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TMI Blog2004 (11) TMI 507X X X X Extracts X X X X X X X X Extracts X X X X ..... dealers in Non-Ferrous metals. The firm had a branch in Bombay. A flat was purchased in Bombay for a consideration of Rs. 1,01,971. The flat was purchased in the accounting year ending on 31-3-1974. The break up of the cost of the flat is as follows : Flat Rs. 95,000 Garage Rs. 5,000 Deposits Rs. 1,500 Shares Rs. 250 Charges Rs. 221 Total Rs. 1,01,971 3. The assessee-firm capitalized the cost of building at Rs. 95,000 in the books of the firm as its office for the branch in Bombay. The assessee also claimed depreciation on the said flat till the assessment year 1995-96. 4. The assessee stopped claiming depreciation on the building from 1-4-1995, i.e., from the assessment year 1996-97 onwards on the ground that the flat w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and treated the surplus on sale of the flat as short-term capital gains. The quantum of the short term capital gain has been determined at Rs. 67,82,874. 8. In first appeal, even though various legal contentions were raised before the CIT(Appeals), the CIT(Appeals) considered the matter on a question of fact and disposed of the first appeal. The CIT(Appeals) observed that the flat was in the control of the assessee-firm, which was used as a branch office and there was no evidence to show that the flat was not used for its business purpose after 31-3-1995. The CIT(A) observed that the claim of non-user of the flat was made by the assessee-firm only for the purpose of overcoming the fiction found in section 50A. In fact, the CIT(A) held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. Thereafter the property was sold during the accounting year ending on 31-3-1998. 13. The facts before the sale of the flat were accepted by the Assessing Officer on the basis of the books of account maintained by the assessee-firm. But the Assessing Officer refused to accept the facts of the case after the sale of the flat as stated by the assessee-firm, as reflected in its books of account. The version of the assessee-firm is not accepted for the reason that according to the Assessing Officer, the business was still carried on in the said flat in Bombay during the previous years relevant to the assessment years 1996-97, 1997-98 and 1998-99. 14. But on a perusal of the orders of the lower authorities, we find that the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for arriving at such a factual conclusion. The said conclusion has been arrived at by the lower authorities only on the basis of intelligent presumption. 16. We have to therefore accept the contention of the assessee-firm that the flat was not used for its business purpose after 31-3-1995. Therefore it is to be accepted that the Bombay flat ceased to be a business asset/depreciable asset on and with effect from 31-3-1995. The flat was acquired by the assessee-firm way back in 1974. Therefore the character of the flat during the accounting year ending on 31-3-1998 was that of long term capital asset. This character of the asset does not change only for the reason that the flat was used as a business asset/depreciable asset in the past. A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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