Sirhind Steels Ltd., Ahmedabad V. The Pr.CIT-4, Ahmedabad

ITA 713/AHD/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 7853 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 24-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P SHARMA
• Assessee Lawyers: VARTIK R CHOKSI
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Business income; Depreciation; Additional depreciation; Transactions in derivatives; Revised return; Futures and options; Set aside; Capital Gains
• Section: 143(3); 50C; 54F; 142(1); 32(1)(iia); 250; 139(1); 48; 13; 22; 263

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL , C BENCH, AHMEDABAD (CONDUCTED THROUGH VIRTUAL COURT AT AHMEDABAD) BEFORE SHRI WASEEM AHMED , ACCOUNTANT MEMBER AND MS . MADHUMITA ROY , JUDICIAL MEMBER ./ ITA NO. 713/AHD/2019 / ASSTT. YEAR: 2014 - 2015 SIRHIND STEEL LTD. , 7 TH FLOOR, SHALIN BUILDING , NR. NEHRU BRIDGE CORNER, ASHRAM ROAD , AHMEDABAD . PAN : AADCS0853R VS. P.C.I.T - 4, AMBAWADI, AHMEDABAD. (APPLICANT) ( RESPON D ENT ) ASSESSEE BY : SHRI VARTIK R. CHOKSI , A.R REVENUE BY : SHRI O.P. SHARMA , CIT .D. R / DATE OF HEARING : 21 / 01 / 2021 / DATE OF PRONOUNCEMENT: 22 / 03 /2021 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE A GAINST THE ORDER OF THE LEARNED PRINCIPAL COMM ISSIONER OF INCOME TAX - 4, AHMEDABAD , DATED 18 /03 /2019 ARISING IN THE MATTER OF ASSESSM ENT ORDER PASSED UNDER S. 263 OF THE INCOME TAX ACT, 1961 ( HERE - IN - AFTER REFERRED TO AS 'THE ACT') RELEVANT TO THE ASSESSMENT YEAR 2014 - 20 15 . ITA NO.713/AHD/2019 ASSTT. YEAR 2014 - 15 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ORDER DATED 18.3.2019 PASSED BY THE LEARNED PR.C.I.T. U/S.263 OF THE I.T. ACT IS BAD IN LAW AND AB INITIO VOID. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED PR. CIT. ERRED IN SETTING ASIDE THE ASSESSMENT ORDER DATED 2.11.2016 PASSED BY THE ASSESSING OFFICER U/S.143(3) R.W.S 147 OF THE I.T. ACT AND DIRECTING THE ASSESSING OFFICER TO PASS A FRESH ASSESSMENT ORDER. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR WITHDRAW ANY GROUND OR GROUN DS OF APPEAL EITHER BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. 3. THE ONLY ISSUE RAISED BY THE ASSESSEE IS THAT THE LEARNED PR. CIT ERRED IN SETTING ASIDE THE ASSESSMENT ORDER DATED 02 - 11 - 2016 FRAMED UNDER SECTION 143(3) BY HOLDING THE SAME AS ERRONEOUS INSOFAR PREJUDICIAL TO THE INTEREST OF R EVENUE. 4 . THE ASSESSEE IS A PUBLIC LIMITED COMPANY AND IT WAS ENGAGED IN THE BUSINESS OF MANUFACTURING OF TMT BARS. SUBSEQUENTLY, THE ACTIVITIES OF FINANCE AND INVESTMENT WERE ALSO INCORPORATED IN THE MAIN OBJECT CLAUSE OF THE MEMORANDUM OF ASSOCIATION. THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION DECLARED INCOME OF RS. 1,78,03,580/ - IN ORIGINAL RETURN FILED UNDER SECT ION 139(1) OF THE ACT COMPRISING OF THE FOLLOWING INCOME: I. B USINESS INCOME OF RS. 36,83,692/ - II. STCG OF RS. 1,41,19,885/ - AND III. LTCG OF 97,295/ - ONLY . 4.1 SUBSEQUENTLY , THE ASSESSEE FILED REVISED RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 63,27,320/ - COMPRISING OF THE FOLLOWING INCOME: I. B USINESS INCOME OF RS. 52,18,327/ - II. STCG OF RS. 11,08,989 / - AND III. LTCG OF RS. 97295/ - 4.2 THE INCOME DECLARED BY THE ASSESSEE IN THE REVISED RETURN OF INCOME WAS ACCEPTED IN THE ASSESSMENT FRAMED UNDER SECT ION 143(3) OF THE ACT VIDE ORDER DATED ITA NO.713/AHD/2019 ASSTT. YEAR 2014 - 15 3 02 - 11 - 2016 EXCEPT FOR SOME ADJUSTMENT IN THE BOOK PROFIT ON ACCOUNT OF EXEMPTED INCOME . 4.3 THE ASSESSEE IN THE ORIGINAL RETURN OF INCOME HAS SHOWN SHORT - TERM CAPITAL GAIN AMOUNTING TO RS. 1,41,19,885/ - UNDER SECTION 50 OF THE ACT WHICH WAS GENERATED ON THE SALE OF ENTIRE BLOCK OF ASSETS I.E. PLANT AND MACHINERIES WHICH WAS ELIGIBLE FOR DEPRECIATION AT THE RATE OF 15% ON THE WRITTEN DOWN VALUE. HOWEVER THE ASSESSEE SUBSEQUENTLY REVISED ITS RETURN OF INCO ME AND DECLARED SHORT - TERM CAPITAL GAIN AT RS. 11,08,989 / - ONLY . A S PER THE ASSESSEE THERE WAS THE ADDITION IN THE BLOCK OF ASSETS I.E. PLANT AND MACHINERIES ON ACCOUNT OF THE PURCHASE OF 3 NEW VEHICLES OF RS. 1,30,10,896/ - AND THE SAME WAS NOT SHOWN IN THE RELEVANT BLOCK OF ASSETS I.E. PLANT AND MACHINERIES IN THE ORIGINAL RETURN OF INCOME. THUS THE ASSESSEE IN THE REVISED RETURN OF INCOME RECTIFIED ITS MISTAKE BY SHOWING SUCH ADDITION OF CARS PURCHASED IN THE BLOCK OF PLANT AND MAC HINERIES WHICH WAS ADJUSTED AGAINST THE STCG ON ACCOUNT OF SALE OF PLANT AND MACHINER IES. ACCORDINGLY, THE ASSESSEE REVISED ITS RETURN OF INCOME AFTER GIVING EFFECT FOR THE ADDITION IN THE BLOCK OF ASSETS WHICH RESULTED CHANGE IN THE AMOUNT OF SHORT - TERM C APITAL GAIN AND IN THE AMOUNT OF DEPRECIATION, HAVING EFFECT ON THE BUSINESS INCOME. 