2015 (3) TMI 52 - AT - Income Tax

Short-Term capital gain u/s 50 - sale of factory building and structure constructed on the lease hold land - payment of additional stamp duty - non application of section 50C as the depreciating asset was transferred contented by assessee - Held that - However, ld.CIT(A) has concluded that section 48 & 49 of the Act would have application on the facts of the present case. We find that as per section 50, the provisions of section 48 & 49 shall be subjected to certain modification. This aspect has not been considered by the ld.CIT(A) while deciding the issue. Therefore, this issue is restored to the file of ld.CIT(A) for decision afresh in accordance with provisions of law. - Decided in favour of assessee for statistical purposes. Claim of Indexation on long term capital gain on sale of land - additional ground raised - Held that - Since this is a legal issue and the same is raised first time before this Tribunal, therefore the ground is admitted and restored back to the file of ld.CIT(A) for decision afresh in accordance with law. Thus, this additional ground raised by the assessee is allowed for statistical purposes.

Summary

Issues:
1. Estimation of short-term capital gain on the sale of a factory building.
2. Applicability of section 50C of the Income Tax Act.
3. Claim for indexation on long-term capital gain on the sale of land.

Issue 1: Estimation of Short-Term Capital Gain:
The appellant challenged the estimated addition of Rs. 25,29,412 as short-term capital gain on the sale of a factory building. The appellant argued that the additional stamp duty payment should not lead to such an addition. The Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) upheld the addition based on section 50 of the Income Tax Act. The appellant contended that section 50C does not apply as the property was a depreciable asset. The Tribunal noted that section 50C valuation would replace the sale consideration for section 48 purposes. The Tribunal directed the issue back to the CIT(A) for a fresh decision considering the provisions of law.

Issue 2: Applicability of Section 50C:
The debate centered on whether section 50C of the Income Tax Act applied to the sale of a depreciable asset. The appellant argued that as a depreciable asset was transferred, section 50C should not be applicable. However, the CIT(A) concluded that sections 48 and 49, along with section 50C, were relevant. The Tribunal observed that section 50 modifies sections 48 and 49 but felt that the CIT(A) did not consider this aspect. Consequently, the issue was remanded to the CIT(A) for a fresh decision in line with the law.

Issue 3: Claim for Indexation on Long-Term Capital Gain:
The appellant raised an additional ground seeking consideration for indexation on long-term capital gain from the sale of land. The Tribunal allowed this ground for being a legal issue raised for the first time at the appellate stage. The matter was sent back to the CIT(A) for a fresh decision in accordance with the law. The appeal was allowed for statistical purposes.

In conclusion, the judgment addressed the disputed estimation of short-term capital gain, the application of section 50C, and the claim for indexation on long-term capital gain. The Tribunal directed a fresh decision on the issues concerning section 50C and the indexation claim, emphasizing adherence to the provisions of the Income Tax Act.