAS ALSO SEEN BY THE ASSESSING OFF ICER THAT THOUGH THE ASSESSEE HAD DISCLOSED SHORT TERM-C APITAL- GAINS ON THE TRANSACTION AS PER PROVISIONS OF SEC.50 OF THE IT. ACT AMOUNTING TO RS.93,40,796/-, TAX WAS CALCUL ATED BY APPLYING THE RATE OF 20% AS PER SEC.112.OF THE I .T. ACT. 2.1 IT WAS CONTENDED BEFORE THE ASSESSING OFFICER THAT THE TAX RATE U/S.112 WAS BEING APPLIED ON THE GAINS TREATING THE GAINS AS LONG TERM CAPITAL GAINS, THOU GH THE RESULTANT CAPITAL GAINS WERE IN THE NATURE OF SHORT TERM CAPITAL GAINS AS PER PROVISIONS OF SEC.50 SINCE DEP RECIATION WAS BEING CLAIMED ON THE ASSET, IN THE LIGHT OF THE DECISION 3 OF THE BOMBAY HIGH COURT IN THE CASE OF CIT VS. ACE BUILDINGS (P) LTD. (144 TAXMANN 855). THE ASSESSEE ALSO PLACED RELIANCE ON THE DECISION OF THE ITAT, MUMBAI BENCH IN THE CASE OF M/S. P.D. KUNTE & CO. VS. ACIT, RANGE-11(3), MUMBAI. HOWEVER, THE ASSESSING OFFICER OBSERVED THAT THE SAID DECISION OF THE ITAT WAS IN THE CONTEXT OF ELIGIBILITY OF EXEMPTION U/S.54EC IN RESPECT OF CAP ITAL GAIN COMPUTED U/S.50 ON TRANSFER OF AN ASSET HELD FOR MORE THAN THREE YEARS. IT IS FURTHER POINTED OUT BY THE ASSESSING OFFICER THAT IN RESPONSE TO MISCELLANEOUS APPLICATI ON FILED IN THAT CASE, THE ORDER WAS MODIFIED TO HOLD THAT ON THE REASONING OF THE BOMBAY HIGH COURT IN THE CASE OF ACE BUILDER PVT. LTD. (SUPRA), IT NATURALLY FOLLOWED TH AT EVEN THE TAX RATE APPLICABLE WHILE BRINGING CAPITAL GAIN TO TAX WILL BE AS PER THE PROVISIONS OF SEC. 112 OF THE I.T. ACT. HOWEVER, ATTEMPTING TO DISTINGUISH THIS INTERPRETAT ION, THE ASSESSING OFFICER STATES THAT SEC.50 OF THE ACT IS A SPECIAL PROVISION INSERTED TO COMPUTE CAPITAL GAINS IN RESPECT OF DEPRECIABLE ASSETS WITH AN INTENTION TO PREVENT DUAL CONCESSION TO THE ASSESSEE IN THE FORMS OF DEPRECIATION AS WELL AS CONCESSIONAL RATE OF TAX. I T IS ALSO EMPHASIZED BY THE ASSESSING OFFICER THAT EVEN IN TH E CASE DECIDED BY THE HON'BLE BOMBAY HIGH COURT MENTIONED SUPRA, THE LARGER ISSUE INVOLVED WAS THE ELIGIBILIT Y OF AN ASSESSEE TO CLAIM DEDUCTION U/S.54E AGAINST CAPITAL GAINS ARISING OUT OF TRANSFER OF AN ASSET ON WHICH DEPRECIATION WAS BEING CLAIMED EVEN IF SUCH GAINS WERE TO BE COM PUTED IN ACCORDANCE WITH THE PROVISIONS OF SEC. 50. 