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Income Tax Appellate Tribunal, DELHI BENCH “B”, NEW DELHI
Before: SHRI N.K. BILLAIYA & SHRI K.NARASIMHA CHARY
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B”, NEW DELHI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER I.T.A. No. 3230/DEL/2015 A.Y. : 2010-11 M/S SAINT MARY’S EDUCATIONAL & ACIT(E), CHARITABLE SOCIETY, VS. CIRCLE, A-BLOCK, SHALIMAR GARDEN, CGO COMPLEX, EXTN.-II, SAHIBABAD, GHAZIABAD GHAZIABAD (PAN: AAETS1945C) (APPELLANT) (RESPONDENT) AND I.T.A. No. 4648/DEL/2015 A.Y. : 2010-11 DY. COMMISSIONER OF INCOME SAINT MARY’S TAX, VS. EDUCATIONAL & ROOM NO. 208, 2ND FLOOR, CHARITABLE SOCIETY, CGO-1, A-BLOCK, SHALIMAR BAGH, HAPUR ROAD, EXTN.-II, SAHIBABAD GHAZIABAD GHAZIABAD (UP) (APPELLANT) (RESPONDENT)
Assessee by : Ms. Ashima Neb, Sr. DR Department by : Sh. Ashutosh Jain, CA
Date of Hearing : 24.09.2018 Date of Order : 26-09-2018
ORDER PER K.NARASIMHA CHARY, J.M.
These appeals filed by the Assessee as well as Revenue
challenging the Order dated 02.04.2015 in Appeal No. 552/2013-14/GZB
for assessment year 2010-11 passed by the Ld. Commissioner of Income
Tax (Appeals), Ghaziabad (in Short “Ld. CIT(A)”).
The brief facts of the case are that the assessee was a society
registered under the Societies Registration Act, 1860 and was engaged in
running a school in the name of St. Mary’s Christian Senior Secondary
School at B-Block, Shalimar Garden, Extn.II, Sahibabad. During the
assessment year under consideration, the assessee sold a plot of land
situated at B-Block, Shalimar Garden, Extn.II, Sahibabad to Saint Joseph
Capuchin Service Society, Ghaziabad for Rs. 4.50 crores. Assessee says
that the building on the said plot of land was sold free of cost. The circle
rate of plot of land at the time of sale was Rs. 4,36,44,420/-. The circle
rate of the building as on that date was Rs. 1,55,60,580/-. Thus the
aggregate circle rate of the property was determined at Rs. 5,92,05,000/-
on which stamp duty was duly paid by the assessee. The AO, however,
computed the long term capital gains on sale of land and building in terms
of section 50C of the Income Tax Act, 1961 (“the Act”) after taking into
account the aggregate circle rate of Rs. 5,92,05,000/- as the sales
consideration and reducing only the cost of acquisition of the land, as
declared by the assessee.
Against the said action of the AO, the Assessee appealed before the
Ld. CIT(A), who upheld the computation of long term capital gains on sale
of land declared by the assessee after taking into account the actual sales
consideration of Rs. 4.50 crores. Ld. CIT(A) further held that out of
aggregate circle rate of Rs. 5,92,05,000/- adopted for the purpose of
section 50C of the Act, Rs. 4.50 crores was attributable to land and the
balance Rs. 1,42,05,000/- be attributed towards sale of building and the 2
same be reduced from WDV of the block. Since the block of assets does
not cease to exist on such reduction, no capital gains raise on sale of
building. Accordingly, Ld. CIT(A) disallowed the excess depreciation of
Rs. 15,56,058/- claimed by the assessee in this regard.
Aggrieved with the Ld. CIT(A)’s action, the assessee challenged the
disallowance of excess depreciation to the tune of Rs. 15,56,058/- by
preferring the ITA No. 3230/Del/2015 (AY 2010-11). However, at the
time of arguments, Ld. AR submitted that the assessee may be permitted
to not press the Appeal. Revenue does not raise any objection to this
proposition of the Ld. AR of the assessee. Hence, the ITA No.
3230/Del/2015 preferred by the Assessee stands dismissed as not
pressed.
Now coming to the Appeal preferred by the Revenue, Ld. DR heavily
relied upon the assessment order of the AO, whereas Ld. AR submitted
that the order of the Ld. CIT(A) does not suffer from any illegality or
irregularity as such the appeal of the Revenue has no merits and further
that inasmuch as the findings of the Ld. CIT(A) are perfectly justified,
though initially challenged the disallowance of Rs. 15,56,058/- being the
10% of the excess depreciation, the assessee concedes such a finding
and not pressed his appeal.
We have carefully gone through the record and duly considered the
submissions on either side. On the issue relating to deletion of addition
of Rs. 1,42,05,000/- out of total addition of Rs. 5,20,38,500/- made by
the AO out of long term capital gain, it could be seen from the impugned
order that Ld. CIT(A) observed as per the claim of section 50C of the Act,
the depreciable assets are to be subject to short capital gain or loss if the
block of assets has ceased to exist and if not then the sale consideration
has to be reduced from the WDV and in the present case it is an admitted
fact that the said building is part of block of assets under the head
buildings and the block has not ceased to exist. Therefore, merely
because the assessee did not reduce the sale consideration from block
would not mean that the asset would be subject to the long term capital
gain, that too, without any benefit of cost of acquisition. On this premise,
Ld. CIT(A) held that the building being the part of block of assessment
subjected to depreciation, and provisions of Section 50 of the Act would
apply in this case. Accordingly, Ld. CIT(A) held that the question of long
term capital gains does not arise and it would be correct to reduce the
sale consideration from the WDV of the block building of Rs.
1,55,60,580/-. Since the block does not cease to exist, the assessee is
not liable for any short term capital gain. Ld. CIT(A) attributed a sum of
Rs. 4.50 crores to the land out of the total sale consideration of Rs.
5,92,05,000/- u/s. 50C and the balance of Rs. 1,42,05,000/- attributable
to the building does not suffer any capital gain tax. Ld. CIT(A) on this
premise, deleted the addition on account of capital gain to the tune of Rs.
1,42,05,000/-, but at the same time disallowed the excess depreciation
of Rs. 1,55,60,580/-.
Having considered the matter in its entirety, we find the above
conclusions reached by the Ld. CIT(A) are perfectly legal and justice and
do not suffer any illegality or irregularity. Therefore, we uphold the
impugned order and consequently find that the Appeal by the Revenue is
also liable to be dismissed. Accordingly, we dismiss the same.
In the result, both the Appeals filed by the Assessee and Revenue
stand dismissed.
Order pronounced in the Open Court on 26/09/2018.
Sd/- Sd/-
[N.K. BILLAIYA] [K.NARASIMHA CHARY] ACCOUNTANT MEMBER JUDICIAL MEMBER
Date 26/09/2018
“SRBHATNAGAR” Copy forwarded to: - 1. Appellant 2. Respondent 3. CIT 4. CIT (A) 5. DR, ITAT