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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
आदेश / O R D E R महावीर ससुंह, न्याययक सदस्य/ PER MAHAVIR SINGH, JM:
This appeal of assessee is arising out of the order of the Commissioner of Income Tax (Appeals)]-57, Mumbai, [in short CIT(A)], in ITA No. CIT(A)-57/Arr.107/2017-18 dated 22.03.2018. The Assessment
2 | P a g e Asst. Commissioner of Income Tax, Circle-17(2), Mumbai (in short ACIT/ITO/ AO) for the A.Y. 2012-13 vide order dated 16.02.2015, under section 143(3) of the Income-tax Act, 1961 (hereinafter ‘the Act’).
2. The only issue in this appeal of assessee is against the order of CIT(A) confirming the action of the AO in treating the long term capital gain declared by assessee on account of sale of factory shed premises-at Jogeshwari as short term capital gain. For this assessee has raised the following three grounds: -
“1. The learned CIT(A) erred in law in confirming the addition of Rs. 70,00,000/- (being whole amount of sales consideration of factory share premises – at Jogeshwari) made by the AO considering the same as short term capital gain as against long term capital gain ₹ 50,51,463/- shown by the appellant in its return of income.
that both the AO as well as CIT(A) failed to consider the W.D.V ₹ 642,893/- as on .1.04.1994 to determine the profit on sale of capital asset from sale consideration.
3. The learned CIT(A) ought to have issued specific and speaking order to grant of relief of interest charged under section 234B & 234C since the appellant filed application on 28.09.2012 before the I.T.O and copy submitted
3 | P a g e Addl. Commissioner of Income-tax, to issue refund adjustment order against refund due to the appellant for AY 2009-10, 2010-11 and 2011-12.”
None is present from the assessee’s side. On behalf of Revenue, Shri Manoj Kumar Singh, the learned Sr. Departmental Representative argued.
We have heard learned DR and gone through the facts and circumstances of the case. Briefly stated facts are that the assessee sold factory gala (shed) at Jogeshwari, which was in use up to 31.03.1994 and written down value of the said factory gala (shed) was ₹ 6,42,893/- as on 01.04.1994 after the said date, no depreciation was claimed on the said capital asset. The written down value of factory gala (Jogeshwari) ₹ 642893/- as on 01.04.1994 is taken at cost for the purposes of determining long term capital gain and long term capital gain was considered at ₹ 50,51,463/-.
From the records, we noted that the assessee started industrial undertaking vide agreement dated 10th Sept., 1999 at Silvasa-Backward state and Union Territories area and obtained PAN as mentioned above. Prior to this, the partners of this firm were carrying on business under the name and style of M/s KK Alufoil since 01.03.1984 and assessed upto A.Y. 1999-2000. Thereafter, the assessee firm took over all the assets and liabilities of said firm at its book value as on 31.03.1999 and those assets and liabilities were incorporated with this new firm. The assessee enclosed copies of ledger accounts of the partners showing the necessary entry passed for taking over the assets and liabilities of the earlier firm before CIT(A). In view of these facts, we noted that the fixed
4 | P a g e Balance sheet was at its book value as its capital asset and no question of taxing the capital gain on said capital assets as business income.
In view of the above facts, we noted that on identical circumstances, the Tribunal is consistently taking a view on this issue whether the gain arising out of the sale proceeds of depreciable asset is to be considered as long term capital gain or business income. We find that this issue has been considered by the Hon'ble Bombay High Court in the case of Manali Investments (supra), wherein, the question referred before the Hon'ble High Court reads as under:
"Whether on the facts and in the circumstances of the case and in law, the Tribunal was correct in holding that the assessee is entitled to set-off under Section 74 in respect of capital gain arising on transfer of capital assets on which depreciation has been allowed in the first year itself and which is deemed as short term capital gain under Section 50 of the Income Tax Act relying upon the judgment of this Court in the case of CIT v. Ace Builders (P.) Limited (281 ITR 210) even though the said decision was rendered in the context of eligibility of deduction under Section 54E."
We noted that this issue is covered by the decision of Hon’ble Bombay High Court in the case of CIT vs. Ace Builders (P.) Limited (2006) 281 ITR 210 (Bom.), wherein Hon’ble Bombay High Court has considered the issue in regard to sale consideration arising out of