4 2.2 THE ASSESSING OFFICER ACCORDINGLY BROUGHT TO TA X THE CAPITAL GAIN TREATING THE SAME AS SHORT TERM CAPITA L GAIN AND DECLINED TO APPLY THE SPECIAL TAX RATE PRESCRIB ED U/S.112 OF THE I.T. ACT. 3. THE ASSESSEE CARRIED THE ISSUE BEFORE THE LD.CI T(A) BUT LD.CIT(A) CONFIRMED THE ASSESSMENT ORDER APPROV ING THE VIEW TAKEN BY THE ASSESSING OFFICER. THE OPERA TIVE PART OF THE FINDING OF THE LD.CIT(A) IS AS UNDER : 5.1 IN THE PRESENT CASE, THERE WAS NO CONTROVERSY ON THE APPLICABILITY OF SECTION 50 IN AS MUCH AS THE ASSESSEE ITSELF COMPUTED SHORT TERM CAPITAL GAIN OF RS.93,40,796/- ON SALE OF ITS OFFICE PREMISES IN THE COMPUTATION OF TOTAL INCOME IN ACCORDANCE WITH THE PROVISIONS OF SECTION 50. THE ISSUE IN APPEAL IS ABOUT THE APPLICABILITY OF CONCESSIONAL TAX RATE OF 20% AS P ER SECTION 112 OF THE I.T. ACT TO THE SHORT TERM CAPITAL GAINS SO COMPUTED UNDER SEC. 50 OF THE I T ACT. RELYING ON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN TH E CASE OF ACE BUILDERS (P) LTD. (144 TAXMANN 855), THE SUBMISSION OF THE APPELLANT IS THAT THE TAX RATE APPLICABLE TO SUCH DEEMED SHORT TERM CAPITAL GAIN I S 20% I.E. THE RATE APPLICABLE TO LONG TERM CAPITAL GAINS TAX UNDER SEC. 112 OF THE I.T. ACT AS THE SUBJECT PROPERTY WAS HELD BY THE APPELLANT FOR MORE THAN THREE YEARS. THIS ARGUMENT OF THE APPELLANT IS NOT LEGALLY SUSTAINABLE. SECTION 50 IS ENACTED WITH THE OBJECT O F DENYING MULTIPLE BENEFITS TO THE OWNERS OF DEPRECIABL E ASSETS. IN OTHER WORDS, WHERE DEPRECIATION HAS BEEN AVAILED ON LONG-TERM CAPITAL ASSET FORMING PART OF A BLOCK OF ASSETS, THEN THE CAPITAL GAIN HAS TO BE COMPUTED IN THE MANNER PRESCRIBED UNDER SECTION 50 AND THE CAPITAL GAINS TAX SHALL BE CHARGED TO TAX AS IF SUCH CAPITAL GAIN HAS ARISEN FROM TRANSFER OF A SHORT- TERM CAPITAL ASSET. THIS LEGAL POSITION WAS AFFIRMED BY THE APEX COURT IN THE CASE OF COMMON WEALTH TRUST LTD. (228 ITR 1) WHEREIN IT WAS HELD THAT WHERE THE CAPITAL ASSET WAS DEPRECIABLE AND THE ASSESSEE HAD AVAILED OF DEDUCTION ON ACCOUNT OF DEPRECIATION, TH E COST OF ACQUISITION SHALL HAVE TO BE DETERMINED IN TERMS OF THE PROVISIONS OF SECTION 50, READ WITH SECTION 48 AND THE ASSESSEE DID NOT HAVE THE RIGHT TO SUBST ITUTE THE VALUE AS ON 1-1-1954 IN CASE OF SUCH ASSETS. TH E SAME PRINCIPLE HOLDS GOOD EVEN IN CASE OF RATE OF TAX AND SUCH CAPITAL GAINS ARISING ON TRANSFER OF DEPRECIABLE ASSETS ON WHICH DEPRECIATION HAS BEEN ALLOWED, SHALL BE CHARGED TO TAX AT THE RATES APPLICABLE TO SHORT TERM CAPITAL GAINS. ONCE THE CAPITAL GAINS ON TRANSFER O F DEPRECIABLE ASSET IS CONSIDERED AS SHORT TERM CAPIT AL GAINS U/S.50 AND INCLUDED IN THE COMPUTATION OF TOT AL INCOME AS SUCH, IT IS NOT CORRECT TO SAY THAT FOR COMPUTATION OF TAX PAYABLE ON THE GAINS, IT SHOULD BE TREATED AS LONG TERM CAPITAL GAINS. THE RATIONALE BEHIND ENACTING SUCH DEEMING PROVISION UNDER SEC. 50 5 IS THAT THE ASSESSEE HAD ALREADY AVAILED BENEFITS IN THE FORM OF DEPRECIATION IN CASE OF DEPRECIABLE ASSETS AND IS NOT EQUITABLE TO EXTEND DUAL BENEFIT OF DEPRECIATIO N AND ALSO CONCESSIONAL TAX RATE OF 20% TO CAPITAL GAINS ARISING ON TRANSFER OF DEPRECIABLE ASSETS. 