SKF INDIA LTD, MUMBAI V. ASST CIT 4(3)4, MUMBAI

ITA 7092/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2342 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 18-11-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 04-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAILASH GAIKWAD
• Assessee Lawyers: MILIN THAKORE
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Depreciation; Wrong claim; Difference of opinion; Tax effect
• Section: 50C; 27

Judgement Text

Z , , IN THE INCOME TAX APPELLATE TRIBUNAL E B ENCH, MUMBAI BEFORE SHRI RAJENDRA, ACCOUNTANT MEMBER AND SHRI C.N. PRASAD, JUDICIAL MEMBER / I .TA NO.7092/MUM/2013 ( / ASSESSMENT YEAR:2002-03 M/S. SKF INDIA LTD., (FORMERLY KNOWN AS SKF BEARINGS INDIA LTD) MAHATAMA GANDHI MEMORIAL BLDG., NETAJI SUBHASH ROAD, MUMBAI-400 002 / VS. THE ACIT - 4(3), AAYAKAR BHAVAN, MUMBAI-400 020 APPELLANT RESPONDENT / I .TA NO.3558/MUM/2012 ( / ASSESSMENT YEAR:2005-06 M/S. SKF INDIA LTD., (FORMERLY KNOWN AS SKF BEARINGS INDIA LTD) MAHATAMA GANDHI MEMORIAL BLDG., NETAJI SUBHASH ROAD, MUMBAI-400 002 / VS. THE ACIT - 4(3), AAYAKAR BHAVAN, MUMBAI-400 020 / I .TA NO.7093/MUM/2013 ( / ASSESSMENT YEAR:2004-05 M/S. SKF INDIA LTD., (FORMERLY KNOWN AS SKF BEARINGS INDIA LTD) MAHATAMA GANDHI MEMORIAL BLDG., NETAJI SUBHASH ROAD, MUMBAI-400 002 / VS. THE ACIT - 4(3), AAYAKAR BHAVAN, MUMBAI-400 020 / I .TA NO.6989/MUM/2013 ( / ASSESSMENT YEAR:2004-05 2 SKF INDIA LTD. THE ACIT - 4(3), AAYAKAR BHAVAN, MUMBAI-400 020 / VS. M/S. SKF INDIA LTD., (FORMERLY KNOWN AS SKF BEARINGS INDIA LTD) MAHATAMA GANDHI MEMORIAL BLDG., NETAJI SUBHASH ROAD, MUMBAI-400 002 ./ ./ PAN/GIR NO.AAACS 0684H ( / APPELLANT ) .. ( / RESPONDENT ) / ASSESSEE BY: SHRI MILIN THAKORE / REVENUE BY: SHRI KAILASH GAIKWAD / DATE OF HEARING :11.07.2016 ! / DATE OF PRONOUNCEMENT :29.07.2016 O R D E R THESE APPEALS ARE FILED BY THE ASSESSEE AND THE REV ENUE AGAINST THE ORDER OF THE LD. CIT(A)-8, MUMBAI DATED 19.09.2013 PERTAINING TO ASSESSMENT YEAR 2002-03 TO 2005-06. 2. IN ALL THESE APPEALS OF THE ASSESSEE , THE ASSES SEE IS CHALLENGING THE ORDER OF THE LD. CIT(A) IN CONFIRMING LEVY OF PENAL TY U/S. 271(1)(C) OF THE ACT. 3. BRIEF FACTS ARE THAT IN ALL THESE THREE ASSESSME NT YEARS ASSESSEE HAS SOLD FLATS ON WHICH IT HAD CLAIMED LONG TERM CAPITA L GAINS AND OFFERED TO TAX AT 20%. IN THE ANNEXURE TO COMPUTATION OF INCO ME, THE ASSESSEE HAS GIVEN THE REASON FOR CLAIMING LONG TERM CAPITAL GAI NS ON SALE OF FLATS AS UNDER: THE CAPITAL GAINS IN RESPECT OF SALE OF THE ABOVE FLAT HAVE BEEN TREATED AS LONG TERM CAPITAL GAINS AND ACCORDINGLY OFFERED FOR TAX AT 20% AS PER SEC. 112(1)(B). THE COMPANY RELIES ON T HE DECISION OF THE 3 SKF INDIA