COMPUTER MEDIA DEALERS ASSOCIATION,MUMBAI vs. CIT (EXEMPTIONS), MUMBAI
Income Tax Appellate Tribunal, MUMBAI BENCH “C” MUMBAI
Before: SHRI OM PRAKASH KANT () & SHRI RAJ KUMAR CHAUHAN () Assessment Year: 2017-18
PER OM PRAKASH KANT, AM
This appeal has been preferred by the assessee against revision order dated 31.03.2025 passed by the Ld. Commissioner of Income-tax (Exemption), Mumbai [in short ‘the Ld. CIT(E)’] for assessment year 2017-18, wherein he has set aside the order passed by the Ld. Assessing Officer dated 02.03.2023. 2. The grounds raised by the assessee are reproduced as under:
The ap order d Tax (E "The C Act, 1 alterna 2. On fac the ord apprec only g earlier the Inc order cannot same i 3. 3: The while p directio detaile the sa erroneo the rev 4. 4: The ('the as of Ass Act, 1 deprec 5. 5: The asset c where headin been fo deprec Income 6. 6: On f he was respec Assess juri ic of an Transf passed under and vo Computer Me ITA ppellant prefers the following Appeal ag dated 31/03/2025 of the Commissioner Exemptions), Mumbai (hereinafter referr CIT") passed under section 263 of the In 1961 ("The Act"). Each of the groun ative and without prejudice to other. cts of this case, the CIT was not justified i der under S. 263 of the Act. The CIT ciate that In this case, the Assessment given effect to the clear direction pass order dated 19/03/2022 passed under come tax Act, 1961. He failed to apprecia giving effect to the order passed unde t be subjected to action under S. 263 aga issue. CIT failed to appreciate that the Assess passing the assessment order giving eff ons passed by the CIT (Exemptions) h ed inquiries in respect of the issue and aid Assessment Order cannot be deem ous in so far as it is prejudicial to the i venue. e CIT failed to appreciate that the office sset') in question has not at all entered i ets' as defined under S. 2(11) of the In 1961 and the appellant has never ciation under S. 32(1) of the Income Tax A CIT failed to appreciate that any gain o could be subject matter of S. 50 only an assessee is declaring its Income u ng 'Profits & Gains of Business' and the forming part of 'Block of Assets' in respec ciation has been allowed under section 32 e Tax Act, 1961. facts and in law, the CIT failed to appre s not empowered to pass an order under t of an Assessment order passed sment Unit. He failed to appreciate ction under S. 263 could be invoked only order passed by the Assessing Offic fer Pricing Officer and not in respect of d by the Assessment Unit. The order s S. 263 is thus bad in law oid ab initio. edia Dealers Association 2 A No. 3033/MUM/2025 gainst the of Income red to as ncome Tax nds is in in passing T failed to t Unit has sed in his r S. 263 of ate that an er S. 263 ain on the sment Unit ffect to the has made d therefore med to be interest of e premises into 'Block ncome Tax r claimed ct, 1961. on sale of in a case under the asset has ct of which 2(1) of the eciate that r S. 263 in by the that the in respect cer or the any order so passed w, illegal
Briefly stated, association of compu wherein claimed exem 1961 (in short ‘the A declared Nil total inc assessee sold offi Rs.26,29,833/- and i was set apart by th invoking section 11( selected for scrutiny passed u/s 143(3) of the claim of the asse by treating the asse total income at Rs.1 the Ld. First Appellat opting for settlemen Subsequently, the Ld and issued notice to sale of the office pre funds invoking secti assessee as assessee charitable organisati received on office pre Officer omitted to do Computer Me ITA facts of the case are that th uter media dealers, filed its re mption of income u/s 11 of the Act’) treating itself as charitable come. During the year under co fice premises for sale co in the return of income filed, sai he assessee for further applica (2) of the Act. The case of th y and in the scrutiny assessm f the Act, wherein the Assessin ssee for exemption of income u essee as a ‘mutual concern’ an ,44,922/-. The assessee carrie te Authority but later on withdr nt under Vivad se Vishwas d. CIT(E) invoked juri iction u/ o the assessee as consideration emises and set apart for furthe ion 11(2) of the Act was not a e was held to be a “mutual con ion by the AO, therefore, th emises was subject to tax whic o so. The relevant part of the fin edia Dealers Association 3 A No. 3033/MUM/2025 he assessee, an eturn of income Income-tax Act, e institution and nsideration, the onsideration of id consideration ation of income he assessee was ment order was g Officer denied /s 11 of the Act nd assessed the d the matter to rew the same by Scheme, 2020. /s 263 of the Act n received from er application of available to the ncern” and not a e consideration h the Assessing nding of the Ld.