5.1 TURNING TO THE AUTHORITIES RELIED UPON BY THE APPELLANT, IN THE CASE OF ACE BUILDERS (286 ITR 210), THE BOMBAY HIGH COURT HELD AS UNDER: IT IS TRUE THAT SECTION 50 IS ENACTED WITH THE OBJE CT OF DENYING MULTIPLE BENEFITS TO THE OWNERS OF DEPRECIA BLE ASSETS. HOWEVER, THAT RESTRICTION IS LIMITED TO THE COMPUTATION OF CAPITAL GAINS AND NOT TO THE EXEMPTI ON PROVISIONS. IN OTHER WORDS, WHERE DEPRECIATION HAS BEEN AVAILED ON LONG-TERM CAPITAL ASSET, THEN THE CAPITA L GAIN HAS TO BE COMPUTED IN THE MANNER PRESCRIBED UNDER SECTION 50 AND THE CAPITAL GAINS TAX WILL BE CHARGE D AS IF SUCH CAPITAL GAIN HAS ARISEN OUT OF A SHORT-TERM CA PITAL ASSET, BUT IF SUCH CAPITAL GAIN IS INVESTED IN THE MANNER PRESCRIBED IN SECTION 54E, THEN THE CAPITAL GAIN SH ALL NOT BE CHARGED UNDER SECTION 45. (EMPHASIS GIVEN). THE BOMBAY HIGH COURT OBSERVED IN THE ABOVE CASE TH AT SECTION 50 DOES NOT CONVERT LONG-TERM CAPITAL ASSET INTO A SHORT-TERM CAPITAL ASSET AND THEREFORE THE BENEFIT OF SECTION 54E WILL BE AVAILABLE TO THE ASSESSEE IRRES PECTIVE OF THE FACT THAT THE COMPUTATION OF CAPITAL GAINS I S DONE EITHER UNDER SECTIONS 48 AND 49 OR UNDER SECTION 50 . BUT AT THE SAME TIME, THE HIGH COURT HELD IN NO UNCERTA IN TERMS THAT THE CAPITAL GAINS TAX WILL BE CHARGED AS IF SUCH CAPITAL GAIN HAS ARISEN OUT OF A SHORT-TERM CAPITAL ASSET. AS POINTED OUT BY THE ASSESSING OFFICER, THIS OBSER VATION OF THE HIGH COURT SUPPORTS THE CASE OF THE REVENUE THAT SUCH CAPITAL GAINS COMPUTED UNDER SEC. 50 SHALL BE CHARGED TO TAX UNDER THE NORMAL TAX RATE APPLICABLE TO SHORT TERM CAPITAL GAINS AND NOT AT THE LOWER RATE OF AS PROVIDED IN SEC. 112 IN CASE OF LONG TERM CAPITAL G AINS. 5.1.1 IN THE CASE OF M/S. P.D. KUNTE & CO. IN ITA N O. 4437/MUM/05 DATED 10.04.2008 READ WITH : MA 394/MUM/2008, THE ITAT, MUMBAI HELD THAT 'ON THE REASONING OF THE BOMBAY HIGH COURT IN THE CASE OF A CE BUILDER PVT. LTD. (SUPRA), IT NATURALLY FOLLOWED TH AT EVEN THE TAX RATE APPLICABLE WHILE BRINGING DECIDED CAPI TAL GAIN TO TAX WILL BE AS PER THE PROVISIONS OF SEC. 112 OF THE I.T. ACT. IN VIEW OF THE DECISION OF THE APEX COURT AND BOMBAY