4.4 SUBSEQ UENTLY, T HE LEARNED PR. CIT FROM THE NOTES TO ACCOUNT ATTACHED WITH THE FINANCIAL STATEMENT BEARING NOTE NO. 23 OBSERVE D THAT THE BUSINESS ACTIVITY I.E. MANUFA CTURING ACTIVITY O F THE ASSESSEE WAS CLOSED DOWN FROM O CTOBER 2012. ACCORDINGLY, T HE ENTIRE FUND S AVAILABLE WITH THE ASSESSEE COMPANY W ERE INVESTED IN MUTUAL FUND S AND DEPOSITS. 4.5 THE LEARNED PR. CIT WAS OF THE VIEW THAT THE AO ERRED IN ALLOWING DEPRECIATION AND ADJUSTMENT OF PURCHASE OF CAR AGAINST THE SALE OF PLANT MACHINERY CONSIDERING THE FACT THAT THE BU SINESS OF THE ASSESSEE COMPANY WA S CLOSED DOWN . THEREFORE THE LEARNED PR. C IT ISSUED NOTICE UNDER SECTION 263 OF THE ACT P RO POSING TO SET ASIDE THE ASSESSMENT ORDER DATED 02 - 11 - 2016 BEING ERRONEOUS INSOFAR PREJUDICIAL TO THE INTEREST OF THE REVENUE. ITA NO.713/AHD/2019 ASSTT. YEAR 2014 - 15 4 4 . 6 THE ASSESSEE REPLIED THAT ITS MANUFACTURING ACTIVITY GOT CLOSED DUE WHICH IT SOLD ITS PLANT AND MACHINER IES DURING THE YEAR AND INVESTED THE ENTIRE FUND INTO THE MUTU AL FUND AND DEPOSIT AND FURTHER OBJECT CLAUSE OF THE MOA WAS AMENDED I.E. FROM MANUFACTURING ACTIVITY TO THE FINANCING ACTIVITY . FOR FINANCING ACTIVITIES IT ALSO AP PLIED TO RBI TO ACT AS NBFC. THUS THE OBSERVATION THAT THE ASSESSEE IN NOT ENGAGED IN BUSINESS ACTIVITY IS WRONG. AS SUCH IT IS ENGAGED IN THE BUSINESS OF FINANCING AND INVESTING ACTIVITY , CARRIED OUT THROUGHOUT THE YEAR WHICH IS EVIDENT FROM INCREASE AND DECREASE OF INVESTMENT SHOWN AS ON 31 ST MARCH 2013 AND 2014. ACCORDINGLY THE ASSESSEE CLAIMED THAT THE CLAIM OF DEPRECIATION ON 3 NEW CAR UNDER THE BLOCK OF PLANT AND MACHINERY IS JUSTIFIED AS THESE WERE PUT USE IN ITS BUSINESS ACTIVIT IES . 4.7 WITH REGARD TO THE ADJUSTMENT OF PURCHASE OF NEW CAR FOR RS. 1,30,10,896/ - WITH THE SALE OF PLANT AND MACHINER IES FOR RS. 1,62,93,966/ - , THE ASSESSEE SUBMITTED THAT BOTH THE ASSETS FALL UNDER THE SAME BLOCK OF 15% . T HEREFORE THE SAME SHOULD BE TREATED AS C UMULATIVELY NOT SEPARATELY. BUT DUE TO SOME O VERSIGHT, IN ORIGINAL RETURN , BOTH THE ASSETS WERE TREATED SEPARATELY. THEREFORE IT RECTIFIED THE MISTAKE BY REVISING THE RETURN. FURTHER THE ASSESSEE CLAIMED THAT THE ABOVE EXPLANATION WERE FURNISHED BEFORE TH E AO DURI NG ASSESSMENT PROCEEDING. THE AO AFTER CONSIDERING AND VERIFYING ALL THE DETAIL S ACCEPTED THE INCOME DECLARED IN THE REVISED RETURN INCLUDING THE AMOUNT OF DEPRECIATION. THEREFORE THE ASSESSMENT ORDER IS N EITHER ERRONEOUS N OR PREJUDICIAL TO THE IN TEREST OF REVENUE AS ALLEGED. THE ASSESSEE ALSO CONTENDED THAT THE LEARNED PR. CIT CANNOT OVERTURN THE ASSESSMENT ORDER IN THE CASE ON HAND AS THE AO , AFTER DUE VERIFICATION AND EXAMINATION , HAS TAKEN ON E OF THE POSSIBLE VIEW UNDER THE PROVISIONS OF LAW. 5. HOWEVER, THE LEARNED PR. CIT DISAGREED WITH THE CONTENTION OF THE ASSESSEE AND HELD THAT THE ORDER PAS SED BY THE AO UNDER SECTION 143( 3 ) OF THE ACT IS ERRONEOUS INSOFAR PREJUDICIAL TO THE INTEREST OF REVENUE BY OBSERVING AS UNDER: 3. I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS MADE. THE ASSESSEE HAS NOT DISPUTED THAT THE BUSINESS IS CLOSED. IT HAS SUBMITTED THAT THE A.O HAS EXAMINED ALL THE FACTS PROPERLY BEFORE THE COMPLETING THE ASSESSMENT AND THEREFORE, JURISDICTION IN THIS ITA NO.713/AHD/2019 ASSTT. YEAR 2014 - 15 5 CASE CANNOT BE INVOKED U/S.263 OF THE ACT. IT IS ALSO SUBMITTED THAT THE ASSESSEE IS INTO THE BUSINESS OF MAKING INVESTMENTS AND INTEREST INCOME IS ASSESSABLE UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION AND IT HAS BEEN SO ASSESSED, WHEREAS THE DIVIDEND INCOME IS TAX EXEMPT AND DISALLOWANCE U/S.14A HAS ALREADY BEEN MADE. 3.1 REGARDING THE CLAIM OF DEPRECIATION ON MOTOR CAR, IT HAS BEEN SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS PER REASONS FOR REVISING THE RETURN THAT PLANT AN D MACHINERY UNDER 15% BLOCK, HAVE BEEN SOLD FOR RS.1,62,93,966/ - AND MOTOR CAR AS ANOTHER ASSET UNDER 15% BLOCK FOR RS.1,30,10,896/ - HAVE BEEN ADDED. BOTH PLANT AND MACHINERY AND MOTOR CAR ARE ELIGIBLE FOR DEPRECIATION @ 15% AND THEREFORE, ARE UNDER THE SAM E BLOCK. FOR THIS REASON, COMBINED DEPRECIATION HAS BEEN COMPUTED AND ACCORDINGLY, THE RETURN OF INCOME HAS BEEN REVISED. THE RETURN WAS PROPERLY EXAMINED BY THE A.O. BEFORE THE COMPLETION OF THE ASSESSMENT. THERE IS NO ERROR IN THE ABOVE, SINCE BOTH PLANT AND MACHINERY AND MOTOR CAR ARE ELIGIBLE FOR DEPRECIATION UNDER THE SAME 15% BLOCK. 