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Facts
The assessee filed its return declaring Nil income. Subsequently, a revised return was filed. The assessee transferred leasehold rights in Surat SEZ. The original return declared a long-term capital loss. The revised return also showed a capital loss, but with a different cost of acquisition. During assessment, the assessee admitted understatement of income and recomputed capital gain.
Held
The Tribunal observed that the CIT(A) had not adjudicated on the admissibility or merits of additional evidence filed by the assessee. The Assessing Officer had drawn adverse inferences without independent verification. Therefore, the matter was restored to the Assessing Officer for fresh adjudication.
Key Issues
Whether the CIT(A) erred in upholding the capital gain computation and other decisions of the Assessing Officer without considering additional evidence, and whether the matter should be remanded for fresh adjudication.
Sections Cited
143(3), 144B, 250, 270A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH MUMBAI
आदेश / ORDER
PER MAKARAND VASANT MAHADEOKAR, AM:
This appeal is filed by the assessee against the order passed by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre(NFAC), Delhi [hereinafter referred to as “CIT(A)”] under section 250 of the Income-tax Act, 1961[hereinafter referred to as “the Act”], dated 26.09.2025, for the Assessment Repro India Limited Year 2022–23, arising out of the assessment order passed by the Assessing Officer under section 143(3) read with section 144B of the Act, dated 27.03.2024. Facts of the Case 2. For the Assessment Year 2022–23, the assessee filed its original return of income on 30.09.2022, declaring total income at Nil. Subsequently, the assessee filed a revised return of income on 30.12.2022.The case was selected for scrutiny under the Computer Aided Scrutiny Selection (CASS) on the basis of various risk parameters, inter alia, relating to addition of assets with high rate of depreciation, high liabilities as compared to low income, claim of large refund, and significant variation in stock figures.
During the year under consideration, the assessee transferred assets situated at Surat Special Economic Zone, namely Plot Nos. 268, 269, 270 and 271. According to the records, the assessee was holding leasehold rights in the said plots, which were originally obtained on sub-lease basis from Diamond and Gems Development Corporation Limited (DGDC), Surat. For transfer of the facility, the assessee entered into a Memorandum of Understanding with M/s Qontrac Prints Pvt. Ltd. for transfer of the entire facility, comprising leasehold land rights, factory building and other assets.
In the original return of income filed on 30.09.2022, the assessee disclosed the transaction under the head “Long Term Capital Gain on sale of land or building” and declared aggregate Repro India Limited sale consideration of Rs. 27,77,52,161/-, against indexed cost of acquisition of Rs. 46,66,14,214/-, resulting in a long-term capital loss of Rs. 18,88,62,053/-.
In the revised return of income filed on 30.12.2022, the assessee reclassified the transaction under “Capital Gain on assets not covered under clauses B1 to B8 of Schedule CG” and declared indexed cost of acquisition at Rs. 49,73,72,283/-, sale consideration at Rs. 27,77,52,161/-, and long-term capital loss of Rs. 21,96,20,122/-.
During the course of assessment proceedings, the Assessing Officer examined the claim of long-term capital loss on transfer of leasehold rights. The assessee was specifically required to furnish complete details and documentary evidence in support of the capital loss claimed.
In response, the assessee submitted that while filing the revised return of income, the cost of acquisition of leasehold rights had been erroneously taken on the basis of Ind AS 116 valuation by adopting fair value as cost of acquisition. The assessee furnished a rectified computation of income and admitted that excess depreciation of Rs. 1,90,24,156/- had been claimed earlier. The assessee further stated that the correct long- term capital gain on sale of leasehold rights was Rs. 4,57,36,573/-, as against the capital loss declared in the revised return, thereby admitting understatement of income.
Repro India Limited 8. The Assessing Officer, however, noted that in the said reply, the assessee had shown sale consideration of leasehold rights at Rs. 11,76,46,508/-, whereas in both the original return as well as the revised return of income, the sale consideration was consistently disclosed at Rs. 27,77,52,161/-. The assessee was required to justify the reduction in sale consideration and to furnish documentary evidence, including agreements relating to sale of assets.