HIGH COURT IN THE CASES REFERRED ABOVE, WITH DUE RESPECT, I AM NOT ABLE TO PERSUADE MYSELF TO FOLLOW THE DECISION OF THE ITAT, MUMBAI ON THE ISSUE. IF THE ARGUMENT OF THE APPELLANT THAT LOWER RATE OF TAX PR OVIDED UNDER SEC. 112 IS APPLICABLE TO THE STCG COMPUTED U NDER SEC. 50 ALSO IS TO BE ACCEPTED, IT WOULD NOT ONLY M AKE THE PROVISIONS OF SECTION 50 REDUNDANT BUT ALSO LEAD TO UNJUST RESULTS. IT IS A SETTLED RULE OF INTERPRETATION THA T THE PROVISIONS OF A STATUTE MUST BE HARMONIOUSLY CONSTR UCTED AND AN INTERPRETATION SHOULD BE AVOIDED WHICH RENDE RS OTHER PROVISION OF THE ACT OTIOSE OR NUGATORY. 5.1.2 IN VIEW OF THE LEGAL POSITION AS DISCUSSED AB OVE , THE ASSESSING OFFICER IS LEGALLY JUSTIFIED IN NOT A LLOWING THE BENEFIT OF LOWER RATE OF TAX UNDER SEC. 112 TO THE CAPITAL GAINS IN QUESTION, WHICH AROSE ON TRANSFER OF DEPRE CIABLE 6 ASSET NOTWITHSTANDING THE POSITION THAT THE CAPITAL ASSET WAS HELD BY THE APPELLANT FOR MORE THAN THREE YEARS . UNDER SEC. 50, THE CAPITAL GAINS ARISING FROM DEPRE CIABLE ASSETS, ON WHICH DEPRECIATION HAS BEEN ALLOWED, IS LIABLE TO BE CHARGED TO TAX AT THE NORMAL TAX RATES APPLIC ABLE TO SHORT TERM CAPITAL GAINS AND THE ACTION OF THE ASSE SSING OFFICER IN THIS REGARD DOES NOT WARRANT ANY INTERFE RENCE AND IS ACCORDINGLY UPHELD. GROUNDS OF APPEAL NO. 1, 2, 3 AND 4 FAIL. NOW THE ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND PERUSED THE RECORD. FACTS ARE NARRATED IN DETA IL WHICH ARE NOT IN DISPUTE. THE LD. COUNSEL SUBMITS THAT T HE ASSESSEE HELD THE ASSET FOR MORE THAN 3 YEARS AND H ENCE, AS PER THE DEFINITION U/S.2(14) THE SAID ASSET BECO ME THE LONG TERM CAPITAL ASSET AND CAPITAL GAIN COMPUTED E VEN U/S.50 IS TO BE TREATED AS LONG TERM CAPITAL GAIN. HE SUBMITS THAT IN THE CASE OF CIT VS. ACE BUILDERS PV T. LTD., (SUPRA) THE HONBLE JURISDICTIONAL HIGH COURT HAS HELD THAT SECTION 50 IS A DEEMING PROVISION, HENCE THE SAME I S TO BE INTERPRETED TO THE EXTENT TO ACHIEVE THE OBJECT OF THE SAID PROVISION. HE ALSO PLACES HIS RELIANCE ON THE DECI SION OF THE ITAT MUMBAI BENCH IN THE CASE OF M/S. P.D. KUNTE & CO. (REGD.) IN ITA NO.4437/MUM/05 ORDER DATED 10-04-200 8. WE HAVE ALSO HEARD THE LD. DEPARTMENTAL REPRESENTAT IVE. 5. IN THE PRESENT CASE, IT IS NOT IN DISPUTE THAT T HE OFFICE PREMISES WHICH WAS SOLD BY THE ASSESSEE WAS A PART OF THE BUSINESS ASSET AND SECTION 50 IS APPLICABLE AS ASSE SSEE HAD CLAIMED DEPRECIATION ON THE SAME. WE ARE UNABLE TO ACCEPT THE SUBMISSION OF THE LD. COUNSEL THAT IN