CIT(E) vide his orde order u/s 263) is rep
“10. Accordin vide provision set aside the the AO to direction:
(a) As the as entity, it may the rules of Section 11 an in the AY.201
(b) The immu assessee wi amounting to mutual assoc mutual sourc indexation fol
Act may be gr
(c) The scope limited to abo beyond the assessment o
(d) The AO is grant the asse
3.1 Consequent to t issued notice for consideration receive
Assessing Officer in mentioned that va
15.02.2023 were pro after considering th transaction of the sa
Computer Me
ITA er u/s 263 of the Act dated 1
roduced as under:
ngly, by virtue of powers vested in the un ns of Section 263 of the Act, I deem it appr assessment order dated 13/11/2019 to reframe the assessment order with ssessee has been considered to be non be clearly mentioned in the assessment accumulation, application as well as b nd 12 of the Act are not available for the 7-18
unity under VSVS 2020 is not availab ith regard to the income from the Rs.26,29,833/-. Accordingly, the assesse ciation, this income from sale of property ces may be brought to tax accordingly. N llowing the computational rules in Chapte ranted as per law.
of assessment proceeding pursuant to th ove issues only and the AO is directed no scope of this issue. No other finding order dated 13/11/2019 may be disturbe directed to follow principles of natural ju essee adequate opportunity of being he the direction of the PCIT, the A considering the taxability ed on the sale of the office n para 2 of the impugned as arious opportunities from ovided to the assessee. The As he submission of the assess ale of the office premises as subj edia Dealers Association
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9.03.2022 (first ndersigned ropriate to the file of following charitable order that benefits of e assessee ble to the property ee being a from non-
Necessary er V of the his order is ot to travel gs in the ed.
ustice and eard.”
Assessing Officer in respect of premises. The sessment order
19.08.2022
to ssessing Officer see treated the jected to capital gain and in view o
Assessing Officer c
Rs.2,72,683/-, which the Assessing Officer the order of the Ld. C
(First order u/s 263).
3.2 Subsequently, a record and after exa transaction of the of gain u/s 50 of the Ac out any inquiry on th order passed while
Assessing Officer, is interest of the Reven with the direction consideration his dire the depreciable asse the section 50 and ac
4. Aggrieved with the assessee is in a grounds as reproduce
4.1 We find that b juri iction acquired
Computer Me
ITA of holding period of the office computed the long term ca h was accepted by the assesse r assessed the said income while
CIT(E) passed u/s 263 of the Act
.
again the Ld. CIT(E) called for amination he was of the view t ffice premises was liable for sh ct and since the Assessing Offic his issue, therefore, the impugn giving effect to the order of ld s erroneous in so far as pre nue. Accordingly, he set aside to pass a speaking order af ection for examining the taxabil t amounting to Rs.26,29,833/- ccordingly charge short term cap the above finding of the Ld. C appeal before the Tribunal by ed above.
efore the Ld. CIT(E), the asse d by the Ld. CIT(E) and also edia Dealers Association
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e premises, the apital gain at ee. Accordingly, e giving effect to t on 19.03.2022
the assessment that sale of the ort term capital cer did not carry ned assessment d CIT(E) by the ejudicial to the the said order fter taking into lity of the sale of - in the light of pital gain.
CIT(E) examining way of raising ssee challenged challenged the finding of the Ld. CIT the assessee also s neither part of the bl by the assessee on s section 50 were not reproduced as under [Special provision for c assets.
51 50. Notw section 2, w block of ass allowed und
1922 (11 of subject to th
(1) whe as a valu of t bloc agg
(i)
(ii)
(iii) such from (2) whe reas the ass at t actu acq
Computer Me
ITA
T(E) on the law. Before us, the submitted that the office prem lock of asset nor any depreciati said office premises, therefore, applicable. For ready referenc
:
computation of capital gains in ca withstanding anything contained in cl here the capital asset is an asset form sets 52 in respect of which depreciat der this Act or under the Indian In 1922), the provisions of sections 48 an e following modifications :- ere the full value of the consideration a result of the transfer of the asset to ue of such consideration received or the transfer of any other capital ass ck of assets during the previous gregate of the following amounts, name expenditure incurred wholly a connection with such transfer or tra the written down value of the blo beginning of the previous year; an the actual cost of any asset fallin assets acquired during the previo h excess shall be deemed to be the c m the transfer of short-term capital ass ere any block of assets ceases to ex son that all the assets in that block ar previous year, the cost of acquisit ets shall be the written down value of the beginning of the previous year, a ual cost of any asset falling within t uired by the assessee during the pre edia Dealers Association
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Ld. Counsel for mises sold was ion was claimed the provision of e, section 50 is ase of depreciable lause (42A) of ming part of a tion has been ncome-tax Act, nd 49 shall be received or accruing ogether with the full accruing as a result et falling within the year, exceeds the ely :- and exclusively in ansfers; ock of assets at the nd ng within the block of us year, capital gains arising ets; xist as such, for the re transferred during tion of the block of of the block of assets as increased by the that block of assets, evious year and the inco tran the 53 [Provided that in forms part of a blo the 1st day of A obtained by the a that block of ass determined in such 55 [Explanation.-Fo amount of goodwi asset in accordanc clause (6) of section 4.2 In view of plain evident that the ass depreciable asset and In such circumstanc value, expenses incu purchase of new ass gain.