According to the Assessing Officer, the assessee relied upon a self-generated invoice and a confirmation from the buyer stating that aggregate consideration of Rs. 39 crores was paid for the entire facility. The Assessing Officer observed that the invoice did not bear acknowledgment of the buyer, lacked credible bifurcation of consideration, and was not supported by registered conveyance or legally enforceable documents evidencing allocation of consideration. It was further observed that the assessee sought to reallocate consideration from land to depreciable assets during assessment proceedings, despite the fixed asset schedule forming part of audited accounts and Form 3CD.
After considering the submissions and material on record, the Assessing Officer rejected the assessee’s claim of reduced sale consideration of Rs. 11,76,46,508/- and adopted sale consideration of Rs. 27,77,52,161/-, as disclosed in the original and revised returns. The indexed cost of acquisition of leasehold Repro India Limited rights was taken at Rs. 7,19,09,935/-, resulting in long-term capital gain of Rs. 20,58,42,226/-.
Accordingly, the long-term capital loss of Rs. 21,96,20,122/- declared in the revised return was reversed, and an effective addition of Rs. 42,54,62,348/- was worked out. Penalty proceedings under section 270A of the Act were initiated for alleged under-reporting of income. The assessment was completed under section 143(3) read with section 144B of the Act, determining total loss at Rs. 40,37,373/- as against loss of Rs. 42,94,99,721/- declared by the assessee.
Aggrieved by the assessment order the assessee filed an appeal before the CIT(A). Before the CIT(A), the assessee challenged, the adoption of sale consideration of Rs. 27,77,52,161/- for computation of capital gains, the rejection of bifurcation of composite consideration, the computation of long- term capital gain at Rs. 20,58,42,226/-, the consequential denial of set-off and carry forward of losses, and the initiation of penalty proceedings.
The assessee reiterated that only Rs. 11,76,46,508/- out of the total consideration of Rs. 39 crores pertained to transfer of leasehold land rights, and the balance consideration related to building and other depreciable assets. It was contended that the higher figure disclosed in the revised return was due to inadvertent error and that the revised computation filed during assessment proceedings reflected the correct position.
Repro India Limited 14. The CIT(A), after considering the submissions and material on record, upheld the findings of the Assessing Officer. The CIT(A) confirmed the adoption of sale consideration of Rs. 27,77,52,161/- for computation of capital gains on transfer of leasehold rights and sustained the long-term capital gain computed by the Assessing Officer. The CIT(A) also upheld the consequential actions of the Assessing Officer, including denial of set-off and carry forward of losses and did not interfere with the initiation of penalty proceedings.
Aggrieved by the order of the CIT(A), the assessee is in appeal before us raising following grounds of appeal:
1. The CIT(A) has erred in upholding the determination of capital gain on sale of leasehold land at Rs. 20,58,42,226/- made by the Assessing Officer as against the correct capital gain of Rs. 4,57,36,573/- and thereby enhancing the capital gain by Rs. 16,01,05,653/-. The CIT(A) ought to have appreciated that the Assessing Officer has incorrectly taken sale consideration at Rs. 27,77,52,161/- as against correct sales consideration of Rs. 11,76,46,508/-.
2. The CIT(A) has erred in upholding the action of the Assessing Officer in computing the income from business and profession at Rs. (21,36,18,519/-) as against the correct income of Rs. (19,45,94,362/-). The CIT (A) ought to have directed the Assessing Officer to take following amount as sale consideration and depreciation thereon as against the amount adopted by the assessing officer. i) Sale Consideration and depreciation in respect of Plant and machinery ought to have been taken at Rs. 15,87,86,762/- and Rs. 8,79,42,182/- respectively as against taken by the officer at Rs. 9,85,14,966/- and 9,69,82,952/- respectively. ii) Sale Consideration and depreciation in respect of Factory Building ought to have been taken at Rs. 9,29,68,583/- and Rs. 1,30,66,871/- Repro India Limited respectively as against taken by the officer at Rs.1,50,02,004/- and 2,08,63,529/- respectively. iii) Sale Consideration and depreciation in respect of Furniture & Fittings ought to have been taken at Rs. 2,53,75,981 /- and Rs. 38,97,146 /- respectively as against taken by the officer at Rs. 35,08,703/- and 60,83,874/- respectively.
