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TMI Blog2010 (8) TMI 682X X X X Extracts X X X X X X X X Extracts X X X X ..... "The ld. CIT(Appeals) has erred in law in holding that land appurtenant to a building forms a part of a block of assets, within the meaning of sec.2 (11) of the Income Tax Act, 1961 for purposes of sec. 50 of the Act, for computation of capital gains. 2. The ld. CIT(Appeals) has erred in not fully allowing the contention that land and building are separate assets, for the purposes of computation of capital gains. 3. The ld. CIT(Appeals) has erred in not holding that the short term capital loss and the long term capital loss, as computed in the Income Tax Return, should be accepted." 2. Common issue involves in these appeals. The assessee has sold land, building and equipments vide sale deed dated 28th August, 1996 for a consolidated amount of Rs. 30,50,000/- in which the price assigned to building and equipment is stated at Rs. 50,000/-. Copy of sale deed is placed at pages 6 to 14 of the paper book. According to the version of the assessee, it was operating cold storage till F.Y. 1975-76 and the total area of land is 9783 sq. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer (a) Brokerage 57,000 (b) Legal Expenses 2,000 (c) Travelling Expenses 7,505 66,805 (ii) Indexed cost of Acquisition Market Fair/Value of Land as on April, 1981 (As per Valuation Report dated 22-5-1993 attached) = 12,22,875 - Indexed cost of Acquisition 12,22,875 x 305 100 37,29,769 37,96,574 Long Term Capital Loss : Rs. 7,96,574 4. The AO did not accept such computation made by the assesee. The AO is of the opinion that after construction of building on the land, it became integral part of the cold storage building and the land value could not be separated from the cold storage building unless the building structure is removed.&n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e part of the building hence sec. 50 was not applicable. According to assessee, sec. 50 could not be applied to any part of the land. 6. Therefore, the short issues involved in both these appeals is regarding applicability or otherwise of sec. 50 on the component of consideration related to land and also the issue whether the assessee has rightly allocated a sum of Rs. 50,000/- out of total sale consideration of Rs. 30,50,000/- towards the other assets as claimed by the assessee in the sale deed. 7. So far as it relates to applicability of sec. 50 on the value of land. It may be mentioned here that the meaning of word "depreciation" was considered by Hon'ble Supreme Court in the case of CIT Vs. Alps Theatre 65 ITR 377 and it was observed that its meaning according to Webster's new word dictionary is "a decrease in value of property though wear deterioration or obsolescence - allowance made for this in book keeping, accounting etc." and keeping in view the said definition it was observed that land cannot depreciate. Hon'ble Supreme Court observed that according to different rates of depreciation fixed for the various types of&nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It will be relevant if the following observations are reproduced from the said decision: - "Land is a capital asset in terms of sec. 2(14) of the Act and, in accordance with the scheme of the Act, it is treated as a separate asset. Even for the purpose of sec. 32, a building which is entitled for depreciation would mean only the superstructure and would not include the site. Under section 48 of the Act, the income chargeable under the head "Capital gains" has to be computed by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset in the manner provided in this section. It is not in dispute that land is a capital asset and only then (sic) it is liable to tax. If the price of two capital assets has been charged at one consolidated price, then the assessee is entitled to bifurcate the same. A situation may arise where a gain from one of the capital assets is a short term capital gain while from the other it is a long term capital gain as in the pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the second issue which relates to whether the allocation made by the assessee to the super structure and other items of a sum of Rs. 50,000/- only is sufficient. Both of the parties were heard on this issue. The investment made by the assessee in the super structure and the other equipments is very old. Since F.Y. 1975-76 the same has not been used. For the purpose of computing long term capital gain the assessee has relied upon the valuation obtained by it from a registered valuer who has valued the asset as on 01.04.1981 vide report dated 22nd May, 1993. This valuation has been obtained by the assessee much prior to the date of sale. Ld. AR of the assessee stated before us that this was got prepared as in that year the assessee was thinking to dispose off the said property. In the said valuation the value of super structure has been arrived at by valuer at Rs. 5,22,310/- and after allowing the benefit of depreciation of Rs. 2,08,924/-, the depreciated value as on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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