LTD. GAUHATI HIGH COURT IN THE CASE OF CIT VS ASSAM PETR OLEUM INDUSTRIES (P) LTD (262 ITR 587) WHICH HAS OBSERVED THAT SEC. 50 ONLY PROVIDES THAT IF THE DEPRECIATION HAS BEEN ALLOWED UNDER THE ACT OF THE CAPITAL ASSET, THEN THE ASSESSEES COMPUTATION OF CAPITAL G AIN WOULD NOT BE U/S. 48 AND 49 OF THE I.T. ACT AND IT WOULD BE WITH MODI FICATION AS PROVIDED U/S. 50 AND THAT SECTION 50 DOES NOT STATE THAT DEP RECIATION ASSET SHALL BE TREATED AS SHORT TERM CAPITAL ASSET. THE ASSESSEE CONTENDS THAT THE SPECIALTY ATTACHED T O SEC. 50 IS TO BE RESTRICTED ONLY TO THE METHOD OF COMPUTING THE C APITAL GAIN AND NOT FOR DETERMINING THE NATURE OF CAPITAL GAIN. 4. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASS ESSEE IN RESPONSE TO THE QUERIES OF ASSESSING OFFICER AS TO WHY PROFIT ON SALE OF FLAT SHOULD NOT BE TAXED AS SHORT TERM CAPITAL GAINS AS AGAINST TH E CLAIM OF THE ASSESSEE AS LONG TERM CAPITAL GAIN, THE ASSESSEE STATED THAT CA PITAL GAINS COMPUTED AS PER SEC. 50C OF THE ACT IN RESPECT OF SALE OF RESID ENTIAL BUILDINGS ARE TREATED AS LONG TERM CAPITAL GAINS FOR THE REASON THAT SEC. 2(29B) DEFINES LONG TERM CAPITAL GAINS AS THE CAPITAL GAIN ARISING FROM THE TRANSFER OF A LONG TERM CAPITAL ASSET. SECTION 2(29A) DEFINES LONG TE RM CAPITAL ASSET AS A CAPITAL ASSET WHICH IS NOT A SHORT TERM CAPITAL ASS ET. IN VIEW OF SEC. 2(42A), SHORT TERM CAPITAL ASSET MEANS A CAPITAL ASSET HELD BY AN ASSESSEE FOR NOT MORE THAN THIRTY SIX MONTHS IMMEDIATELY PRECEDING T HE DATE OF ITS TRANSFER ARE LONG TERM CAPITAL GAINS. 4.1.DURING THE PREVIOUS YEAR ENDED 31 ST MARCH, 2005, A FLAT IN PEMINO APARTMENT WAS SOLD, WHICH WAS ACQUIRED VIDE AGREEME NT DATED 14 TH MARCH, 1989. THUS, THE SAID RESIDENTIAL BUILDING WAS HELD BY THE COMPANY FOR MORE THAN THIRTY SIX MONTHS BEFORE ITS TRANSFER/SAL E, HENCE IT WAS LONG TERM CAPITAL ASSET AND ACCORDINGLY, GAIN ON ITS TRA NSFER, COMPUTED AS PER PROVISIONS OF SEC.50 IS LONG TERM CAPITAL GAIN. IT WAS FURTHER CONTENDED THAT THE ESTIMATION OF TREATING/DEEMING ANY CAPITAL GAIN ARISING ON TRANSFER 4 SKF INDIA LTD. OF A DEPRECIABLE ASSET AS SHORT TERM CAPITAL GAIN U /S. 50, IS ONLY FOR THE PURPOSE OF SEC. 48 & 49 AND THEREFORE, IT CANNOT BE EXTENDED TO OTHER PROVISIONS OF THE INCOME-TAX ACT, AS IF IT IS SO EX TENDED, IT WOULD AMOUNT TO EXTENDING THE DEEMING PROVISIONS BEYOND ITS LEGITIM ATE FIELD. THE ASSESSEE PLACING RELIANCE ON THE DECISION OF GAUHATI HIGH CO URT IN THE CASE OF CIT VS ASSAM PETROLEUM INDUSTRIES (P) LTD. (262 ITR 587) S UBMITTED THAT SEC. 50 IS TO BE RESTRICTED TO ONLY FOR THE METHOD OF COMPU TING THE CAPITAL GAIN AND NOT FOR DETERMINING THE NATURE OF CAPITAL GAIN, THE REFORE THE ASSESSEE SUBMITTED