TH E CASE OF ACE BUILDERS PVT. LTD., (SUPRA) THE HONBLE HIGH COURT HAS HELD THAT EVEN CAPITAL GAIN IS COMPUTED IN THE MANNER PRESCRIBED U/S.50 IN THAT CASE ALSO, THE SAME IS TO BE 7 TREATED AS LONG TERM CAPITAL GAIN. WE WOULD LIKE T O REFER TO THE DECISION IN THE CASE OF ACE BUILDERS PVT. LTD., (SUPRA), MORE PARTICULARLY, PARA 26 WHICH READS AS UNDER : 26. IT IS TRUE THAT SECTION 50 IS ENACTED WITH THE OBJECT OF DENYING MULTIPLE BENEFITS TO THE OWNERS OF DEPRECIA BLE ASSETS. HOWEVER, THAT RESTRICTION IS LIMITED TO THE COMPUTATION OF CAPITAL GAINS AND NOT TO THE EXEMPTI ON PROVISIONS. IN OTHER WORDS, WHERE THE LONG-TERM CAP ITAL ASSET HAS AVAILED DEPRECIATION, THEN THE CAPITAL GA IN HAS TO BE COMPUTED IN THE MANNER PRESCRIBED UNDER SECTI ON 50 AND THE CAPITAL GAINS TAX WILL BE CHARGED AS IF SUCH CAPITAL GAIN HAS ARISEN OUT OF A SHORT-TERM CAPITAL ASSET BUT IF SUCH CAPITAL GAIN IS INVESTED IN THE MANNER PRESCRIBED IN SECTION 54E, THEN THE CAPITAL GAIN SHALL NOT BE CHARGED UNDER SECTION 45 OF THE INCOME TAX ACT. TO PUT IT SIMPLY, THE BENEFIT OF SECTION 54E WILL BE A VAILABLE TO THE ASSESSEE IRRESPECTIVE OF THE FACT THAT THE COMPUTATION OF CAPITAL GAINS IS DONE EITHER UNDER S ECTIONS 48 AND 49 OR UNDER SECTION 50. THE CONTENTION OF TH E REVENUE THAT BY AMENDMENT TO SECTION 50, THE LONG-T ERM CAPITAL ASSET HAS BEEN CONVERTED INTO A SHORT-TERM CAPITAL ASSET IS ALSO WITHOUT ANY MERIT. AS STATED HEREINAB OVE, THE LEGAL FICTION CREATED BY THE STATUTE IS TO DEEM THE CAPITAL GAIN AS SHORT-TERM CAPITAL GAIN AND NOT TO DEEM THE ASSET AS SHORT-TERM CAPITAL ASSET. THEREFORE, I T CANNOT BE SAID THAT SECTION 50 CONVERTS LONG-TERM CAPITAL ASSET INTO A SHORT-TERM CAPITAL ASSET. (EMPHASIS SUPPLIE D) 5.1 WE FIND THAT THE ISSUE BEFORE THE LORDSHIPS WAS IN RESPECT OF EXEMPTION/DEDUCTION CLAIMED BY THE ASSES SEE BY MAKING THE INVESTMENT IN A NOTIFIED SECURITIES U /S.54E OF THE ACT. IN THE CLEAR WORDS, THEIR LORDSHIPS HA VE OBSERVED THAT WHERE THE LONG TERM CAPITAL ASSET HA S AVAILED OF DEPRECIATION, THEN THE CAPITAL GAIN HAS TO BE COMPUTED IN THE MANNER PRESCRIBED U/S.50 AND THE CA PITAL GAINS TAX WILL BE CHARGED AS IF SAID CAPITAL GAIN H AS ARISEN OUT OF A SHORT TERM CAPITAL ASSET, I.E., UNDER NORM AL RATES APPLICABLE . 5.2 SECTION 112 READS AS UNDER : 112. TAX ON LONG-TERM CAPITAL GAINS.