3.2 THE SUBMISSION, OF THE ASSESSEE THAT BOTH PLANT AND MACHINERY AND MOTOR CAR BEING ELIGIBLE FOR DEPRECIATION @ 15% ARE PART OF THE SAME BLOCK OF ASSETS, IS NOT CORRECT . AS PER NEW APPENDIX - I IN DEPRECIATION TABLE, BOTH MACHINERY AND PLANT AND MOTOR CARS ARE UNDER THE HEADING - ILL IN PART - A 'MACHINERY AND PLANT' AND THE FIRST TWO ITEMS ARE: (1) MACHINERY AND PLANT OTHER THAN THOSE COVERED BY SUB - ITEMS (2), (3) AND (8) BELOW: - (2) MOTOR CARS, OTHER THAN THOSE USED IN A BUSINESS OF RUNNING THEM ON HIRE, ACQUIRED OR PUT TO USE ON OR AFTER 01/04/1990. THUS AS ABOVE, THE BLOCK OF 'MACHINERY AND PLANT' FALLS IN SUB BLOCKPF SUB - ITEM(L) OF ITEM - ILL, WHEREAS MOTOR CARS FALLS IN SUB ITEM (2) IN ITEM - ILL OF THE DEPRECIATION TABLE. 3.3 NO DOUBT, BOTH THE ITEMS MACHINERY AND PLANT AND MOTOR CARS ARE ELIGIBLE FOR DEPRECIATION @ 15%|BUT THEY DO NOT FORM PART OF THE SAME BLOCK. CLEARLY THE BLOCK' OF MACHINERY AHCTPLANT CONSISTS OF A LL THE ITEMS EXCEPT MOTOR CARS IN SUB - ITEM NO. (2) AND OTHER ITEMS IN SUB - ITEM NO. (3) AND VARIOUS ITEMS IN SUB - ITEM NO. (8) BELOW SUB - ITEM (1) OF THE BLOCK MACHINERY AND PLANT. THEREFORE, AS PER EXPRESS RULES, MOTOR CARS DO NOT FORM PART OF THE SAME BLOCK AS MACHINERY AND PLANT. 3.4 HE A.O. HAS NOT EXAMINED THIS ASPECT AT ALL WHILE CONSIDERING THE REVISED RETURN OF THE ASSESSEE AND COMPLETED THE ASSESSMENT. THE ASSESSEE ALSO IN ITS SUBMISSION HAS CLUBBED THE TWO DISTINCT BLOCKS OF MACHINERY AND PLANT A ND MOTOR CAR TOGETHER MERELY ON THE BASIS O F SAME RATE OF DEPRECIATION 15% FOR WHICH THEY ARE ELIGIBLE BUT OVERLOOKED THAT THEY ARE TWO DIFFERENT AND DISTINCT BLOCKS AND MERELY ON THE BASIS OF DEPRECIATION RATES BEING THE SAME, THEY CANNOT BE SAID TO BE FORMING PART OF THE SAME BLOCK. SINCE, THE A.O. HAS NOT CONSIDERED THIS EXPRESS PROVISION IN NEW APPENDIX - I OF THE INCOME TAX RULE GOVERNING THE DEPRECIATION RATES AND FORMATION OF BLOCKS AS PROVIDED THEREIN, THE ASSESSMENT PASSED BY THE A.O. IS ERRONEOUS IN A MANNER THAT IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. 4. THEREFORE, THE ASSESSMENT ORDER DATED 02/11/2016 PASSED BY THE A.O. U/S.143 (3) OF THE ACT IN THE CASE OF THE ASSESSEE IS SET ASIDE AND THE A.O. IS DIRECTED TO MAKE A FRESH ASSESSMENT A FTER MAKING ALL NECESSARY ENQUIRIES PROPERLY AND VERIFICATION IN RESPECT OF ALL RELEVANT ASPECTS INCLUDING THOSE INDENTIFIED IN THIS ORDER SUPRA. ITA NO.713/AHD/2019 ASSTT. YEAR 2014 - 15 6 6 . B EING AGGRIEVED BY THE ORDER OF THE LEARNED PR. CIT, THE ASSESSEE IS IN APPEAL BEFORE US. 7 . THE LEARNED AR BEFORE US FILED A PAPER BOOK RUNNING FROM PAGES 1 TO 152 AND SUBMITTED THAT THE ASSESSMENT WAS FRAMED BY THE AO AFTER DUE VERIFICATION AND APPLICATION OF HIS MIND WHICH IS EVIDENT FROM THE QUERIES RAISED BY HIM IN THE NOTICE ISSUED UNDER SEC TION 142(1) OF THE ACT AS WELL AS THE SUBMISSIONS MADE BY THE ASSESSEE IN RESPONSE TO SUCH NOTICE. 7 .1 THE LEARNED AR FURTHER CONTENDED THAT BOTH THE PLANT & MACHINERIES AND MOTOR CARS ARE CARRYING THE SAME RATE OF DEPRECIATION. THEREFORE, BOTH THE ASSET S FALL IN THE SAME CATEGORY OF BLOCK OF ASSETS. ACCORDINGLY, THE LEARNED AR CONTENDED THAT THE ASSESSMENT ORDER DOES NOT SUFFER FROM ANY INFIRMITY AS ALLEGED BY THE LEARNED PR. CIT. 8 . O N THE OTHER HAND THE LEARNED DR BEFORE US SUBMITTED THAT THERE WAS NO SPECIFIC QUERY RAISED BY THE AO DURING THE ASSESSMENT PROCEEDINGS ABOUT THE ADJUSTMENTS OF THE CAR PURCHASED AGAINST THE SHORT - TERM CAPITAL GAIN GENERATED ON THE SALE OF PLANT AND MACHINERIES. FURTHERMORE, THERE IS NO DAMAGE TO THE ASSESSEE BY THE ORDER OF THE LEARNED PR. CIT. AS PER THE LEARNED DR, THE AO HAS FRAMED THE ASSESSMENT ON WRONG ASSUMPTION OF FACTS WHICH CAN CERTAINLY BE REVISED BY THE LEARNED PR. CIT. THE LEARNED DR V EHEMENTLY SUPPORTED THE ORDER OF THE LEARNED PR. CIT. 9 . WE HAVE HEARD TH E RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE 1 ST ALLEGATION OF THE LEARNED PR. CIT IS THAT THERE ARE DIFFERENT BLOCK OF ASSETS FOR THE PLANT AND MACHINERY IS VIZ A VIZ MOTOR CARS AS PER APPENDIX - I UNDER THE HEA DING III OF THE DEPRECIATION SCHEDULE. ACCORDINGLY THE LEARNED