THAT IN VIEW OF THIS DECISION, CAPITAL GA INS WAS COMPUTED AS PER PROVISIONS OF SEC. 50, HAVE BEEN TREATED AS LONG TE RM CAPITAL GAIN AND ACCORDINGLY TAXED AT 20% AS PER SEC. 112(1)(B) OF T HE ACT. 5. HOWEVER, THE ASSESSING OFFICER REJECTING THE CON TENTIONS OF THE ASSESSEE COMPUTED THE PROFIT ON SALE OF THE FLAT AS SHORT TERM CAPITAL GAIN AND TAXED ACCORDINGLY. ACCORDING TO THE ASSESSING OFFICER, THE DECISION OF THE GAUHATI HIGH COURT DOES NOT LAY DOWN ANY LAW AS TO THE RATE OF TAXATION ON THE SHORT TERM CAPITAL GAIN ARISING AS PROFIT U/ S. 50 I.E. WHETHER SEC. 112(1)(B) WOULD OR WOULD NOT APPLY. ACCORDING TO T HE ASSESSING OFFICER SEC. 112 IS AGAIN AN INDEPENDENT CHARGING SECTION W HICH WOULD APPLY TO LONG TERM CAPITAL GAIN AND ONCE THE STATUTE HAS CRE ATED A LEGAL FICTION TO TREAT CAPITAL GAINS ON DEPRECIABLE ASSET AS SHORT T ERM CAPITAL GAIN THAT LEGAL FICTION COULD NOT TAKE ANY DIFFERENT FORM FOR THE CHARGING SECTION. 6. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) AND TRIBUNAL. THE TRIBUNAL IN ITA NO. 6461/M/09 DATED 24.2.2012 F OLLOWING ITS EARLIER ORDER FOR THE ASSESSMENT YEAR 2001-02 TO 2004-05 S USTAINED THE ORDER OF THE ASSESSING OFFICER IN TREATING THE CAPITAL GAINS FOR SALE OF FLATS AS SHORT TERM CAPITAL GAIN AS AGAINST THE CLAIM OF THE ASSES SEE THAT IT IS LONG TERM CAPITAL GAIN TAXABLE @ 20%. THE ASSESSING OFFICER INITIATED THE PENALTY 5 SKF INDIA LTD. PROCEEDINGS FOR ALL THESE ASSESSMENT YEARS AND REQU IRED THE ASSESSEE TO EXPLAIN AS TO WHY PENALTY U/S. 271(1)(C) SHOULD NOT BE LEVIED FOR THE WRONG CLAIM OF LONG TERM CAPITAL GAIN. THE ASSESSEE S UBMITTED ITS REPLY STATING THAT IT HAD MADE FULL DISCLOSURE OF THE CLAIM FOR L ONG TERM CAPITAL GAIN ON THE SALE OF FLAT BY WAY OF NOTE TO THE COMPUTATION OF INCOME AND THE CLAIM WAS MADE RELYING ON THE GAUHATI HIGH COURT DECISION . IN ITS REPLY, THE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER AS UNDER: TAXABILITY OF SHORT-TERM CAPITAL GAIN U/S. 50- TH E-FACTS AND IEGAL POSITION TAKEN BY THE ASSESSEE IN THE RETURN OF INCOME WAS DISCLOSED IN NOTES ANNEXED TO COMPUTATION OF TOTAL INCOME WHICH IS REPRODUCED BELOW: 'THE CAPITAL GAIN IN RESPECT OF THE SALE OF ABOVE F LAT HAVE BEEN TREATED AS LONG TERM CAPITAL GAINS AND ACCORDI NGLY OFFERED TO TAX AT 20% AS PER SECTION 112(1)(B). THE COMPANY RELIES ON THE DECISION OF GAUHATI HIGH COURT IN THE CASE OF C IT VS ASSAM PETROLEUM INDUSTRIES (P) LTD (262 ITR 587) WHICH HA S OBSERVED THAT SECTION 50 ONLY PROVIDES THAT IF THE DEPRECIAT ION HAS BEEN ALLOWED UNDER THE ACT ON THE CAPITAL ASSET, THEN TH E ASSESSE'S COMPUTATION OF CAPITAL GAIN WOULD NOT BE UNDER SECT ION 48 AND 49 OF THE INCOME-TAX ACT AND IT WOULD BE WITH