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TMI Blog2012 (4) TMI 374X X X X Extracts X X X X X X X X Extracts X X X X ..... 06. The revenue has challenged the view of the Tribunal treating the aforesaid plant and machinery as long term assets, which are held entitled to benefit of cost inflation index for computing the long term capital gain. However, the Revenue has claimed that the following questions of law would arise for determination of this Court and have pressed for admission of the appeal: "1. Whether on the facts and circumstances of the case, the Hon'ble ITAT was right in law in holding that the assessee had the option to maintain two separate blocks of assets i.e. Plant & Machinery (put to use) and the Plant and Machinery (Not put to use) when same percentage of depreciation has been prescribed for plant and machinery as per Section 2(11) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set out the facts in brief. The assessee-respondent filed return on 30.11.2006 declaring nil income in respect of the assessment year 2006-07. The case was subsequently taken up for scrutiny. The assessment was completed under Section 143(3) of the Act vide order dated 10.12.2008 (A-1) at an income of Rs. 3,58,610/-, inter alia, making disallowance of appreciation at Rs. 4,04,340/- because unit belonging to the assessee-respondent was out of production from the period commencing March, 1998 and further adjusting brought forward depreciation losses against the capital gain on the sale of plant and machinery, which was effected in the financial year 2005-06. The assessee-respondent filed an application under Section 154 of the Act seeking re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t would apply on the profits gain on the sale of the plant and machinery (not in use) and the Assessing Officer has rightly assessed the gain as short term capital gain (A-3) (Colly.). 4. The assessee-respondent challenged the view taken by the CIT(A) before the Tribunal by filing two separate appeals. The Tribunal vide order dated 31.05.2011 (A-4), allowed the appeal of the assessee-respondent against the order under Section 154 of the Act (ITA No. 1397/Chd/2010), holding that the assessee-respondent was prevented by a sufficient cause in not filing the appeal within the time prescribed by the statute before the CIT(A). Accordingly, the application seeking condonation of delay was allowed by the Tribunal. On the quantum appeal (ITA No. 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al consideration of Rs. 2.35 Crores. The said machinery was acquired partly in the financial year 1997-98 for a value of Rs. 43.03 lacs and the balance in the financial year 1998-99 of the value of Rs. 80.03 lacs. The total value has been worked out at Rs. 1.23 Crores. The assessee-respondent filed on record the list of assets starting from the year ending 31.03.1998 to 31.03.2006. The assessee-respondent had claimed depreciation in respect of other item namely, on the plant and machinery having written down value of Rs. 1.19 Crores for the financial year 1997-98. The addition in the plant and machinery of Rs. 43.03 lacs was reflected separately under the head 'plant and machinery (not in use)' because no depreciation was claimed on the afo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a period of more than 36 months, which is long term capital asset as defined under Section 2(28A) of the Act and the capital gain arising on transfer is required to be assessed as long term capital as per the definition given in Section 2(29B) of the Act. The aforesaid provision has overriding effect contained in Section 2(42-A) of the Act. Therefore, the plant and machinery (not in use) could not be merged with the other head titled as plant and machinery. The view of the Tribunal is crystal clear in para 15 of the judgment which reads as under: "15. In the facts of the present case, the assessee had reflected the said asset as part of its list of assets but the block of assets on which depreciation was claimed by the assessee was plant a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of indexed cost of acquisition, which working out the gain arising on the transfer of the said capital asset. Accordingly, the order of the CIT(A) is set aside and the Assessing Officer is directed to allow the claim of the assessee by adopting the indexed cost of acquisition in determining the income from long term capital gain on sale of plant and machinery (not in use). Thus grounds of appeal raised by the assessee on the merits of the addition are allowed. In view of the same, there is no merit in the grounds of appeal raised by the assessee against the rejection of claim under Section 154 of the Income-tax Act." 6. When we confronted learned counsel for the appellant with the aforesaid factual as well as legal position, he could not s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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