5. Before us, learn has contended that treated as a “mutua engaged in any busi scope of Section 28(i the income and exp activities, and any su view of the principle event any income acc
Computer Me
ITA ome received or accruing as a result nsfers shall be deemed to be the capita transfer of short-term capital assets:]
n a case where goodwill of a business ock of asset for the assessment year
April, 2020 and depreciation there assessee under the Act, the written d set and short-term capital gain, if a h manner as may be prescribed 54.]
or the purposes of this section, red ill of a business or profession, from ce with sub-item (B) of item (ii) of su n 43 shall be deemed to be transfer.]
n reading of the provisions of set under consideration shoul d, secondly, it should be part o ces, the excess if any over th urred for sale of asset and amo set, would be deemed to be sho ned counsel appearing on behalf although the status of the ass al concern” by the Assessing O iness activity and, therefore, fa iii) of the Act. It has been subm penditure of the assessee per urplus arising there from is not of mutuality. It is further subm crues outside the framework of edia Dealers Association
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t of such transfer or al gains arising from s or profession r beginning on eon has been down value of any, shall be duction of the m the block of ub-clause (c) of section 50 it is ld be, firstly, a f block of asset.
he written down ount invested in ort term capital f of the assessee sessee has been Officer, it is not falls outside the mitted that both rtain to mutual liable to tax, in mitted that in the mutuality, such income, if at all, ma
Other Sources" and Business or Professio
5.1 Learned counse claimed depreciation therefore, the provis capital gains on the application. Consequ obligation to inquire observation of the CI such inquiry—is bot the present case.
6. We have heard th counsel for the parti record. Upon careful advanced on behalf impugned revisionary has proceeded on th depreciation on the without verifying t however, as discern
Officer neither treate
Computer Me
ITA ay be assessed under the head d not under the head "Profits on."
el also submitted that the asse n on the office premises in ions of Section 50 of the Act, e sale of depreciable assets, uently, the Assessing Officer e into the applicability of Secti
IT(E)—that the Assessing Office th unwarranted and misplaced he rival submissions advanced es and have perused the mater consideration, we find merit in of the assessee. The learned y order passed under Section he presumption that the assess office premises in earlier ass he relevant records. The fa nible from the record, is that ed the income of the assessee edia Dealers Association
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d "Income from s and Gains of essee has never question, and which apply to would have no was under no ion 50, and the r failed to make d in the facts of by the learned rial available on the contentions d CIT(E), in the 263 of the Act, see had claimed sessment years, actual position, t the Assessing as arising from business activity nor in the past.
6.1 It is an undispu mutual concern, and fold of mutuality is from sources outside of any finding to the being no claim of de
Section 50 of the Ac was no occasion for respect of the said pr
6.2 In this view o assessment order consequently, the inv
263 by the learned C is not sustainable on 6.3 Accordingly, the is set aside, and th
Officer is restored. G therefore, allowed.
6.4 In light of the a Grounds No. 1, 2, an Computer Me
ITA r allowed any depreciation on th uted position that the assessee d that the surplus, if any, gener not taxable, except to the exte e the scope of mutual activities.
e contrary by the Assessing Of epreciation by the assessee, th t could not have been invoked.
the Assessing Officer to initiat rovision.
of the matter, we find no in passed by the Assessing vocation of revisional juri ictio
CIT(E), predicated upon Explan n the facts of the present case.
e impugned order passed by the he assessment order passed by rounds No. 3 and 5 raised by th above conclusion, the remainin nd 6, which pertain to the juri edia Dealers Association
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he said premises e functions as a rated within the ent it is earned
. In the absence fficer, and there he provisions of . As such, there te an inquiry in nfirmity in the Officer, and n under Section nation 2 thereto, e learned CIT(E) y the Assessing he assessee are, ng grounds—i.e., dictional validity of the revisionary consequence of an ea warrant adjudication
6. In the result, th
Order pronoun (RAJ KUMAR C
JUDICIAL M
Mumbai;
Dated: 31/07/2025
Rahul Sharma, Sr. P.S.
Copy of the Order forward
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.
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ITA proceedings initiated under S arlier order—are rendered acade n at this stage.
he appeal of the assessee is allow ced in the open Court on 31/0
/-
S
CHAUHAN)
(OM PRAK
MEMBER
ACCOUNTA ded to :
BY ORDER
(Assistant Re
ITAT, Mu edia Dealers Association
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Section 263 in emic and do not wed.
07/2025. KASH KANT)
ANT MEMBER
R, gistrar) umbai