M/S TRIVENI RAYONS PRIVATE LIMITED,CITY LIGHT, SURAT V. DY. CIT, SURAT-2(1)(1), SURAT, MAJURAGATE, SURAT

ITA 993/SRT/2025

AI Insights

This case involves an appeal by M/s. Triveni Rayons Pvt. Ltd. against the order of the National Faceless Appeal Centre (NFAC), Delhi, concerning the assessment year 2015-16. The primary issues in the appeal included the violation of CBDT Instruction No. 20/2015 on limited scrutiny, disallowance of deductions under Section 54G, disallowance of depreciation under Section 32, and disallowance of short-term capital loss and loss on the sale of fixed assets. The Tribunal examined the submissions and evidence presented by both the assessee and the revenue, including the details of transactions and the application of relevant sections of the Income Tax Act, 1961.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 847407 (ITAT-SURAT)
• Duration Of Justice: 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2026
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Surat
• Assessment Year: 2015-2016
• Appeal Filed On: 23-09-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AJAY UKE
• Assessee Lawyers: RASESH SHAH
• Keywords: Depreciation
• Section: 32

Judgement Text

"THE INCOME TAX APPELLATE TRIBUNAL SURAT “DB” BENCH, SURAT Before Dr. BRR Kumar, Hon’ble Vice President And Ms. Suchitra Kamble, Judicial Member M/s. Triveni Rayons Pvt. Ltd. 231, City Light Shopping Centre, Surat, Gujarat-395007 PAN: AABCT1010F (Appellant) Vs The Dy. CIT Surat-2(1)(1), Surat (Respondent) Assessee by: Shri Rasesh Shah, A.R. Revenue by: Shri Shri Ajay Uke, Sr. D.R. Date of hearing : 23-01-2026 Date of pronouncement : 27-03-2026 आदेश/ORDER Per Suchitra Kamble, Judicial Member: This is an appeal filed against the order dated 25-07- 2025 passed by National Faceless Appeal Centre(NFAC), Delhi for assessment year 2015-16. 2. The grounds of appeal are as under:- “1. On the facts and Circumstances of the case and in law, the Ld. CIT(A) has erred in not considering the fact that Assessment should be vitiated for violation of CBDT Instruction No. 20/2015 on Limited Scrutiny. 2. On the facts and Circumstances of the case and in law, the ld. CITIA) has erred in disallowing the deduction amounting to ITA No. 993/Srt/2025 Assessment Year 2015-16 Printed from counselvise.com I.T.A No.993/Srt/2025 M/s. Triveni Rayons Pvt. Ltd., A.Y.2015-16 2 Rs. 1,57,88,101/- under Section 54G of the Income Tax Act, 1961. 3. On the facts and Circumstances of the case and in law, the ld. CIT(A) has erred in disallowing the depreciation under Section 32 of the Income Tax Act, 1961. 4. On the facts and Circumstances of the case and in law, the Ld. CIT(A) has erred in disallowing Short term capital loss under Income Tax Act, 1961. 5. On the facts and Circumstances of the case and in law, the ld. CIT(A) has erred in disallowing the loss on sale of Fixed Assets debited to profit and loss account under Income Tax Act, 1961. 6. That the Appellant craves, leave, to add, alter or modify any of the ground(s) of appeal on or before the date of hearing.” 3. The assessee filed return of income for assessment year 2015-16 showing total loss (-) 31,10,0018/- on 25-09-2015. The case of the assessee was selected for scrutiny and notice u/s. 143(2) of the Act was issued on 04-04-2016. In response to the statutory notices, the assessee filed details before the Assessing Officer. The assessee company was engaged in the business of manufacturing of texturised yarn, grey fabrics and trading of grey fabrics. The Assessing Officer observed that the assessee had sold a property for a total consideration of Rs. 5 crores comprising of value of the land being Rs. 2 crore and constructed building being at the value of 3 crores to USV Ltd (company). After claiming indexed cost of Rs. 42,11,899/- which resulted in capital gain of Rs. 1,57,88,101/- which the assessee company claimed as exempt in the computation of income filed along with the return of income. In view of the investment made by the assessee company in purchase of a plot along with the building in the textile park of Fairdeal Textile Park Pvt. Ltd. for the amount of Rs. 1,74,23,700/- and by subscribing to shares Printed from counselvise.com I.T.A No.993/Srt/2025 M/s. Triveni Rayons Pvt. Ltd., A.Y.2015-16 3 Fairdeal Textile Park Pvt. Ltd for an amount of Rs. 28,17,000/-. The Assessing Officer noticed that the assessee company amount reflected the long term capital on sale of land and short term capital on sale of building as nil. The assessee company has claimed exemption in respect of the sale of land. When the assessee company was called for the details such as, copy of sale deed and original purchase deed of the land which is sold during the year, copy of the purchase deed of the land purchased during the year and working of capital gain, complete details of deduction claimed u/s. 54, the same was not given by the assessee. The assessee company has merely enclosed the copy of computation of income reflecting its claim of consolidating exemption u/s. 54G and 54F. After going through the assessee’s details, the Assessing Officer made addition of Rs. 1,57,88,101/- thereby disallowing the long term capital gain. The Assessing Officer also disallowed Rs. 3,36,610/- on the excess claim of depreciation on plant and machinery. The Assessing Officer made addition of Rs. 73,41,368/- in respect of short term capital gain on account of sale of building. The Assessing Officer further made addition of Rs. 38,22,610/- in respect of loss on sale of fixed assets debited to profit and loss account. 