- (1) WHERE THE TOTAL INCOME OF AN ASSESSEE INCLUDES ANY INCOME, AR ISING FROM THE TRANSFER OF A LONG-TERM CAPITAL ASSET, WHI CH IS CHARGEABLE UNDER THE HEAD CAPITAL GAINS, THE TAX 8 PAYABLE BY THE ASSESSEE ON THE TOTAL INCOME SHALL B E THE AGGREGATE OF, (A) IN THE CASE OF AN INDIVIDUAL OR A HINDU UNDIVID ED FAMILY, BEING A RESIDENT, (I) THE AMOUNT OF INCOME-TAX PAYABLE ON THE TOTAL I NCOME AS REDUCED BY THE AMOUNT OF SUCH LONG-TERM CAPITAL GAINS, HAD THE TOTAL INCOME AS SO REDUCED BEEN HIS TOTAL I NCOME ; AND (II) THE AMOUNT OF INCOME-TAX CALCULATED ON SUCH LO NG- TERM CAPITAL GAINS AT THE RATE OF TWENTY PER CENT : PROVIDED THAT WHERE THE TOTAL INCOME AS REDUCED BY SUCH LONG-TERM CAPITAL GAINS IS BELOW THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME-TAX, THEN, SUCH L ONG- TERM CAPITAL GAINS SHALL BE REDUCED BY THE AMOUNT B Y WHICH THE TOTAL INCOME AS SO REDUCED FALLS SHORT OF THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME-TA X AND THE TAX ON THE BALANCE OF SUCH LONG-TERM CAPITA L GAINS SHALL BE COMPUTED AT THE RATE OF TWENTY PER CENT ; (B) IN THE CASE OF A DOMESTIC COMPANY, (I) THE AMOUNT OF INCOME-TAX PAYABLE ON THE TOTAL I NCOME AS REDUCED BY THE AMOUNT OF SUCH LONG-TERM CAPITAL GAINS, HAD THE TOTAL INCOME AS SO REDUCED BEEN ITS TOTAL I NCOME ; AND (II) THE AMOUNT OF INCOME-TAX CALCULATED ON SUCH LO NG- TERM CAPITAL GAINS AT THE RATE OF TWENTY PER CENT : (C) IN THE CASE OF A NON-RESIDENT (NOT BEING A COMP ANY) OR A FOREIGN COMPANY, (I) THE AMOUNT OF INCOME-TAX PAYABLE ON THE TOTAL I NCOME AS REDUCED BY THE AMOUNT OF SUCH LONG-TERM CAPITAL GAINS, HAD THE TOTAL INCOME AS SO REDUCED BEEN ITS TOTAL I NCOME ; AND (II) THE AMOUNT OF INCOME-TAX CALCULATED ON SUCH LO NG- TERM CAPITAL GAINS AT THE RATE OF TWENTY PER CENT ; (D)] IN ANY OTHER CASE OF A RESIDENT, (I) THE AMOUNT OF INCOME-TAX PAYABLE ON THE TOTAL I NCOME AS REDUCED BY THE AMOUNT OF LONG-TERM CAPITAL GAINS , HAD THE TOTAL INCOME AS SO REDUCED BEEN ITS TOTAL INCOM E ; AND (II) THE AMOUNT OF INCOME-TAX CALCULATED ON SUCH LO NG- TERM CAPITAL GAINS AT THE RATE OF TWENTY PER CENT. EXPLANATION. PROVIDED THAT WHERE THE TAX PAYABLE IN RESPECT OF A NY INCOME ARISING FROM THE TRANSFER OF A LONG-TERM CAP ITAL ASSET, BEING LISTED SECURITIES OR UNIT OR ZERO COUP ON BOND, EXCEEDS TEN PER CENT OF THE AMOUNT OF CAPITAL GAINS BEFORE GIVING EFFECT TO THE PROVISIONS OF THE SECOND PROVI SO TO SECTION 48, THEN, SUCH EXCESS SHALL BE IGNORED FOR THE PURPOSE OF COMPUTING THE TAX PAYABLE BY THE ASSESSE E. EXPLANATION.FOR THE PURPOSES OF THIS SUB-SECTION, 9 (A) LISTED SECURITIES MEANS THE SECURITIES (I) AS DEFINED IN CLAUSE (H) OF SECTION 2 OF