MODIF ICATION AS PROVIDED UNDER SECTION 50 AND THAT SECTION 50 DOES NOT STATE THAT DEPRECIABLE ASSETS SHALL BE TREATED AS SHORT TERM C APITAL ASSETS.' . THE ASSESSEE CONTENDS THAT SPECIALTY ATTACHED TO SE CTION 50 IS TO BE RESTRICTED ONLY TO THE METHOD OF COMPUTING THE C APITAL GAIN AND NOT FOR DETERMINING THE NATURE OF CAPITAL ASSET S. ' . THE FACT THAT ASSESSEE HAS DISCLOSED THE FACTS AND LEGAL POSITION ALONG WITH THE COMPUTATION OF TOTAL INCOME IS ALSO RECOGNIZED BY THE ASSESSING OFFICER AT PARA 7 OF THE ASSESSMENT O RDER DATED DECEMBER 26, 2008. . SINCE ALL THE NECESSARY FACTS AND LEGAL POSITION HA S BEEN DISCLOSED IN THE INFORMATION FILED ALONG WITH THE R ETURN OF INCOME, THERE CANNOT BE SAID TO HAVE BEEN CONCEALME NT OR FILING OF INACCURATE FACTS BY THE ASSESSEE COMPANY. 6 SKF INDIA LTD. 7. THE ASSESSEE FURTHER CONTENDED THAT THE CLAIM WA S MADE BASED ON THE JUDICIAL DECISIONS AND THEREFORE IT CANNOT GIV E RISE TO PENALTY U/S. 271(1)(C) OF THE ACT. ASSESSEE PLACED RELIANCE ON THE FOLLOWING DECISIONS IN SUPPORT OF ITS CONTENTIONS. 1. VANAIK INVESTORS LTD. VS ITO 5 SOT 591 (DEL) 2. VIJAY I. SHETH VS ITO 63 TTJ 488 (AHD.) 3. ITO VS BUDGE BUDGE CO. LTD. 100 ITD 387 (KOL.) THEREFORE, IT WAS CONTENDED THAT NON ACCEPTANCE OF THE CLAIM BY THE DEPARTMENT DOES NOT BRING THE ASSESSEE WITHIN TH E PURVIEW OF SEC. 271(1)(C) OF THE ACT. THE ASSESSEE ALSO RELIED ON THE DECISION OF APEX COURT IN THE CASE OF CIT VS RELIANCE PETROPRODUCTS PVT. L TD. (322 ITR 158) WHEREIN IT WAS HELD THAT A CLAIM WHICH MAY NOT BE S USTAINABLE IN LAW DOES NOT TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCOME. PLACING RELIANCE ON THE DECISION OF THE PUNE BENCH IN THE C ASE OF KANBAY SOFTWARE INDIA PVT. LTD VS ACIT (31 SOT 153) IT WAS CONTENDE D THAT RAISING A LEGAL CLAIM EVEN IF IT IS ULTIMATELY FOUND TO BE LEGALLY UNACCEPTABLE BY THE TAX AUTHORITIES, CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS OF INCOME. THEREFORE, THE ASSESSEE CONTENDED THAT IT HAS NEITH ER CONCEALED PARTICULARS OF INCOME NOR IT HAS FURNISHED INACCURATE PARTICULA RS OF SUCH INCOME AND HENCE NO PENALTY SHOULD BE LEVIED U/S. 271(1)(C) OF THE ACT. HOWEVER, THE ASSESSING OFFICER PASSED ORDER U/S. 271(1)(C) IMPOS ING PENALTY U/S. 271(1)(C) OF THE ACT HOLDING THAT ASSESSEE HAS DELI BERATELY CHOSE TO MAKE A CLAIM ON THE BASIS OF A CASE LAW WHICH IS NOT APPLI CABLE IN ITS CASE. THE ASSESSING OFFICER HELD THAT ASSESSEE HAS FILED INAC CURATE PARTICULARS OF INCOME BY MAKING AN INCORRECT CLAIM WHICH HAS RESUL TED IN REDUCING ITS TAX LIABILITY. 7 SKF INDIA LTD. 8. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT ASSESSEE HAS MADE FULL DISCLOSURE IN THE RETURN OF INCOME REGARDING THE COMPUTATION OF CAPITAL GAINS AND A NOTE WAS ALSO AP PENDED TO THE COMPUTATION OF INCOME WHICH CLEARLY PROVES THE ST AND OF THE ASSESSEE WHY ASSESSEE HAS MADE CLAIM IN RESPECT OF SALE OF PROPE RTY AS LONG TERM CAPITAL GAINS THEREBY ATTRACTING TAX AT 20%. THE STAND TAK EN BY THE ASSESSEE IS A LEGAL CONTENTION AND THE LD. COUNSEL FOR THE ASSESS EE SUBMITS THAT INFACT THE CONTENTION OF THE ASSESSEE WAS ACCEPTED BY THE TRIB UNAL IN SMITA CONDUCTORS LTD. VS DCIT IN ITA NO. 4004 OF 2011 DAT ED 17.9.2013 AFTER DECIDING THE APPEAL BY THE TRIBUNAL IN ASSESSEES C ASE. HE SUBMITS THAT IN THIS CASE IT WAS HELD THAT FOR THE PURPOSE OF COMPU TATION OF CAPITAL GAIN, THE FLAT HAS TO BE TREATED AS SHORT TERM CAPITAL GAIN U /S. 50 OF THE ACT BUT FOR THE PURPOSE OF APPLICABILITY OF TAX RATE IT HAS TO BE T REATED AS LONG TERM CAPITAL GAIN IF HELD FOR MORE THAN 3 YEARS. WHILE COMING T O SUCH CONCLUSION, THE TRIBUNAL CONSIDERED THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF CIT VS ACE BUILDERS (P). LTD., (281 ITR 410) AND AL SO THE DECISION OF THE MUMBAI BENCH IN THE CASE OF MANALI INVESTMENTS VS A CIT (139 TTJ 411). THEREFORE, THE LD. COUNSEL FOR THE ASSESSEE VEHEMEN TLY SUBMITS THAT THE LEGAL CONTENTION RAISED BY THE ASSESSEE HAS BEEN AC CEPTED IN ONE OF THE DECISION OF THE TRIBUNAL HOLDING THAT FOR TAX PURPO SES THE PROPERTY WHICH WAS HELD FOR MORE THAN 3 YEARS SHOULD BE CONSIDERED AS LONG TERM CAPITAL GAIN. THEREFORE, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THERE ARE TWO VIEWS POSSIBLE AND ULTIMATELY THE LEGAL CONTENTION TAKEN BY THE ASSESSEE WAS NOT PROVED TO BE COMPLETELY BASELESS SINCE IN O NE OF THE DECISIONS, THE CONTENTION OF THE ASSESSEE WAS ACCEPTED THEREFORE I T IS A BONAFIDE LEGAL CONTENTION TAKEN BY THE ASSESSEE BY MAKING COMPLETE DISCLOSURE AND 8 SKF INDIA LTD. THEREFORE NO PENALTY FOR EITHER CONCEALMENT OR FOR FURNISHING OF INACCURATE PARTICULARS CAN BE LEVIED. 9. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE DECISIONS RELIED ON. THE ASSESSEE IN THIS CASE WHILE COMPUTING THE INCOME FOR ALL THESE ASSESSMENT YEAR REPORTED PROFIT ON SALE OF FLAT UNDER THE HEAD INCOME FROM LONG TE RM CAPITAL GAINS THOUGH THE ASSET WAS DEPRECIABLE ASSET. THE ANNEXURE TO C OMPUTATION OF INCOME, THE ASSESSEE HAS GIVEN A NOTE AS TO WHY IT IS CLAIM ING THE PROFIT ON SALE OF FLAT UNDER THE HEAD LONG TERM CAPITAL GAINS ATTRACT ING TAX AT 20%. APPARENTLY, THE CLAIM WAS MADE BASED ON THE DECISIO N OF GAUHATI HIGH COURT IN THE CASE OF CIT VS ASSAM PETROLEUM INDUSTR IES PVT. LTD., (262 ITR 587). THE CONTENTION OF THE ASSESSEE THAT EVEN IN THE CASE OF DEPRECIABLE ASSET, IF THE ASSET IS HELD FOR MORE THAN 3 YEARS, THE SALE PROCEEDS