PR. CIT WAS OF THE VIEW THAT THE MOTOR CARS PURCHASED BY THE ASSESSEE CANNOT FORM PART OF THE BLOCK OF ASSETS UNDER THE CATEGORY OF PLANT AND MACHINERY. BUT THE ASSESSEE IN THE REVISED COMPUTAT ION OF INCOME HAS SHOWN BOTH THE ASSETS ITA NO.713/AHD/2019 ASSTT. YEAR 2014 - 15 7 UNDER THE SAME CATEGORY WHICH WAS ALSO ACCEPTED BY THE AO. IN THIS CONNECTION WE NOTE THAT ADMITTEDLY THERE ARE 2 DIFFERENT BL OCK OF ASSETS AS SPECIFIED IN THE DEPRECIATION SCHEDULE BUT BOTH THE ASSETS CARRY THE SAME RATE OF DEPRECIATION I.E. 15%. FOR THIS PURPOSE WE FIND NECESSARY TO REFER THE DEFINITION OF THE BLOCK OF ASSETS AS PROVIDED UNDER SUB - SECTION (11) TO SECTION 2 OF THE ACT WHICH READS AS UNDER: ( 11 ) 'BLOCK OF ASSETS' MEANS A GROUP OF ASSETS FALLING WITHIN A CLASS OF ASSETS COMPRISING ( A ) TANGIBLE ASSETS, BEING BUILDINGS, MACHINERY, PLANT OR FURNITURE ; ( B ) INTANGIBLE ASSETS, BEING KNOW - HOW, PATENTS, COPYRIGHTS, TRADE - MARKS, LICENCES, FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR N ATURE, IN RESPECT OF WHICH THE SAME PERCENTAGE OF DEPRECIATION IS PRESCRIBED ; 9 .1 F ROM THE ABOVE DEFINITION, IT IS REVEALED THAT DIFFERENT ASSETS WILL FALL IN THE SAME BLOCK OF ASSETS CATEGORY, IF THEY ARE CARRYING SAME RATE OF DEPRECIATION. THERE IS NO DISPUTE QUA THE FACT THAT PLANT AND MACHINER IES VIZ A VIZ MOTOR CARS ARE CARRYING SAME RATE OF DEPRECIATION. THIS FACT WAS ALSO ADMITTED BY THE LEARNED PR. CIT WHICH IS REPRODUCED AS UNDER: NO DOUBT, BOTH THE ITEMS MACHINERY AND PLANT AND MOTOR CARS ARE E LIGIBLE FOR DEPRECIATION @ 15%. 9 .2 W E ALSO FIND THAT THE HON BLE ITAT DELHI BENCH IN CASE OF PANCHILA HOSPITALITY VENTURES LTD IN ITA NO - 5984/DEL/2016 REPORTED IN 85 TAXMAN N .COM 350 HELD THAT THE ASSETS CARRYING SAME RATE OF DEPRECIATION WILL FALL UNDER THE SAME BLOCK OF ASSETS. THE RELEVANT FINDING OF THE HON BLE BENCH READS AS UNDER: AFTER PERUSING SECTIONS 50 AND 2(11), MORE SPECIFICALLY SECTION 2(11), ONE THING THAT EVIDENTLY BE COMES CLEAR IS THAT IN THE INCOME - TAX ACT, THERE ARE ONLY TWO CATEGORIES OF CLASS OF ASSETS, I.E. , TANGIBLE AND INTANGIBLE AND WITHIN THE SAME CLASS, VARIOUS BLOCK OF ASSETS ARE COVERED. IN THE INSTANT CASE, ON GOING THROUGH THE ORDER OF THE COMMISSIONER ( APPEALS), IT IS OBSERVED THAT HE HAS FAILED TO APPRECIATE THE FACT THAT SECTION 2(11) SPECIFIES ONLY TWO CLASS OF ASSETS, I.E. , TANGIBLE AND INTANGIBLE ASSETS AND WITHIN THESE TWO CLASSES OF ASSETS, ASSETS HAVING SAME RATE OF DEPRECIATION ARE PRESCRIBED AN D THEY FALL WITHIN THE SAME BLOCK. WHEREAS, THE CONCEPT OF AN ASSET FALLING WITHIN THE SAME BLOCK IS DRIVEN BY THE SAME RATE OF DEPRECIATION ONCE IT FALLS IN THE SAME CLASS OF ASSETS. [PARA 5.1] IN VIEW OF THE ABOVE, THE COMMISSIONER (APPEALS) HAS COMPLETELY MISUNDERSTOOD AND MISCONCEIVED THE SECTIONS 50 AND 2(11) AND HAS WRONGLY INTERPRETED THAT AN ASSET CAN BE IN THE SAME BLOCK ONLY ON THE BASIS OF CLASS OF ASSETS, AS WELL AS RATE OF DEPRECIATIO N AND NOT ON RATE OF DEPRECIATION ALONE. IT IS THE FINDING OF THE COMMISSIONER (APPEALS) THAT FOR AN ASSESSEE TO BE IN THE SAME BLOCK OF ASSET, IT IS MANDATORY THAT THEY SHOULD FALL WITHIN SAME 'CLASS OF ASSET' SHOULD ALSO BE ELIGIBLE IN THE SAME RATE. THE COMMISSIONER (APPEALS) IN HIS ITA NO.713/AHD/2019 ASSTT. YEAR 2014 - 15 8 ORDER HAS HELD THAT, TWO ASSETS FALLING WITHIN TWO DIFFERENT CLASSES CAN NEVER CONSTITUTE A SINGLE 'BLOCK OF ASSETS' EVEN THOUGH THEY MAY BE ELIGIBLE FOR DEPRECIATION AT THE SAME RATE. [PARA 5.2] 9 .3 IN THIS REGARD WE ALSO F IND SUPPORT AND GUIDANCE FROM THE ORDER OF THE HON BLE MUMBAI TRIBUNAL IN CASE OF AVIN PUMPS (P.) LTD. IN ITA NO 3840/MUM/2012 REPORTED IN 40 TAXMAN N .COM 123 WHERE IN SIMILAR ISSUE THE HON BLE BENCH HELD AS UNDER: 5. WE HAVE CONSIDERED THE ISSUE AND EXAMINED THE RIVAL CONTENTIONS. AS FAR AS LEGAL PRINCIPLES ARE CONCERNED, THE CO - ORDINATE BENCH IN THE CASE OF ARTIC ( SUPRA ), HELD THAT THE ASSESSEE WOULD BE ENTITLED TO CLAIM SET OFF OF COST OF NEW ASSET ACQUIRED IN THE PREVIOUS YEAR, EVEN IF THE ASSESSEE WAS NOT CARRYING ON THE SAME BUSINESS OR THE OTHER BUSINESS. THIS IS ALSO ONE OF THE CONTENTIONS OF THE ASSESSING OFFICER THAT THE ASSESSEE STOPPED BUSINESS, WHICH WAS ALSO CONTESTED BY THE ASSESSEE. THE CO - ORDINATE BENCH IN THE ABOVEREFERRED CASE HELD AS UNDER : 'SECTION 50 MAKES SPECIAL PROVISION FOR THE COMPUTATION OF CAPITAL GAINS IN THE CASE OF DEPRECIABLE ASSETS. THE EFFECT, IN