4. The assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. The ld. A.R. submitted that the assessment is in violation of CBDT Instruction 20/2015 on limited scrutiny. As regards ground no. 2 the ld. A.R. submitted that the CIT(A) erred in disallowing the deduction amounting to Rs. 1,57,88,101/- u/s. 54G of the Income Tax Act. As relates to ground no. 3, the ld. A.R. submitted that the disallowing the depreciation u/s. 32 of Printed from counselvise.com I.T.A No.993/Srt/2025 M/s. Triveni Rayons Pvt. Ltd., A.Y.2015-16 4 the Act was also unjustified. The assessee has given all the details related to the claiming of the same depreciation. Ground No. 4 is related to disallowance of short term capital loss under Income Tax Act for which the ld. A.R. submitted that the assessee has given the details of ledger account of plant and machinery along with audited financial statements which categorically mentions that the assessee’s claim of set off of the short term capital loss on the sale of machinery against the short term capital gain on sale of building was justifiable as in the process has already reduced written down value of machinery by the amount of capital gain. As relates to ground no. 5, the ld. A.R. submitted that the disallowance of loss on sale of fixed assets debited to profit and loss account under Income Tax Act, 1961 was also not justified as the Assessing Officer only looked into debit side of the profit and loss account and has overlooked the income side of the profit and loss account of the assessee. In fact, the assessee had debited not only capital loss of Rs. 38,22,610/- but also has shown Rs. 4,59,30,768/- as capital profit on the income side of the profit and loss account. 6. The ld. D.R. relied upon the assessment order and the order of the CIT(A). 7. We have heard both the parties and perused all the relevant material available on record. As relates to ground no. 1 that the assessment should be shifted for violation of CBDT Instruction No. 20/2015 on limited scrutiny appears to be not justifiable as the assessment itself categorically mentions that the assessment was for scrutiny. Thus, it is a complete scrutiny. Thus, ground no. 1 is dismissed. As relates to ground no. 2, the contention of the ld. A.R. that the assessee claimed the Printed from counselvise.com I.T.A No.993/Srt/2025 M/s. Triveni Rayons Pvt. Ltd., A.Y.2015-16 5 deduction u/s. 54G by shifting its industrial area undertaking from the urban areas i.e. from industrial Daman to rural areas at village in Gujarat. But from the perusal of the records, it can be seen that the assessee has not produced the copy of sale deed and the original purchase deed of the land which is sold during assessment year as well as no evidence of acquisition or installation of inward plant and machinery of new plant and machinery was furnished either during or at appellate proceedings and merely purchase of land/building without demonstrating proof of actual shifting and continuation of the industrial undertaking does not satisfy the conditions of section 54G of the Act. Thus, the disallowance by the Assessing Officer and the confirmation by the CIT(A) has rightly been done. There is no need to interfere with the findings of the CIT(A). Ground no. 2 is dismissed. As relates to ground no. 3, the contention of the ld. A.R. that the Assessing Officer did not verify the claim of depreciation in the books of account was duly disallowed by the assessee itself in his computation of income which was before the Assessing Officer. The depreciation claimed by the assessee had been arrived at after conducting the cost of machinery sold and reducing the balance written down value further by short term capital gain of Rs. 45,90,080/- arose on the sale of the building being of same class of depreciable assets. The Assessing Officer has categorically mentioned that the assessee’ claim depreciation without reducing the short term capital loss on sale of machinery from the opening written down value of the block. Thus, the excess depreciation disallowed by the Assessing Officer is justifiable and there is no need to interfere with the finding of the CIT(A). Ground nos. 3 is dismissed. As regards to ground no. 4 related to disallowance of short term capital gain on account of sale of building the assessee had claimed Rs. Printed from counselvise.com I.T.A No.993/Srt/2025 M/s. Triveni Rayons Pvt. Ltd., A.Y.2015-16 6 25,10,259/- as transfer expenses while computing the capital gain but no supporting documentary evidences related to the said expenses was given by the assessee before the Assessing Officer as well as before the CIT(A) and not even before us. Thus, the disallowance was rightly made by the Assessing Officer. There is no need to interfere with the finding of the CIT(A). Thus, Ground nos. 4 is dismissed. As relates to ground no. 5 related to disallowance of loss on sale of fixed assets debited to profit and loss account under Income Tax Act. The CIT(A) has categorically mentioned that the loss was reflected in the books may be valid for accounting purpose that means the CIT(A) has taken into account the loss incurred by the assessee. Therefore, the claim of the assessee with the capital loss was already excluded while computing income is supported by the working and the re-conciliation. Thus, ground no. 5 is allowed. 8. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 27-03-2026 Sd/- Sd/- (Dr. BRR Kumar) (Suchitra Kamble) Vice President Judicial Member Ahmedabad : Dated 27/03/2026 आदेश क\u0006 \u0007\bत ल प अ\u000fे षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Surat 6. Guard file. By order, Assistant Registrar, Income Tax Appellate Tribunal, Surat Printed from counselvise.com "