HAVE TO BE ASSESSED ON LONG TERM CAPITAL GAINS BASED ON THE OB SERVATION OF THE HONBLE HIGH COURT THAT SEC. 50 ONLY PROVIDES THAT THE DEPRECIATION HAS BEEN ALLOWED UNDER THE ACT ON THE CAPITAL ASSET THE N THE ASSESSEES COMPUTATION OF CAPITAL ASSET WOULD NOT BE U/S. 48 & 49 OF THE ACT AND IT WOULD BE WITH MODIFICATION AS PROVIDED U/S. 50 AND THAT SEC. 50 DOES NOT STATE THAT DEPRECIABLE ASSET SHALL BE TREATED AS SH ORT TERM CAPITAL ASSET. THE ASSESSEE CONTENDED THAT THE SPECIALTY ATTACHED TO SEC. 50 IS TO BE RESTRICTED ONLY TO THE METHOD OF COMPUTING THE CAPI TAL GAIN AND NOT FOR DETERMINING THE NATURE OF CAPITAL GAIN. THE CONTEN TIONS WERE NOT ACCEPTED BY THE ASSESSING OFFICER AND HE COMPUTED THE SHORT TERM CAPITAL GAIN AND PENALTY WAS LEVIED U/S. 271(1)(C) OF THE ACT FOR CO NCEALMENT OF INCOME. THE STAND OF THE ASSESSEE WAS REJECTED BY THE FIRST APPELLATE AUTHORITY AS WELL AS THE TRIBUNAL. THE ASSESSEE CONTENDS THAT T HERE IS A FULL DISCLOSURE MADE AND A LEGAL CONTENTION WAS RAISED BASED ON CER TAIN LEGAL PRONOUNCEMENTS AND THE LEGAL CONTENTION OF THE ASSE SSEE WAS INFACT 9 SKF INDIA LTD. ACCEPTED IN ONE OF THE DECISIONS BY THE TRIBUNAL IN THE CASE OF SMITA CONDUCTORS LTD (SUPRA). 10. WE HAVE PERUSED THE DECISION OF THE TRIBUNAL IN THE CASE OF SMITA CONDUCTORS LTD. (SUPRA) WHEREIN IT WAS HELD AS UNDE R: 2.5 THE ASSESSEE HAS ALSO RAISED AN ADDITIONAL GRO UND THAT FOR THE PURPOSE OF APPLICATION OF TAX RATE, THE CAPITAL GAIN IN CASE O F THE ASSESSEE HAS TO BE ASSESSED AS LONG TERM CAPITAL GAIN AS THE FLAT HAD BEEN HELD BY THE ASSESSEE FOR MORE THAN THREE YEARS. IT HAS BEEN ARGUED THAT PROV ISIONS OF SECTION 50 DEEMING THE CAPITAL GAIN AS SHORT TERM CAPITAL GAIN IS ONLY FOR THE PURPOSES OF SECTION 48 AND 49 WHICH RELATE TO COMPUTATION OF CA PITAL GAIN. THE DEEMING PROVISIONS HAS, THEREFORE, TO BE RESTRICTED ONLY TO COMPUTATION OF CAPITAL GAIN AND FOR THE PURPOSE OF OTHER PROVISIONS OF THE ACT, THE CAPITAL GAIN HAS TO BE TREATED AS LONG TERM CAPITAL GAIN. THE VIEW CANVASS ED BY THE LEARNED AR IS SUPPORTED BY THE JUDGMENT OF HONBLE HIGH COURT OF BOMBAY IN CASE OF ACE BUILDERS P. LTD. (SUPRA) IN WHICH IT HAS BEEN HELD THAT FOR THE PURPOSE OF OTHER PROVISIONS OF THE ACT SUCH AS SECTION 54EC THE CAPI TAL GAIN HAS TO BE TREATED AS LONG TERM CAPITAL GAIN, IF THE ASSET IS HELD FOR MORE THAN THREE YEARS. THE SAME VIEW HAS BEEN TAKEN BY THE MUMBAI BENCH OF TRI BUNAL IN CASE OF MANALI INVESTMENTS VS. ASSISTANT COMMISSIONER OF INCOME TA X (139 TTJ 411) IN WHICH IT HAS BEEN HELD THAT THE PRESCRIPTIONS OF SE CTION 50 ARE TO BE EXTENDED ONLY TO THE STAGE OF COMPUTATION OF CAPITAL GAIN AN D, THEREFORE, CAPITAL GAIN RESULTING FROM TRANSFER OF DEPRECIABLE