3. The CIT(A) has erred in upholding the action of the Assessing Officer in not considering the brought forward business loss of A.Y. 2021-22 amounting to Rs. 34,81,24,674/- to be carried forward to subsequent year.
4. The CIT(A) has erred in upholding the action of the Assessing Officer in not considering the brought forward unabsorbed depreciation of A.Y. 2021-22 amounting to Rs. 61,44,58,589/- to be carried forward to subsequent year.
5. The CIT(A) has erred in upholding the action of the Assessing Officer in calculating Total Income in the Computation Sheet at Rs. 42,31,99,665 as against total income at Rs. (40,37,373/-) as determined by the Assessing Officer himself in the Assessment Order.
6. The Assessing officer has erred in respect of non-grant of MAT credit of Rs. 17,55,03,866/- to be set off against Income tax liability determined by Assessing Officer.
7. The CIT(A) has erred in upholding the action of the Assessing Officer in granting TDS & TCS credit aggregating to Rs. 1,66,04,077/- only instead of Rs. 1,66,09,802/- as claimed by the Assessee.
8. The CIT(A) has erred in upholding the assessment order passed u/s. 143(3) of the Act, which is illegal, bad in law and in violation of principles of natural justice.
9. The order passed by the CIT(A) is in violation of principles of natural justice. The appellant craves leave to add to, amend, alter or delete all or any of the foregoing grounds of appeal
16. During the course of hearing before us, the learned Authorised Representative (AR) of the assessee reiterated the Repro India Limited factual matrix as emerging from the record and submitted that the cost of the asset adopted in the original as well as the revised return of income at Rs. 27,25,74,290/- was based on the book value of the assets as revalued in accordance with Ind AS. It was submitted that such value was not the actual historical cost of acquisition but a revalued figure reflected in the books pursuant to accounting standards.
The learned AR further submitted that, in the rectified computation of income furnished during the course of assessment proceedings, the cost of the asset was correctly taken at Rs. 3,95,00,000/-, being the actual cost of acquisition of the leasehold rights.
It was further contended that the sale consideration of Rs. 27,77,52,161/- disclosed in the original as well as the revised return of income was arrived at on the basis of apportionment of the composite sale consideration by adopting the written down value of various assets, whereas, in the rectified computation submitted before the Assessing Officer, the sale consideration of Rs. 11,76,46,508/- represented the actual consideration attributable to transfer of leasehold rights in land, as evidenced by the sale invoices and other documents placed on record before the Assessing Officer as well as the CIT(A).
The tabulated details relating to leasehold rights, as placed on records by the learned AR, are: As per Original Computation of Income filed on 30/09/2022 Repro India Limited Particulars Cost of Asset Indexed Cost Sale Value Capital Gain / (Rs.) (Rs.) (Rs.) Loss (Rs.) Surat Land – 15,83,68,000 30,06,14,707 16,37,71,574 -13,68,43,133 Plot No. 268 and 269 Plot No. 271 – 8,34,40,000 13,22,52,400 8,10,09,482 -5,12,42,918 Sachin Surat Plot No. 270 3,07,66,290 3,37,47,107 3,29,71,105 -7,76,002 TOTAL 27,25,74,290 46,66,14,214 27,77,52,161 -18,88,62,053 As per Revised Computation of Income filed on 30/12/2022 Particulars Cost of Asset Indexed Cost Sale Value Capital Gain / (Rs.) (Rs.) (Rs.) Loss (Rs.) Surat Land – 15,83,68,000 30,06,14,707 16,37,71,574 -13,68,43,133 Plot No. 268 and 269 Plot No. 271 – 8,34,40,000 14,37,52,609 8,10,09,482 -6,27,43,127 Sachin Surat Plot No. 270 3,07,66,290 5,30,04,967 3,29,71,105 -2,00,33,862 TOTAL 27,25,74,290 49,73,72,283 27,77,52,161 -21,96,20,122 As per Rectified Computation of Income submitted during assessment proceedings on 30/12/2023 Particulars Cost of Asset Indexed Cost Sale Value Capital Gain / (Rs.) (Rs.) (Rs.) Loss (Rs.) Surat Land – 2,20,00,000 4,17,60,479 2,59,38,172 -1,58,22,307 Plot No. 268 and 269 Plot No. 271 – 89,40,000 1,54,02,065 6,23,48,489 4,69,46,424 Sachin Surat Plot No. 270 85,60,000 1,47,47,391 2,93,59,847 1,46,12,456 TOTAL 3,95,00,000 7,19,09,935 11,76,46,508 4,57,36,573
