LATE SHRI SATISH WAMAN BHIDE,MUMBAI vs. ITO 18(2)(3), MUMBAI

सुनवाई की तायीख / Date of Hearing : 02.03.2017 घोषणा की तायीख /Date of Pronouncement : 17.03.2017 आदेश / O R D E R

PER D. KARUNAKARA RAO, AM:

2. The Ld CIT (A) erred in law as well as in facts in rejecting the assessee‟s contention that the notice issued u/s 148 was barred by limitation as it was served on 1.4.2013 whereas the re-assessment proceedings were getting barred by limitation on 31.3.2013.

3. The Ld CIT (A) erred in law as well as in facts in rejecting the assessee‟s contention that long term capital gains on sale of industrial unit determined u/s 50 was taxable @ 20% as per section 112 of the Act and not @ 30%.

4. The Ld CIT (A) erred in law as well as in facts in not allowing deduction of bank loan of Rs. 35,64,232/- secured by way of charge against the property in determination of capital gains u/s 50C.”

by the assessee, ld Counsel for the assessee submitted that the ground no.4 is not pressed. After hearing the Ld DR, we dismissed the said ground no.4 as not pressed.

3. Referring to grounds no.1 and 2, Ld Counsel for the assessee submitted that the notice u/s 148 dated 25.3.2013 was served on the assessee only on 1.4.2013 against the due date of 31.3.2013. According to Ld AR, since the said notice served a day after the due date is a invalid one therefore, the re-assessment proceedings are bad in law. In reply to the same, Ld DR for the Revenue submitted that the mandate of the provisions of section 148 suggests that the notice must be issued before the end of the limitation period and the same was issued on 25.3.2013 in this case. Therefore, the date of service of notice u/s 148 on 1.4.2013 is not bad in law. On hearing the Ld Representatives of both the parties and on perusal of the relevant provisions, we find, the limitation if any is on the issuance of notice of the Act and there is no fetters on the service aspect of the said notice. Therefore, we proceed to dismiss this legal issue raised in ground no.1. Accordingly we order.

4. Referring to Ground no.3, Ld AR submitted that the assessee owns a long term capital asset and the same was sold. Assessee offered the relevant gains u/s 50 of the Act applying the tax rate of 20% as per section 112 of the Act. However, the AO is of the view that the tax rate of 30%, which is applicable to the short term capital gains should be applied. Before us, Ld Counsel for the assessee brought our attention to the decision of the Tribunal in the case of Smita Conductors Ltd vs. DCIT [2014] 41 taxmann.com 514 (Mumbai-Trib), dated 17.09.2013 Ld Counsel for the assessee read out the contents of para 2.6 of the said order of the Tribunal. On hearing the Ld Representatives of both the parties on this issue, we proceed to extract the relevant lines from the said para 2.6 of the said Tribunal‟s order (supra) and the same reads as under:- “2.6. We, therefore, held that, for the purpose of computation of capital gain, the flat has to be treated as short term capital gains u/s 50 of the Act, but for the purpose of applicability of tax rat it has to be treated as long term capital gain if held for more than three years. We accordingly direct the AO to complete the capital gain from the sale of flat and apply the appropriate tax rate after necessary verification in the light of the observations made in this order.”

5. Considering the above, legal proposition, we grant similar directions to the AO to apply the said legal propositions to the facts of the case. AO shall grant a