RAI BHAGWAN DAS BAGLA BAHADURS MARWARI HINDU HOSPITAL,KOLKATA vs. I.T.O., WARD - 49(3) NOW, I.T.O., WARD - 44(2), KOLKATA, KOLKATA

This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 30.03.2024 for the AY 2016-17.

Less: Indexed Cost of acquisition Cost of acquisition as on 01.04.1981 ₹84,71,600 X 1081/100 Rs.9,15,77,996 Long Term Capital Gain ₹12,35,377” 05. Thereafter, the ld. AO mentioned that the case was referred to District Valuation Officer (DVO) on 30.10.2018 for valuation of the property as per proposal of DDIT (Investigation), Kolkata-1, however, till date

6.5 The appellant considered the rent from the building that comprised the block of assets 'building as business income, and I have confirmed it earlier. The appellant's business income was derived through the utilization of a building, which was both a business asset and depreciable asset. The Income Tax Act makes depreciation mandatory from the assessment year 2002-03, and “8. We have heard the rival submissions and perused the material available on record. Assessee had worked out the indexed cost of acquisition of 12.97 Kattah of land out of total 27.96 Kattach of land sold by him taking Rs.3,50,000/- per Kattah as fair market value as on 1.4.1981. For arriving at this fair market value, assessee had relied on valuation report given by one Shri Mallar Mukherjee, Registered Valuer, copy of which has been placed at pages 34 to 46 of the paper book filed. In his report it has been mentioned by the Registered Valuer that on local enquiry, the price of land in the concerned area, during 1981-1982 was between Rs.3,50,000/- and Rs.4,00,000/- per Kattah. This conclusion appears at page 42 of the paper book. As against this, opinion of the Assessing Officer was that such fair value was very high since assessee was holding the property since 1979. Based on this reasoning he had referred the valuation to the DVO. Copy of the DVO's report is placed at pages 69 to 84 of the paper book. DVO in his report has clearly mentioned that reference to him was made by the Assessing Officer under section 55A of the Act. He determined the value of 12.97 Kattah of land as on 1.4.1981 at Rs.11,90,000/-. At this juncture, a look at section 55A becomes necessary. This is reproduced hereunder :— 55A : With a view of ascertaining the fair market value of a capital asset for the purposes of this chapter, the Assessing Officer may refer the valuation of capital asset to a Valuation Officer— (a) In a case where the value of the asset as claimed by the assesese is in accordance with the estimate made by a registered valuer, if the Assessing Officer is of the opinion that the value so claimed is less than its fair market value, (b) In any other case, if the Assessing Officer is of the opinion- (i) That the fair market value of the asset exceeds the value of the asset as claimed by the assesese by more than such amount as may be prescribed in this behalf, or “2. We have gone through the judgment and order of the Commissioner of Income-tax (Appeals) and also the judgment and order impugned before us. While reading the same we are of the view that in this matter no question of law is involved far less substantial one for the following reasons as stated hereunder.

“6. We have heard the rival contentions and gone through the facts and circumstances of the case. We noted that the assessee has claimed depreciation on the property sold as Lunkard Sky Max of 17 units in AYs 2010-11 and 2011-12. But from AY 2012-13 i.e. Financial Year 2011-12 out of 17 units 7 units were given on rent and accordingly rental income was shown as income from house property and no depreciation was claimed on this property. As argued by the learned Counsel for the assessee that once the property let out it loses its character as a business asset and no depreciation was allowable on it. This fact has not been denied by the Revenue. We noted that this issue has been decided by Co-ordinate Bench of Mumbai in the case of M/s Prabodh Investment & Trading Company Pvt. Ltd. vs. ITO in wherein it is held as under: “ 7. The next contention of the assessee is the one based on the order of the Cochin Bench of the Tribunal cited supra. In that case the assessee stopped claiming depreciation on the flat from the assessment year 1995-96 onwards on the ground that it was no more used for the purpose of the business. In the books of account the flat was shown as an investment from 01.04.1995. In the previous year relevant to the assessment year 1998-99, the flat was sold and the surplus was declared as long term capital gains. The income tax authorities held that the capital gains should be assessed as short term capital gains on the footing that the flat might have been used for business purposes even in the assessment years 1996-97 and 1997-98. On further appeal to the Tribunal, it was held that the flat ceased to be a business asset or depreciable asset on and with effect from 01.04.1995 and its character during the accounting year ended on 31.03.1998 was that of a long term capital asset and, therefore, the capital gains should be computed as long term capital gains. In this order the provisions of section 50A were referred to. This section makes special provision for cost of acquisition in the case of depreciable asset. It says that where the capital asset is one in respect of which depreciation was allowed in any previous year; the provisions of sections 48 and 49 shall apply subject to the modification that the written down value of the asset, as adjusted, shall be taken as the cost of acquisition. Relying on this provision the Tribunal held that

Order pronounced in the open court on 19.12.2024.