The learned AR also placed on records the depreciation schedule as per the values indicated above. The consolidated summary of depreciation schedules is given below:
Repro India Limited Particulars Original Return Revised Return Rectified filed on filed on Computation 30.09.2022 (Rs.) 30.12.2022 (Rs.) submitted on 30.12.2023 (Rs.) Total 11,70,25,673/- 11,70,25,673/- 11,70,25,673/- Deletions during the year Depreciation 14,37,62,077/- 14,37,62,077/- 14,37,62,077/- as per Income- tax Act WDV as on 1,07,18,90,850/- 1,07,18,90,850/- 1,07,18,90,850/- 31.03.2022
The AR also placed on records the erroneous the asset-wise working for allocation of sale consideration with reference to the written down value of assets sold, as emerging from the depreciation records for the previous year relevant to AY 2022– 23.
The learned AR pointed out, in brief, that the Assessing Officer rejected the assessee’s submissions on the following grounds:
The invoice was marked as “Original for Recipient” but was found with the assessee and not with M/s Qontrac Prints Pvt. Ltd., and hence was treated as not delivered.
The invoice did not bear any receiving endorsement or acknowledgment from the buyer.
Repro India Limited The buyer confirmed only the gross consideration and did not furnish an asset-wise breakup, leading to rejection of the assessee’s allocation. The buyer’s address mentioned in the invoice did not tally with the plots covered by the transaction, which was treated as indicating an afterthought. The sale consideration of Rs. 27,77,52,161/- remained unchanged in the original and revised returns, and its subsequent reduction during assessment was held to be unjustified. The cost of acquisition and indexed cost claimed in the original and revised returns were treated as inflated and contrary to law. The assessee accepted actual cost during assessment but redistributed sale consideration among assets to reduce capital gains by using the block-of-assets mechanism. A higher portion of sale consideration was attributed to depreciable assets and a lower portion to land, so that tax impact was confined to depreciation. The fixed asset schedule was revised and depreciation reduced by Rs. 1,90,24,156/-, which was held to be impermissible as the original schedule was audited and part of Form 3CD.
Repro India Limited 23. The learned AR submitted that while recording the above observations and drawing adverse inferences, the Assessing Officer did not make any independent enquiry with the counter party, namely M/s Qontrac Prints Pvt. Ltd.. It was pointed out that no verification was carried out from the buyer regarding receipt of the invoice, etc. The Assessing Officer, despite having the complete particulars of the buyer, did not issue any notice nor sought any clarification from the counter party and proceeded to reject the assessee’s explanation solely on presumptions. According to the learned AR, in the absence of such basic verification, the observations made by the Assessing Officer are based on suspicion and are unsustainable on facts.
The learned AR further submitted that during the appellate proceedings before the CIT(A), the assessee had filed additional evidence, inter alia, the sale agreement dated 30.04.2021 with M/s Qontrac Prints Private Limited, the certificate issued by Diamond and Gem Development Corporation Limited, and the financial statements of M/s Qontrac Prints Private Limited for the years ended 31.03.2022, 31.03.2023 and 31.03.2024, along with a specific prayer for admission of such additional evidence.
It was pointed out that the CIT(A) has neither adjudicated upon the admissibility of the additional evidence nor recorded any finding on merits in respect thereof, and the said material evidence has remained completely unconsidered. According to the learned AR, non-consideration of such additional evidence has Repro India Limited resulted in denial of proper opportunity and incomplete adjudication of the issue.
