2012 (7) TMI 58 - ITAT DELHI

Capital gain – transfer of property where title is not absolute and clear - land was transferred during the financial year 1999-2000 - sale transaction of the land completed during the relevant previous year under consideration, only the registration has been done subsequently - assessee has received 50% of the total consideration as "partial Payment" against the sale of property Second Part and another remaining 50% of the sales consideration was kept in an interest bearing escrow account with the agreement that the said amount shall be delivered on-or before the registration – Held that:- assessee was always ready and willing to perform his part of contract - assessee has also granted an unrestricted exclusive right to use and build upon this land - assessee has transferred a capital asset as defined under section 2(47)(v) of the Income-tax Act. Consequent upon this transfer of capital asset, the assessee is liable to pay the capital gain tax during the year under consideration - Revenue's appeal is allowed.

Depreciation - assessee has not claimed the depreciation on the bulk of assets with the contention that the claim of depreciation is at the option of the assessee - assessee also did not claim any depreciation allowances – Held that:- By not claiming any depreciation allowances, the assessee company had adopted a colorable tax planning devices and hence the case of the assessee is squarely covered within the purview of the decision of the Supreme Court in the McDowell's case (1985 (4) TMI 64 (SC)) - assessee is granted depreciation as per Annexure "A" to this order. The depreciation shall be allowed to be carried forward for eight succeeding years as per section 32(2) of the I.T. Act and the written down value of the assets/additions to the asset's shall accordingly be reduced and this would be the opening WDV for the assessment year 1999-2000

Expenditure incurred under the VRS - capital or revenue – Held that:- Expenditure on the voluntary retirement scheme is an allowable expenditure as the same has been incurred on account of commercial expediency - compensation paid to the workmen who retired prematurely and such expenditure incurred by the assessee for commercial expediency in order to facilitate carrying out the business is allowable u/s 37(1) of Income-tax Act, therefore, it cannot be said to be an expenditure of capital in nature - expenditure incurred on VRS is allowable as revenue expenditure – In favor of assessee