THE SE CURITIES CONTRACTS (REGULATION) ACT, 1956 (32 OF 1956); AND (II) LISTED IN ANY RECOGNISED STOCK EXCHANGE IN IND IA; (B) UNIT SHALL HAVE THE MEANING ASSIGNED TO IT IN CLAUSE (B) OF EXPLANATION TO SECTION 115AB. (2) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INC LUDES ANY INCOME ARISING FROM THE TRANSFER OF A LONG-TERM CAPITAL ASSET, THE GROSS TOTAL INCOME SHALL BE REDU CED BY THE AMOUNT OF SUCH INCOME AND THE DEDUCTION UNDER CHAPTER VI-A SHALL BE ALLOWED AS IF THE GROSS TOTAL INCOME AS SO REDUCED WERE THE GROSS TOTAL INCOME OF THE ASSESSEE. (3) WHERE THE TOTAL INCOME OF AN ASSESSEE INCLUDES ANY INCOME ARISING FROM THE TRANSFER OF A LONG-TERM CAP ITAL ASSET, THE TOTAL INCOME SHALL BE REDUCED BY THE AMO UNT OF SUCH INCOME AND THE REBATE UNDER SECTION 88 SHALL B E ALLOWED FROM THE INCOME-TAX ON THE TOTAL INCOME AS SO REDUCED. 5.3 IT IS CLEAR FROM THE LANGUAGE USED BY THE LEGIS LATURE THAT IF THE LONG TERM CAPITAL GAIN IS COMPUTED THEN IT WILL SUFFER THE TAX @20% AS AGAINST THE NORMAL RATE OF I NCOME- TAX. MOREOVER, IN THE ACE BUILDERS PVT. LTD., (SUP RA) THEIR LORDSHIPS HAVE EXPLAINED THAT IF THE CAPITAL GAIN I S COMPUTED AS PROVIDED U/S.50 THEN THE CAPITAL GAINS TAX WILL BE CHARGED AS IF SUCH CAPITAL GAIN HAS ARISEN OUT O F SHORT TERM CAPITAL ASSET. WE HAVE TO INTERPRET THE JUDGE MENT OR DECISION AS A WHOLE AND WE CANNOT INTERPRET IN THE PIECEMEAL TO UNDERSTAND THE RATIO DECIDENDI. 5.4 THE LD. COUNSEL HAS ALSO RELIED ON THE DECISION IN THE CASE OF M/S. P.D. KUNTE & CO. (REGD.) (SUPRA). IT IS TRUE THAT IN SAID CASE THE ASSESSEE HAD TAKEN GROUND NO. 2 WHICH IS ANALOGOUS TO THE PLEA OF THE ASSESSEE. BU T ON PERUSAL OF THE SAID ORDER, WE FIND THAT THE SAID GR OUND REMAINED TO BE ADJUDICATED AND THERE IS NO DECISION ON THIS ISSUE. WE ARE NOT THEREFORE INCLINED TO RELY UPON THE 10 DECISION IN THE CASE OF M/S. P.D. KUNTE & CO. (REGD .) (SUPRA). WE ACCORDINGLY APPROVE THE INTERPRETATION MADE BY THE LD.CIT(A) OF SECTION 50 AND SECTION 112 AND CONFIRM THE ORDER ON THIS ISSUE BEFORE US. ACCORDINGLY, TH E GROUNDS TAKEN BY THE ASSESSEE ARE DISMISSED. 6. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 30-10-2014. SD/- SD/- (G.S. PANNU) (R.S. P ADVEKAR) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE DATED: 30 TH OCTOBER, 2014 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A)-III, PUNE 4. CIT-III, PUNE 5. THE D.R, B PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // ASSISTANT REGISTRAR, ITAT, PUNE BENCHES, PUNE