BRIEF, OF THE SECTION IS TO MAKE CERTAIN MODIFICATIONS IN THE DEDUCTIONS TO BE ALLOWED UNDER SECTIONS 48 AND 49 FROM THE CON SIDERATION RECEIVED AS A RESULT OF THE TRANSFER. THUS, IN THE CASE OF DEPRECIABLE ASSETS, INSTEAD OF THE DEDUCTIONS ALLOWED BY SECTIONS 48 AND 49, THE DEDUCTIONS PERMITTED UNDER SECTION 50(1)(I), (II) AND (III) WOULD BE ALLOWABLE. THE SECTION ALSO SAYS THA T EVEN THOUGH THE PARTICULAR DEPRECIABLE ASSET HAS BEEN HELD BY THE ASSESSEE FOR MORE THAN 36 MONTHS, STILL THE CAPITAL GAINS WOULD BE CONSIDERED AND DEALT WITH AS SHORT - TERM CAPITAL GAINS ONLY AND NOT AS LONG - TERM CAPITAL GAINS. THAT IS THE EFFECT OF THE NON OBSTANTE CLAUSE WHICH RULES OUT THE APPLICABILITY OF SECTION 2(42A). THOUGH SOME MODIFICATIONS OR CHANGES HAVE BEEN MADE IN THE COMPUTATION OF THE CAPITAL GAINS ON TRANSFER OF DEPRECIABLE ASSETS, THE NATURE AND CONTENT OF THE SUBJECT MATTER OF TAXATION REMAINS THE SAME, VIZ., CAPITAL GAINS. THE RULES RELATING TO THE COMPUTATION OF BUSINESS INCOME ARE NOT INCORPORATED OR WORKED INTO THE RULES RELATING TO THE COMPUTATION OF CAPITAL GAINS. THEREFORE, WHILE EXAMINING THE APPLICABILITY OF THE PROVISIONS OF S ECTION 50, THE TRIBUNAL IS NOT TO BE INFLUENCED BY THE RULES RELATING TO THE COMPUTATION OF THE BUSINESS INCOME. SECTION 2(11) DEFINES 'BLOCK OF ASSETS' WHICH DOES NOT SPEAK OF DEPRECIATION HAVING BEEN ALLOWED IN THE ASSESSMENTS IN RESPECT OF ANY ASSET FAL LING WITHIN THE BLOCK OF ASSETS BUT REFERS ONLY TO THE DEPRECIATION RATES BEING PRESCRIBED IN THE RULES. SECTION 50 REFERS TO A CAPITAL ASSETS 'FORMING PART OF A BLOCK OF ASSETS IN RESPECT OF WHICH DEPRECIATION HAS BEEN ALLOWED'. THIS MEANS THAT THE ASSET WHICH IS SOLD AND THE CAPITAL GAINS RELATING TO WHICH IS THE SUBJECT - MATTER OF COMPUTATION MUST HAVE BEEN USED IN A BUSINESS CARRIED ON BY THE ASSESSEE. THAT CONDITION WAS SATISFIED IN THE PRESENT CASE AND THERE WAS NO DISPUTE ABOUT THE SAME. THE REQUIREME NT FOR ALLOWING DEDUCTION IN RESPECT OF THE NEW ASSET UNDER SECTION 50(1)(III) IS THAT IT SHOULD BE AN ASSET FALLING WITHIN THE BLOCK OF ASSETS WHICH MEANS THAT IT SHOULD BE AN ASSET WHICH FALLS WITHIN A CLASS OF BUILDINGS IN RESPECT OF WHICH THE SAME PERC ENTAGE OF DEPRECIATION IS PRESCRIBED. THERE IS NO EXPLICIT REQUIREMENT IN THE STATUTORY PROVISION TO THE EFFECT THAT THE NEW ASSET SHOULD ALSO BE USED IN A BUSINESS CARRIED ON BY THE ASSESSEE AND IF THERE IS NO BUSINESS CARRIED ON BY HIM, THE DEDUCTION CAN NOT BE GIVEN. KEEPING IN MIND THE DIFFERENCE BETWEEN THE PROVISIONS RELATING TO THE COMPUTATION OF THE BUSINESS INCOME AND THOSE RELATING TO THE COMPUTATION OF CAPITAL GAINS, AS BROUGHT OUT BY THE SUPREME COURT IN THE CASE OF CIT V. EXPRESS NEWSPAPERS LTD. [1964] 53 ITR 250 (SC) , IT WOULD BE CLEAR THAT THE COURT SHOULD NOT ALLOW THE PROVISIONS RELATING TO SECTION 50(1)(III) TO BE INTERPRETED IN THE MANNER SUGGESTED BY TH E REVENUE. THERE IS ITA NO.713/AHD/2019 ASSTT. YEAR 2014 - 15 9 NO EXPLICIT OR EXPRESS REQUIREMENT THAT THE NEW ASSET SHOULD BE PUT TO USE IN ANY BUSINESS CARRIED ON BY THE ASSESSEE. THE CENTRAL BOARD OF DIRECT TAXES CIRCULAR NO. 469, DATED SEPTEMBER 23, 1986 ([1986] 162 ITR (ST.) 21) SHOWS THAT THE MAIN OBJECT OF INTRODUCING THE BLOCK OF ASSETS CONCEPT WAS ONLY TO REDUCE TIME AND EFFORT SPENT IN DETAILED RECORD MAINTENANCE. WHILE GIVING EFFECT TO THIS OBJECT, THERE COULD HAVE BEEN NO JUSTIFICATION OR WARRANT FOR PRESCRIBING A CONDITION THAT THE NEW ASSET, IN ADDITION TO BEING AN ASSET IN RESPECT OF WHICH THE SAME RATE OF DEPRECIATION IS PRESCRIBED AS IN THE CASE OF THE OTHER ASSETS WITHIN THE CLASS, SHOULD ALSO BE USED IN A BUSINESS CARRIED ON BY THE ASSESSEE. IN THE CASE OF A BUILDING, THE NEW BUILD ING PURCHASED SHOULD BE ONE IN RESPECT OF WHICH THE SAME RATE OF DEPRECIATION, AS IS PRESCRIBED IN RESPECT OF THE OTHER BUILDINGS, HAS BEEN PRESCRIBED BY THE RULES. IF THE ASSESSEE CARRIES ON A BUSINESS, IN THAT CASE HE WOULD ALSO BE ELIGIBLE FOR AN ALLOWA NCE ON ACCOUNT OF DEPRECIATION AT THAT RATE. IN THE CASE OF AN ASSESSEE WHO DOES NOT CARRY ON A BUSINESS, THE RESULT WOULD BE THAT HE WOULD NOT BE ENTITLED TO ANY ALLOWANCE ON ACCOUNT OF DEPRECIATION IN RESPECT OF THE ASSET. IF AT A FUTURE DATE HE DECIDES TO COMMENCE A BUSINESS, HE WOULD BE ENTITLED TO THE DEPRECIATION ALLOWANCE IN RESPECT OF THE NEW ASSET, PROVIDED HE SATISFIES THE AUTHORITIES THAT THE NEW ASSET WAS USED IN THAT BUSINESS. IN THE ABSENCE OF ANY EXPRESS REQUIREMENT IN THE STATUTORY PROVISION OR THE JUSTIFICATION TO READ INTO IT A BUILT IN REQUIREMENT, IT IS NOT POSSIBLE TO UPHOLD THE CONTENTION OF THE DEPARTMENT THAT THE ASSESSEE SHOULD BE FOUND TO HAVE BEEN CARRYING ON A BUSINESS IN THE YEAR IN WHICH THE NEW ASSET WAS PURCHASED. FOR THE AFOR ESAID REASONS, IT WAS TO BE HELD THAT THE ASSESSEE WAS ENTITLED TO THE DEDUCTION OF THE COST OF THE FLAT IN NEW BOMBAY UNDER SECTION 50(1)(III) IN THE COMPUTATION OF THE CAPITAL GAINS IN RESPECT OF THE SALE OF THE PUNE PROPERTY.' 