Accordingly, the learned Authorised Representative prayed that, in the interest of justice, the matter be restored to the file of the Assessing Officer for fresh adjudication after considering the additional evidence and after affording the assessee a reasonable opportunity of being heard.
The learned Departmental Representative strongly objected to the prayer for restoring the matter to the file of the Assessing Officer. He submitted that the assessee has repeatedly changed the sale consideration as well as the cost figures without furnishing any cogent basis or contemporaneous evidence. According to the learned DR, the alleged bifurcation and reallocation of sale consideration is supported only by self- generated vouchers and documents, which lack independent corroboration.
The learned DR further submitted that the lower authorities have rightly held that such changes in figures during the course of proceedings clearly indicate that the exercise undertaken by the assessee is an afterthought aimed at reducing the tax liability. Placing reliance on the orders of the Assessing Officer and the CIT(A), the learned DR contended that no useful purpose would be served by remanding the matter and that the findings recorded by the lower authorities deserve to be upheld.
Repro India Limited 29. The learned AR, in rebuttal, specifically invited our attention to the sale agreement dated 30.04.2021 entered into with M/s Qontrac Prints Pvt. Ltd., which was filed as additional evidence before the CIT(A). He submitted that the said agreement constitutes a primary and contemporaneous document evidencing the transaction including the consideration paid and the rate at which the consideration is arrived at, but the CIT(A) has not adverted to or adjudicated upon the same. The AR also invited our attention to certificate issued by the SEZ Developer certifying the current rate of leasehold land which stood at Rs.20,000 per Sq. meter for any potential buyer.
According to the learned AR, non-consideration of these crucial document has resulted in incomplete adjudication of the issue. He therefore submitted that, in the interest of justice, the matter deserves to be restored to the file of the Assessing Officer for fresh adjudication after considering the said sale agreement and other additional evidence on record.
We have carefully considered the rival submissions, perused the orders of the lower authorities and examined the material placed on record. It is an undisputed position that the assessee had filed additional evidence before the CIT(A), which, inter alia, included the sale agreement dated 30.04.2021 entered into with M/s Qontrac Prints Pvt. Ltd., along with other supporting documents. From the record, it is evident that the said sale agreement constitutes a primary and contemporaneous document governing the transaction of sale, which goes to the Repro India Limited very root of the controversy relating to the nature of assets sold, allocation of sale consideration and computation of capital gains. However, we find that the CIT(A) has neither recorded any finding on the admissibility of the additional evidence nor examined the same on merits. There is also no discussion or adjudication with respect to the contents of the sale agreement dated 30.04.2021. Non-consideration of such material evidence, which has a direct bearing on the issues under adjudication, renders the appellate order incomplete.
We also note that the Assessing Officer has drawn adverse inferences on various aspects of the transaction, including allocation of sale consideration, genuineness of invoices and alleged afterthought, without carrying out any independent verification from the counter party, despite the assessee having specifically relied upon the sale agreement and other contemporaneous documents. At the same time, the objections raised by the learned DR regarding frequent changes in figures and reliance on self-generated documents also require proper factual examination in the light of the complete documentary record.
In these circumstances, we are of the considered view that the matter requires fresh and comprehensive examination after taking into account all relevant evidence, including the additional evidence filed before the CIT(A). In the interest of justice, and to ensure proper adjudication on the basis of complete facts, we Repro India Limited deem it appropriate to set aside the order of the CIT(A) on this issue and restore the matter to the file of the Assessing Officer.
The Assessing Officer is directed to adjudicate the issue afresh in accordance with law, after considering the sale agreement dated 30.04.2021 and other additional evidence on record, and after affording the assessee a reasonable opportunity of being heard. We clarify that we have not expressed any opinion on the merits of the controversy, and all issues are left open.
Accordingly, the matter is restored to the file of the Assessing Officer for fresh adjudication and the appeal is allowed for statistical purposes.
Order pronounced in the open court on 09.02.2026.