ASSET WHICH WAS HELD FOR MORE THAN THREE YEARS WOULD RETAIN THE CHARACTER OF LONG TERM CAPITAL GAIN FOR THE PURPOSE OF ALL OTHER PROVISIONS OF THE ACT. IN THIS CASE THE LD. AR FOR THE ASSESSEE SUBMITTED THAT FLAT HAD BEEN HELD FOR 15 T O 20 YEARS WHICH IS SUPPORTED BY THE FACT THAT COST OF THE FLAT AS SHOW N IN THE BALANCE SHEET WAS ONLY RS. 1,30,000/-. THEREFORE, IF THE FLAT IS HELD FOR MORE THAN THREE YEARS THE M/S SMITA CONDUCTORS LTD - 6 - TAX RATE HAS TO BE A PPLIED AS PROVIDED IN SECTION 112 OF THE IT ACT APPLICABLE IN RESPECT OF CAPITAL GAIN ARISING FROM TRANSFER OF LONG TERM CAPITAL ASSET. 2.6 WE, THEREFORE, HELD THAT, FOR THE PURPOSE OF CO MPUTATION OF CAPITAL GAIN, THE FLAT HAS TO BE TREATED AS SHORT TERM CAPITAL GA IN U/S 50 OF THE IT ACT, BUT FOR THE PURPOSE OF APPLICABILITY OF TAX RATE IT HAS TO BE TREATED AS LONG TERM CAPITAL GAIN IF HELD FOR MORE THAN THREE YEARS. WE ACCORDIN GLY DIRECT THE AO TO COMPUTE THE CAPITAL GAIN FROM THE SALE OF FLAT AND APPLY THE APPROPRIATE TAX RATE AFTER NECESSARY VERIFICATION IN THE LIGHT OF O BSERVATIONS MADE IN THIS ORDER. 11. ON A READING FROM THE ORDER OF THE CO-ORDINATE BENCH OF THE TRIBUNAL, WE FIND THAT THE LEGAL CONTENTION AS RAISED BY THE ASSESSEE IS ACCEPTED IN THIS CASE WHICH IS ALMOST SIMILAR TO THE CONTENTION RAISED BY THE ASSESSEE. 10 SKF INDIA LTD. THEREFORE, IT CANNOT BE SAID THAT THE LEGAL CONTENT ION RAISED BY THE ASSESSEE IS TOTALLY FALSE AND A WRONG CLAIM SIMPLY BECAUSE BY MAKING A CLAIM WHICH IS NOT SUSTAINABLE IN LAW, CANNOT LEAD TO CONCEALME NT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE CONTENTION RAISED BY THE ASSESSEE IS ALSO ONE OF THE POSSIBLE VIEWS AND THE ISSUE IS HIGHLY DEBATABLE. IT IS ONLY A DIFFERENCE OF OPINION. THUS, WE HOLD THAT THERE IS NO CONCEALMENT OF INCOME BY THE ASSESSEE BY MAKING A L EGAL CLAIM WHICH IS OTHERWISE COMPLETELY DISCLOSED IN THE RETURN OF INC OME BY WAY OF A NOTE. HENCE, WE DIRECT THE ASSESSING OFFICER TO DELETE TH E PENALTY LEVIED U/S. 271(1)(C) OF THE ACT FOR ALL THESE THREE ASSESSMENT YEARS. ITA NO. 6989/M/2013 A.Y. 2004-05 REVENUES APPE AL 12. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A)-8, MUMBAI DATED 19.9.20-13 PERTAINING TO ASS ESSMENT YEAR 2004- 05. 13. THE GROUNDS RAISED BY THE REVENUE READ AS UNDE R: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) ERRED IN DELETING THE PENALTY LEVIED U/S. 27 1(1)(C) OF THE I.T. ACT, 1961 ON ACCOUNT OF CLAIM OF DEDUCTION U/S. 80H HC. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE IMPUGNED ORDER OF THE LD. CIT(A) IS CONTRARY TO LAW AND CONSEQUENTLY MERITS TO BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 14. BOTH THE COUNSELS AGREED THAT THE REVENUE EFFEC T IN THIS APPEAL IS LESS THAN 10 LAKHS. 