6. IN THIS CASE AS SEEN FR OM THE ORDERS OF THE AUTHORITIES, THE ASSESSEE HAS NOT STOPPED BUSINESS, THEREFORE, AS RIGHTLY HELD BY THE CO - ORDINATE BENCH THE ASSESSEE IS ENTITLED FOR DEDUCTION UNDER SECTION 50(1)(III) IF THE NEW ASSET IS FALLING UNDER SAME BLOCK OF ASSETS. 9 .4 WE AL SO FIND SUPPORT AND GUIDANCE FROM THE ORDER OF THE HON BLE DELHI HIGH COURT IN CASE OF CIT VS. ANSAL PROPERTIES & INFRASTRUCTURE LTD. REPORTED IN 20 TAXMAN N .COM 770 WHERE IT WAS HELD AS UNDER: AS PER SECTION 2(11), THE EXPRESSION 'BLOCK OF ASSETS' MEANS GROUP OF ASSETS FALLING WITHIN THE ASSETS ENUMERATED IN CLAUSES ( A ) AND ( B ). CLAUSE ( A ) REFERS TO TANGIBLE ASSETS, INCLUDING BUILDING, MACHINERY, PLANT AND CLAUSE (B) REFERS TO INTANGIBLE ASSETS LIKE COPYRIGHT, KNOW HOW, TRADE MARK, ETC. THE AFORESAID SEC TION DOES NOT MAKE ANY DISTINCTION BETWEEN DIFFERENT UNITS OR DIFFERENT TYPE OF BUSINESSES, WHICH MAY BE CARRIED ON BY THE ASSESSEE. THE TERM 'BUSINESS' MENTIONED ABOVE REFERS TO DIFFERENT TYPE OF BUSINESS ACTIVITIES CARRIED ON BY THE ASSESSEE. THE ONLY RE QUIREMENT IS THAT IN RESPECT OF ASSETS WHICH FORM THE BLOCK OF ASSETS, SAME PERCENTAGE OF DEPRECIATION SHOULD BE PRESCRIBED. THE WORD 'SAME PERCENTAGE' SHOWS THAT THE BLOCK OF ASSETS REFERS TO SAME RATE OF DEPRECIATION WHICH IS PRESCRIBED UNDER THE RULES. ALL ASSETS, WHICH MAY BE OF DIFFERENT TYPES, BUT IN RESPECT OF WHICH SAME PERCENTAGE OF DEPRECIATION IS PRESCRIBED, ARE TO BE TREATED AND FORM PART OF THE BLOCK OF ASSETS. [PARA 13] APPENDIX - I UNDER RULE 5 OF THE INCOME - TAX RULES, 1962 PRESCRIBES AND STATE S THE TABLE OF RATES AT WHICH DEPRECIATION IS ADMISSIBLE AND IS DIVIDED INTO DIFFERENT PARTS AND SUB - HEADINGS. RATES OF DEPRECIATION HAVE BEEN PRESCRIBED. ASSETS OF DIFFERENT TYPES WHICH HAVE BEEN PRESCRIBED SAME RATE OF DEPRECIATION HAVE BEEN CLUBBED AND PUT TOGETHER. APPENDIX DOES NOT STIPULATE AND PROVIDE THAT EACH UNIT OR DIVISION OF ASSESSEE HAS TO BE SEPARATELY ACCOUNTED FOR AND SHOWN OR FORMS A SEPARATE BLOCK OF ASSETS. THE TABLE, IN FACT, DOES NOT ITA NO.713/AHD/2019 ASSTT. YEAR 2014 - 15 10 POSTULATE AND REQUIRE ANY SUCH DIVISION OR BIFURCATI ON. THE BIFURCATION IS MADE BETWEEN TANGIBLE ASSETS AND INTANGIBLE ASSETS AND THEN UNDER VARIOUS SUB - HEADINGS AS PER THE RATE OF DEPRECIATION MENTIONED IN THE SAID APPENDIX. [PARA 14] SECTION 50 STATES THAT NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 2(4 2A) WHERE CAPITAL ASSET IS AN ASSET FORMING PART OF THE BLOCK OF ASSETS ON WHICH DEPRECIATION HAS BEEN ALLOWED, THEN PROVISIONS OF SECTIONS 48 AND 49 WILL BE APPLICABLE, SUBJECT TO THE MODIFICATION MADE BY THE SECTION. THE FULL VALUE OF THE CONSIDERATION R ECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE SAID ASSET OR ANY OTHER ASSET FALLING WITHIN BLOCK OF THE ASSET SHALL BE TAXABLE AS SHORT - TERM CAPITAL GAIN IF IT EXCEEDS THE AGGREGATE VALUE OF THE FOLLOWING: (1) EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH THE TRANSFER OF THE ASSETS. (2) WRITTEN DOWN VALUE OF BLOCK OF ASSETS AT THE BEGINNING OF THE PREVIOUS YEAR. (3) ACTUAL COST OF THE ASSETS FALLING WITHIN THE BLOCK OF ASSETS ACQUIRED DURING THE PREVIOUS YEAR. [PARA 15] THUS, UNDER SECTION 50 SHORT - TERM CAPITAL GAINS IS PAYABLE IN CASE AFTER ADDING THE THREE AMOUNTS/VALUES AND SUBTRACTING THE SAME FROM THE VALUE OF CONSIDERATION RECEIVED/ACCRUING ON THE TRANSFER OF ASSET AND OTHER ASSETS IN THE BLOCK OF ASSETS, THERE IS AN EXCE SS OR SURPLUS. IN CASE THERE IS NO EXCESS, THEN NOTHING IS PAYABLE AS SHORT - TERM CAPITAL GAINS. [PARA 16] THE PHRASE 'BLOCK OF ASSETS' BEING A TERM OF ART, WHICH HAS BEEN SPECIFICALLY DEFINED IN SECTION 2(11), WILL REFER TO THE BLOCK OF ASSETS ON WHICH THE SAME RATE OF DEPRECIATION IS PRESCRIBED. AS LONG AS THERE IS NO SURPLUS ON SALE OF ASSETS WHICH FORM PART OF THE BLOCK OF ASSETS, I.E., ASSETS CARRYING THE SAME RATE OF DEPRECIATION, SHORT - TERM CAPITAL GAIN WOULD NOT BE PAYABLE. HOWEVER, IF THERE IS SURPL US, THEN SHORT - TERM CAPITAL GAIN TAX WOULD BE PAYABLE. THE BLOCK OF ASSETS WILL MEAN THE ASSETS CARRYING THE SAME RATE OF DEPRECIATION. [PARA 17] 9 .5 I N VIEW OF THE ABOVE THERE IS NO AMBIGUITY TO THE FACT THAT MOTOR CARS AND THE PLANT & MACHINERY BEING EL IGIBLE FOR DEPRECIATION AT THE SAME RATE HAS TO BE CLASSIFIED UNDER SAME BLOCK OF ASSETS DESPITE THERE WERE DIFFERENT ENTRIES IN THE DEPRECIATION SCHEDULE. 