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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: SHRI RAJPAL YADAV & SHRI AMARJIT SINGH
PER AMARJIT SINGH - AM:
The appeal filed by the assessee for A.Y. 2011-11, arise from order of the CIT(A)-3, Ahmedabad dated 15.12.2016, in proceedings penalty under section 271(1)(c) of the Income Tax Act, 1961; in short “the Act”.
The solitary ground of appeal of the assessee is against the order of Ld. CIT(A) in confirming penalty u/s. 271(1)(c) of the Act to the amount of Rs. 3,89,665/- levied by the AO. The fact in brief is that assessee has filed return of income declaring total income of Rs. 2,36,790/- on 30.09.2010. The return of income filed by the assessee was subject to scrutiny assessment and order u/s. 143(3) of the Act was passed on 28.12.2012.
During the course of assessment the AO noticed that assessee has sold an industrial plot of land along with factory shed for Rs. 42,00,000/- during the year under consideration. The W.D.V. of the factory shed was adjusted with the sale consideration and cost of Rs. 33,10,000/- of another plot of land and factory shed acquired during the year under consideration. The cost of the plot sold was declared at Rs. 16,00,000/-. After verification of the aforesaid fact the AO has observed that assessee has not disclosed any capital gain on sale of industrial plot which was a capital asset. Therefore, the AO has bifurcated the sale consideration of Rs. 42,00,000/- between the value of land and the factory shed. After taking the value of factory shed for F.Y. 2006-07 the W.D.V. of the same for F.Y. 2009-10 was determined at Rs. 5,83,200/-, therefore, sale consideration of Rs. 5,83,200/- was attributed towards the factory shed and the remaining sale consideration of Rs. 36,16,800/- was attributed towards sale of land. After taking cost of land of Rs. 8,00,000/- as on 21.12.2006 with indexation the long term capital gain on sale of land was determined at Rs. 26,42,620/-. The aforesaid long term capital gain from the sale of land of Rs. 26,42,620/- was added to the total income of the assessee and penalty proceeding u/s. 271(1)(c) of the Act were initiated for concealing particular of income.
The assessee has filed appeal before the Ld. CIT(A) who has restricted the addition of long term capital gain to the amount of Rs. 19,48,362/- on the ground that the assessee has not claimed any depreciation on the factory shed, therefore, the cost for the purpose of calculating the capital gain shall be the cost of acquisition for which the assessee has purchased the asset in the year 2006. Thereafter, the AO has issued show-cause notice dated 02.01.2015 to the assessee to explain as to why the penalty u/s. 271(1)(c) of the Act should not be levied for not disclosing aforesaid long term capital gains. The assessee has replied that there was no concealment of income, therefore, penalty should not be levied u/s. 271(1)(c) of the Act. The AO was of the view that long term capital gain on the sale of factory land was ascertained during the assessment proceeding, therefore, it can be safely presumed that assessee has indeed 2 concealed the particulars of her income for the year under consideration. Accordingly, he has levied minimum penalty of Rs. 3,89,665/- on concealment of particulars of income in respect of long term capital gain on sale of factory land.
Aggrieved assessee has filed appeal before the Ld. CIT(A). Ld. CIT(A) has dismissed the appeal of the assessee.
5. During the course of appellate proceeding before us we have heard the Ld. DR and perused the material on record. During the course of penalty proceeding the assessee stated that it is not justified to bifurcate the cost of the factory shed and the cost of land in two parties as the sale consideration pertained to the composite unit including both factory shed and land and no separate or individual price was determined for factory shed and land. The AO has not aggreed with the submission of the assessee and he was of the view that sale consideration attributable to the plot of land should be subject to capital gain tax. However, the AO was of the view that the factory shed depreciate @ 10% per year, therefore, the sale consideration attributable to the value of factory shed was determined at Rs. 5,83,200/- out of the total sale consideration of Rs. 42,00,000/- whereas the balance of Rs. 36,16,800/- was determined as attributable to the value of land and accordingly the long term capital gain on sale of land was determined at Rs. 26,42,620/-. It is demonstrated from the above facts that assessee has purchased composite unit as per the purchase deed of the factory shed bearing plot No. 51/03, Phase-1 at GIDC, Narol, Ahmedabad and the conveyance made by the vendor was in respect of lease hold right etc. The assessee had purchased the land and factory building for Rs. 16,00,000/- in the year 2006. The AO has considered the cost in the ratio of 50:50. The AO has held that the building was a depreciable asset and accordingly the depreciate value of the building was deducted from the sale consideration of Rs. 42,00,000/- and balance consideration was considered toward land sale and capital gain was worked out after allowing indexation. It is clear that assessee has sold the factory shed as a composite and single unit and no separate sale consideration was received toward land and factory shed.
In the light of the above facts and circumstances we are of the view that assessee has disclosed all the material fact and the assessee has not claimed any depreciation on the land which was included in the composite unit of the factory shed, therefore, the decision of Ld. CIT(A) in sustaining the penalty levied by the AO is not justified. Accordingly, the penalty levied in the assessee’s case is deleted.
In the result, the appeal of the assessee is allowed.
This Order pronounced in Open Court on 28/06/2019
Sd/- Sd/- (RAJPAL YADAV) (AMARJIT SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad: Dated 28/06/2019 TANMAY TRUE COPY आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. राज�व / Revenue 2. आवेदक / Assessee 3. संबं�धत आयकर आयु�त / Concerned CIT 4.आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध,आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाइल / Guard file. By order/आदेश से,
उप/सहायक पंजीकार आयकर अपील�य अ�धकरण,अहमदाबाद । 1.Date of dictation on 18.06.2019 2.Date on which the typed draft is placed before the Dictating Member 19.06.2019 3.Date on which the approved draft comes to the Sr. P.S./P.S. 28.06.2019 4.Date on which the fair order is placed before the Dictating Member for Pronouncement 28.06.2019 5.Date on which the fair order comes back to the Sr. P.S./P.S 28 .06.2019 6.Date on which the file goes to the Bench Clerk 28 .06.2019 7.Date on which the file goes to the Head Clerk…………. 8.The date on which the file goes to the Asstt. Registrar for signature on the order…………………… 9.Date of Despatch of the Order………