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2017 (11) TMI 504 - AT - Income TaxCapital gain - proof of purchase of property during the year - additions of the properties in the block of asset - depreciation claimed on the said block of assets - Held that - The purchase transactions in respect of both of the properties under consideration had taken place during the year under consideration, viz. A.Y. 2009-10. We thus are of the considered view that the claim of the assessee in respect of the additions made in the block of assets towards purchase of the aforesaid properties, viz. (i). Residential property at Nagpur; and (ii). Property marked as 94, Sector 2, Koparkhairane, Navi Mumbai, is found to be in order. That in the backdrop of our aforesaid observations, we are of the considered view that neither the assessing of an amount of ₹ 93,96,127/- under the head Short term capital gain , nor the disallowance of depreciation of ₹ 12,699/- could have been made in the hands of the assessee. We thus in terms of our aforesaid observations uphold the order of the CIT(A). Appeal of the revenue is dismissed.
Issues Involved:
1. Deletion of addition of ?93,96,127/- treated as Short Term Capital Gain under Section 50 of the Income Tax Act, 1961. 2. Direction to consider the value of properties amounting to ?24,91,588/- in the block of assets and to allow depreciation claim by the assessee. Issue-wise Detailed Analysis: 1. Deletion of Addition of ?93,96,127/- Treated as Short Term Capital Gain under Section 50 of the Act: The revenue contested the deletion of the addition of ?93,96,127/- treated as Short Term Capital Gain under Section 50 of the Income Tax Act, 1961. The Assessing Officer (A.O) had observed that the assessee company sold two properties for ?1,18,87,715/- and claimed additions in the same 'block of assets' of office premises. However, the A.O doubted the veracity of the assessee's claim regarding the purchase transactions of these properties, leading to the exclusion of these additions from the 'block of assets' and assessing the income from the sale of properties as Short Term Capital Gain. The CIT(A) accepted the assessee's claim and held that the additions of the two properties were in order and rightly entered in the 'block of assets.' The CIT(A) vacated the addition made by the A.O towards Short Term Capital Gain of ?93,96,127/- and disallowance of depreciation of ?12,699/-. The CIT(A) observed that the possession of the properties was taken during the A.Y. 2009-10 and substantial payment was made, thus fulfilling the definition of 'transfer' under Section 2(47) of the Act. The Tribunal agreed with the CIT(A) and concluded that the purchase transactions of both properties had taken place during the year under consideration (A.Y. 2009-10). The Tribunal noted that the possession of the properties was delivered, and substantial purchase consideration was paid during the relevant year. The Tribunal upheld the CIT(A)'s order, confirming that the addition of ?93,96,127/- under Short Term Capital Gain and disallowance of depreciation could not be made. 2. Direction to Consider the Value of Properties Amounting to ?24,91,588/- in the Block of Assets and to Allow Depreciation Claim by the Assessee: The A.O had excluded the additions of the properties from the 'block of assets' and disallowed the depreciation of ?12,699/- claimed by the assessee. The CIT(A) directed the A.O to consider the value of the properties amounting to ?24,91,588/- in the block of assets and to allow the depreciation claim. The Tribunal reviewed the facts and found that the assessee had taken possession of the properties during the A.Y. 2009-10 and made substantial payments. The Tribunal referred to the Explanation 2 to Section 2(47)(v) of the Act, which clarifies the scope of 'transfer.' The Tribunal concluded that the purchase transactions of the properties were completed during the relevant year, and the properties were rightly included in the 'block of assets.' Consequently, the depreciation claim was justified. The Tribunal upheld the CIT(A)'s direction to consider the value of the properties in the block of assets and allow the depreciation claim, confirming that the assessee's actions were in compliance with the provisions of the Income Tax Act. Conclusion: The Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s order. The Tribunal confirmed that the purchase transactions of the properties were completed during the A.Y. 2009-10, and the properties were rightly included in the 'block of assets,' justifying the deletion of the addition of ?93,96,127/- treated as Short Term Capital Gain and allowing the depreciation claim.
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