9 .6 IT WAS ALSO POINTED OUT THAT THE ASSESSEE IS NOT CARRYING ON ANY BUSINESS ACTIVITY. INDEED THE M ANUFACTURING ACTIVITY OF THE ASSESSEE WAS CLOSED DOWN BUT THE ASSESSEE CHANGE D ITS OBJECT CLAUSE WHICH CAN BE VERIFIED FROM THE MEMORANDUM OF ASSOCIATION. AS SUCH THE ASSESSEE GOT INSERTED NEW OBJECTS IN THE MAIN OBJECT CLAUSE OF MEMORANDUM OF ASSOCIATIO N BY PASSING SPECIAL RESOLUTION DATED 13 TH NOVEMBER 20 13. THESE OBJECT CLAUSE ARE APPEARING ON PAGE 108 OF THE PAPER BOOK AND THE RELEVANT EXTRACT REPRODUCED AS UNDER: 7. TO BUY, SELL OR DEAL IN ALL TYPES OF COMMODITIES TRADED ON THE COMMODITIES ARID/OR SPOT EXCHANGE(S) INDIA OR ABROAD IN CASH OR DERIVATIVES SEGMENTS INCLUDING FORWARD CONTRACTS AND TO CARRY ON BUSINESS OF INVESTING AND / OR TRADING IN COMMODITIES THROUGH DE ALER, ITA NO.713/AHD/2019 ASSTT. YEAR 2014 - 15 11 MERCHANTS, AGENTS AND THE COMMODITIES EXCHANGE(S) AND/OR SPOT EXCHANGE(S) INCLUDING TAKING AND / OR GIVING PHYSICAL DELIVERY OF COMMODITIES, ARTICLES, PRODUCTS. 8. TO INVEST, ACQUIRE, SUBSCRIBE, PURCHASE, HOLD, SELL, DIVEST OR OTHERWISE DEAL IN SECU RITIES, FINANCIAL INSTRUMENTS, FINANCIAL PRODUCTS, UNITS, BONDS, COMMERCIAL PAPERS, ACKNOWLEDGMENTS, DEPOSITS, NOTES, OBLIGATIONS, WARRANTS, GOVERNMENT SECURITIES LOANS, LOAN CERTIFICATES, ALL KINDS OF DERIVATIVES INCLUDING INTEREST DERIVATIVES, FUTURES, F ORWARDS, OPTIONS, CALLS, SWAPS, RIGHTS OR INTEREST IN SECURITIES, FOREIGN CURRENCIES, CARBON CREDITS, FINANCIAL SECURITIES AND ANY OTHER SECURITIES ISSUED BY ANY ENTITY WHETHER FOR THE PURPOSE OF HEDGING, ARBITRAGE, OR FOR ANY OTHER PURPOSE. 9. TO BUY, SE LL, EXPORT, IMPORT, DEAL IN ALL KINDS OF COMMODITIES AND DERIVATIVES TRANSACTIONS IN GOLD, SILVER, PLATINUM, OTHER PRECIOUS METALS, AND TO DEAL ON ANY COMMODITY EXCHANGE AND FOR THIS PURPOSE TAKE MEMBERSHIP OF ANY COMMODITY EXCHANGE OR WITH ANY BULLION BAN K OR ANY CANALIZING AGENCY OR SIMILAR ORGANIZATION WHETHER IN INDIA OR ABROAD. FOR THIS PURPOSE TO ENTER INTO TRANSACTIONS IN NATURE OF HEDGING, SPOT TRADING, FORWARD COMMODITY CONTRACTS, RATE SWAPS, COMMODITY FUTURE / SWAPS, COMMODITY FUTURES AND OPTIONS AND IN DERIVATIVES OF SUCH COMMODITIES, WHETHER FOR THE PURPOSE OF TRADING, INVESTMENT, HEDGING, ARBITRAGE, OR ANY OTHER PURPOSE, WHETHER IN INDIA OR ABROAD IN RELATION TO THE ATTAINMENT OF THE MAIN OBJECTS OF THE COMPANY. 9 .7 I N ADDITION TO THE ABOVE WE ALSO NOTE THAT THE ASSESSEE HAS DECLARED INTEREST INCOME AS BUSINESS INCOME WHICH WAS ALSO ACCEPTED BY THE REVE NUE. THIS INTEREST INCOME OF 8 5 , 30 , 962 / - WAS DECLARED IN THE YEAR UNDER CONSIDERATION. 9 .8 IN VIEW OF THE ABOVE, IT SEEMS THAT THE ASSESSEE WAS CARRYING ON THE BUSINESS ACTIVITIES AND THEREFORE THE DEPRECIATION CLAIMED BY THE ASSESSEE ON THE CARS CANNOT BE DISALLOWED ON THE GROUND THAT THERE WAS NO BUSINESS ACTIVITY CARRIED OUT BY THE ASSESSEE I N THE YEAR UNDER CONSIDERATION. 9 .9 MOVING FURTHER, WE ALSO NOTE THAT THE AO DURING THE ASSESSMENT PROCEEDINGS HAS RAISED THE FOLLOWING QUESTIONS IN THE NOTICE ISSUED UNDER SECTION 142( 1 ) OF THE ACT: 5. COMPLETE DETAILS OF ADDITIONS MADE TO FIXED ASSETS INCLUDING WORK IN PROGRESS DURING THE FINANCIAL YEAR 2013 - 14, ALONG WITH THE COPIES OF BILLS/VOUCHERS EXCEEDING RS.10 LAKHS FOR SUCH ADDITIONS ALONG WITH DATE OF PUT TO USE. WHETHER LOANS HAS BEEN TAKEN/USED FOR SUCH ADDITIONS? PLEASE FURNISH THE DETAILS OF PRE - INSTALLATION EXPENSES. 6. COMPLETE DETAILS OF ALL THE DELETIONS MADE TO FIXED ASSETS, TREATMENT GIVEN IN THE BOOKS OF ACCOUNTS OF THE SAME AND WHETHER ANY CAPITAL GAIN IS LEVIABLE ON SUCH TRANSACTIONS. 7. EXPLAIN WHETHER ANY CLAIM U/S. 32(1)(IIA) HA VE BEEN MADE BY THE COMPANY IF YES, THEN COMPLETE DETAILS AND JUSTIFICATION FOR THE SAME. ITA NO.713/AHD/2019 ASSTT. YEAR 2014 - 15 12 9 .10 THE ABOVE QUER IES RAISED BY THE AO HAS BEEN DULY ANSWERED BY THE ASSESSEE DUR ING THE ASSESSMENT PROCEEDINGS V IDE LETTER DATED 24 TH OF JUNE 2016 WHICH ARE RE PRODU CE D AS UNDER: 3. ADDITION TO FIXED ASSETS (SR.NO.5) THE STATEMENT GIVING DETAILS OF ADDITION MADE TO FIXED ASSETS DURING THE YEAR WITH COPIES OF INVOICES IS AS PER ENCLOSED ANNEXURE - 3. 