15. BEFORE GOING INTO THE MERITS OF THE CASE, WE CO NSIDER CBDTS LATEST INSTRUCTIONS VIDE CIRCULAR NO.21/2015 DATED 10/12/2 015, THE RELEVANT PORTION OF WHICH READ AS UNDER:- 11 SKF INDIA LTD. CIRCULAR NO. 21/2015 F NO 279/MISC. 142/2007-ITJ (PT) GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD DIRECT TAXES NEW DELHI THE 10TH DECEMBER, 2015 SUBJECT: REVISION OF MONETARY LIMITS FOR FILING O F APPEALS BY THE DEPARTMENT BEFORE INCOME TAX APPELLATE TRIBUNAL AND HIGH COURTS AND SLP BEFORE SUPREME COURT - MEASURES FOR REDUCING LITIGATION - REG REFERENCE IS INVITED TO BOARD'S INSTRUCTION NO 5/20 14 DATED 10.07.2014 WHEREIN MONETARY LIMITS AND OTHER CONDIT IONS FOR FILING DEPARTMENTAL APPEALS (IN INCOME-TAX MATTERS) BEFORE APPELLATE TRIBUNAL AND HIGH COURTS AND SLP BEFORE T HE SUPREME COURT WERE SPECIFIED. 2. IN SUPERSESSION OF THE ABOVE INSTRUCTION, IT HA S BEEN DECIDED BY THE BOARD THAT DEPARTMENTAL APPEALS MAY BE FILED ON MERITS BEFORE APPELLATE TRIBUNAL AND HIGH COURTS AND SLP B EFORE THE SUPREME COURT KEEPING IN VIEW THE MONETARY LIMITS A ND CONDITIONS SPECIFIED BELOW. 3. HENCEFORTH, APPEALS/ SLPS SHALL NOT BE FILED IN CASES WHERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMITS GIVE N HEREUNDER: - S. NO APPEALS IN INCOME - TAX MATTERS MONETARY LIMIT (IN RS) 1. BEFORE APPELLATE TRIBUNAL 10,00,000/ - 2. BEFORE HIGH COURT 20,00,000/ - 3. BEFORE SUPREME COURT 25,00,000/ - IT IS CLARIFIED THAT AN APPEAL SHOULD NOT BE FILED MERELY BECAUSE THE TAX EFFECT IN A CASE EXCEEDS THE MONETARY LIMITS PRESCR IBED ABOVE. FILING OF APPEAL IN SUCH CASES IS TO BE DECIDED ON MERITS OF THE CASE. 16. IT IS FURTHER CLARIFIED BY THE BOARD IN ITS CIR CULAR THAT THESE INSTRUCTIONS WILL APPLY RETROSPECTIVELY TO PENDING APPEALS AND APPEALS TO BE 12 SKF INDIA LTD. FILED HENCEFORTH IN HIGH COURTS AND TRIBUNALS. IT IS ALSO MADE CLEAR THAT PENDING APPEALS BELOW THE MONITORY LIMITS FIXED IN PARA-3 ABOVE MAY BE WITHDRAWN OR NOT PRESSED. 17. IN THE CASE IN HAND, THE TOTAL DEMAND AS PER CI T(A)S ORDER IS LESS THAN THE AMOUNT OF RS. 10,00,000/-, WHICH IS BELOW THE MONETARY LIMITS AS MENTIONED IN CBDT CIRCULAR DATED 10.12.2015 (SUPRA) . FOLLOWING THE SAME, THIS APPEAL OF THE REVENUE IS DISMISSED. 18. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED AND THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 29 TH JULY, 2016. SD/- SD/- (RAJENDRA) (C.N. PRASAD ) ' / ACCOUNTANT MEMBER # $' /JUDICIAL MEMBER MUMBAI; '' DATED 29 TH JULY, 2016 . $ . ./ RJ , 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. + ./0 / GUARD FILE. / BY ORDER, )$ //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI