9911796707
|
Home
Issues Involved:
1. Whether the transaction between the assessee and M/s Samcor Glass Ltd. (SGL) is a lease of land, building, and plant and machinery or a sale of plant and machinery only. 2. Whether the lease transaction falls within the ambit of 'transfer' as defined in section 2(47) of the Income-tax Act, 1961. 3. Whether the object of transfer falls within the definition of 'capital asset' under section 2(14) of the Income-tax Act, 1961. 4. Whether the consideration arising from such a transaction is chargeable to tax under section 45, read with section 50 of the Income-tax Act, 1961. Detailed Analysis: 1. Nature of the Transaction: Lease or Sale The Assessing Officer (AO) concluded that the transaction between the assessee and SGL amounted to a 'transfer' within the meaning of section 2(47) and considered it as a sale of plant and machinery only. The AO cited various circumstantial evidences, such as the assessee's continued use of the premises and the valuation report indicating the business's limited future value. However, the Tribunal found that the AO's conclusion was based on suspicion and conjecture without concrete evidence. The Tribunal held that the transaction was indeed a lease of land, building, and plant and machinery, as evidenced by the lease deed and the actions of the parties involved. 2. Lease as 'Transfer' under Section 2(47) The Tribunal examined whether the lease transaction falls within the ambit of 'transfer' as defined in section 2(47). It was noted that the definition of 'transfer' is inclusive and not exhaustive, encompassing various forms of transfer, including lease. The Tribunal referred to the Supreme Court's decisions in A.R. Krishnamurthy and R.K. Palshikar (HUF), which held that leasehold rights in a property are capital assets and their transfer falls within the definition of 'transfer' under section 2(47). The Tribunal concluded that the lease transaction in question does indeed fall within the ambit of 'transfer' as defined in section 2(47). 3. Definition of 'Capital Asset' The Tribunal confirmed that leasehold rights in a property constitute a 'capital asset' under section 2(14) of the Income-tax Act, 1961. This was supported by the Supreme Court's rulings in A.R. Krishnamurthy and R.K. Palshikar (HUF), which established that leasehold rights are capital assets and their transfer is subject to capital gains tax. 4. Taxability under Section 45 and Section 50 The Tribunal held that the consideration arising from the lease transaction is chargeable to tax under section 45. However, it found that section 50, which pertains to the computation of capital gains on depreciable assets, was not applicable in this case. The Tribunal reasoned that the land is not a depreciable asset, and the ownership of the assets remained with the assessee. Consequently, the AO was directed to recompute the capital gains in accordance with the law, considering the nature of the capital gain based on the holding period of the assets. Conclusion: The Tribunal concluded that the transaction between the assessee and SGL was a lease of land, building, and plant and machinery, not a sale of plant and machinery only. The lease transaction falls within the definition of 'transfer' under section 2(47) and involves a 'capital asset' as defined in section 2(14). The consideration arising from the transaction is chargeable to tax under section 45, but section 50 is not applicable. The AO was directed to recompute the capital gains accordingly. The appeal was partly allowed.
|