4. DELETION OF FIXED ASSETS (SR. NO.6) THE STATEMENT GIVING PARTICULARS OF DELETION MADE TO FIXED ASSETS DURING THE YEAR UNDER CONSIDERATION ALONG WITH WORKING OF PROFIT/LOSS INCURRED ON SUCH SALE OF FIXED ASSETS AND SAMPLE BILL COPIES IS AS PER ENCLOSED ANNEXURE - 4.AS REGARDS TO GAIN/LOSS WE SUBMIT THAT SALE PROCEE DS REALIZED FROM SALE OF FIXED ASSETS WAS REDUCED FROM BLOCK OF ASSETS AND CONSEQUENTIAL GAIN/LOSS WAS OFFERED TO TAX UNDER SECTION 50C OF THE ACT WHICH IS VERIFIABLE FROM COMPUTATION OF TOTAL INCOME ATTACHED HEREWITH VIDE ANNEXURE - 5. 5. DETAILS OF CLAIM U/S.32(1) (IIA) OF ACT (SR. NO.7) WE HAVE NOT CLAIMED ANY ADDITIONAL DEPRECIATION DURING THE YEAR AND ACCORDINGLY DETAILS CALLED FOR ARE NOT APPLICABLE. 9 .11 THUS FROM THE ABOVE, IT IS TRANSPIRED THAT THE AO DURING THE ASSESSMENT PROCEEDINGS HAVE CARRIED OUT NECESSARY VERIFICATION AFTER APPLYING HIS MIND. THEREAFTER HE HAS TAKEN A CONSCIOUS DECISION BY ACCEPTING THE INCOME DECLARED BY THE ASSESSEE IN THE REVISED RETURN OF INCOME. ONCE THE AO HAS TAKEN A VIEW AFTER NECESSARY VERIFICATION THEN THE LEARNED PR . CIT CANNOT SUBSTITUTE THE VIEW TAKEN BY THE AO BY HIS OWN VIEW ON THE GROUND OF NON - VERIFICATION. IN HOLDING SO WE DRAW SUPPORT AND GUIDANCE FROM THE ORDER OF THE COORDINATE BENCH OF THIS TRIBUNAL IN CASE OF SMT. MINAL NAYAN SHAH VS. PR. CIT IN ITA NO. 6 43/AHD/2019 REPORTED IN 111 TAXMANN.COM 516, WHERE IT WAS HELD AS UNDER: IN THE INSTANT CASE, IT IS DEMONSTRATED ON BEHALF OF THE ASSESSEE THAT NECESSARY INQUIRIES WERE MADE TOWARDS COMPUTATION OF LONG TERM CAPITAL GAIN AND CLAIM OF DEDUCTION UNDER SECTIO N 54F. THE ISSUE OF ELIGIBILITY OF CLAIM OF DEDUCTION WAS THUS PRESENT TO THE MIND OF THE ASSESSING OFFICER. RELEVANT DOCUMENTS WERE ALSO SHOWN TO HAVE BEEN FILED IN THE ASSESSMENT PROCEEDINGS. EXPRESSION 'A RESIDENTIAL HOUSE' WOULD ENCOMPASS DIFFERENT RES IDENTIAL UNITS LOCATED ON THE DIFFERENT FLOORS OF THE SAME BUILDING. ON FACTS, IT IS NOTED THAT ALL THE THREE UNITS ARE LOCATED ON THE DIFFERENT FLOORS OF THE SAME STRUCTURE AND PURCHASED BY THE ASSESSEE BY A COMMON DEED OF CONVEYANCE. IN THE FACTS AND CIR CUMSTANCES, PLURALITY OF OPINION ABOUT THE ALLOWABILITY OF DEDUCTION SURELY EXISTS EVEN IF IT IS PRESUMED FOR A MOMENT THAT VIEW ADOPTED BY THE ASSESSING OFFICER IN FAVOUR OF THE ASSESSEE IS NOT SINGULAR OR ABSOLUTE. IN THE CIRCUMSTANCES, WHERE THE LANGUAG E COUCHED IN SECTION 54F HAS BEEN INTERPRETED IN A MANNER FAVOURABLE TO THE ASSESSEE AND MULTIPLE RESIDENTIAL UNITS WERE INCLUDED WITHIN THE SPHERE OF SECTION 54F, THERE IS NO WRONG IN THE ACTION OF THE ASSESSING OFFICER IN SEEING THE ISSUE IN A WIDER SPEC TRUM. THUS, WHEN THE ISSUE OF ELIGIBILITY OF DEDUCTION UNDER SECTION 54F IS TESTED ON THE TOUCHSTONE OF PREVAILING JUDICIAL DICTA, THE ACTION OF THE ASSESSING OFFICER CANNOT BE DISCREDITED AS INCORRECT APPLICATION OF LAW OR WRONG ASSUMPTION OF FACTS. AS NOTED EARLIER, ITA NO.713/AHD/2019 ASSTT. YEAR 2014 - 15 13 THE RELEVANT FACTS CONCERNING THE PURCHASE OF SUPER STRUCTURE COMPRISING OF THREE DIFFERENT UNITS WERE DULY PLACED AND AVAILABLE ON RECORD. THE ASSESSING OFFICE R WAS NOT FOUND TO BE TOTALLY OBLIVIOUS OF THE RELEVANT FACTS. THUS, THERE IS AN APPARENT PLAUSIBILITY ABOUT THE ASSENT OF MIND OF ASSESSING OFFICER ON ADMISSIBILITY OF CLAIM HAVING REGARD TO THE LAW EXISTING AT THE RELEVANT TIME. IN THESE CIRCUMSTANCES, T HE ASSESSING OFFICER CAN BE SAFELY PRESUMED TO HAVE ADOPTED A VIEW WHICH WAS PLAUSIBLE THOUGH NOT NECESSARILY AGREEABLE TO THE REVISIONAL COMMISSIONER. [PARA 9.2] 9 .12 IN VIEW OF THE ABOVE AND AFTER CONSIDERING THE FACTS IN TOTALITY WE HOLD THAT THERE IS NO INFIRMITY IN THE ORDER OF THE AO WHICH REQUIRES TO BE REVISED BY THE LEARNED PR. CIT UNDER SECTION 263 OF THE ACT. ACCORDINGLY THE ORDER OF THE LEARNED PR. CIT IS BASED ON WRONG ASSUMPTION OF FACTS. CONSEQUENTLY WE QUASH THE SAME. HENCE THE GROUND OF AP PEAL OF THE ASSESSEE IS ALLOWED. 10 . IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. O RDER PRONOUNCED IN THE COURT ON 22 /03 / 2021 AT AHMEDABAD. SD/ - SD/ - (MADHUMITA ROY ) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (TRUE COPY) A HMEDABAD; DATED 22 / 03 /2021 M ANISH