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TMI Blog2012 (10) TMI 465X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue and Shri R. Sundara Rajan, C.A., represented on behalf of the assessee. 2. It was submitted by Ld. DR that for assessment year 2006-07, there were two issues. The first was against the action of the Commissioner of Income Tax(A) in allowing capital expenses of Rs. 12,68,286/- on conversion of land held as capital assets and later converted into 'stock in trade'. The second issue was against the action of the Ld. Commissioner of Income Tax(A) in allowing the terminal depreciation on the WDV of the cost of the factory building and land as a revenue expenditure. It was the submission that in the revenue appeal No. 445/Mds./11, there was only one issue against the action of the Commissioner of Income Tax(A) in allowing WDV being t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was the submission that as the land and building had been converted into stock in trade in 2003, the business of the assessee of typesetting and offset printing had been discontinued. As the business had been discontinued, the terminal depreciation in respect of that business could not be claimed as expenditure in the business of real estate. It was the submission that Ld. Commissioner of Income Tax(A) erred in granting the assessee the benefit of deduction as a Revenue expenditure of both the terminal depreciation as also the development cost incurred by the assessee in respect of its business of offset printing and typesetting, which had been discontinued. It was the submission that the order of the Assessing Officer is liable to restored ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the developed land is used for construction of dwelling units and balance 25% in 2006-07. Three agreements are entered into between the individual bungalow unit buyer's and the Assessee Company, Land sale agreement, Development agreement and the Construction agreement. A separate development agreement is entered into between the individual bungalow unit buyers and the Assessee Company for recovering the development cost including the cost of Building demolished. The land cost and the development cost are recovered in 2005-06 and offered as income during that year. The cost recovered from the individual bungalow units for Land and Land development is more than the cost claimed in the books of account we request you to allow the Loss on con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... portion in which the Factory Building is constructed during 1995. The factory building was constructed on 14,300 sq.ft. and the development cost of land is incurred only for that portion. The total cost of land including the land development cost is included in the Fixed Assets Schedule during 1995 as cost of land. After 2003, because of the recession imprinting industry for which the Company is originally formed, the management of the Company thought of utilizing the vacant land available for promoting independent residential dwelling units and diversified their line of activity and got necessary approvals from the Government authorities. In the first two years 2003-04 and 2004-05 only vacant factory land is utilized and only the cost of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dividual bungalow units from 75% of land cost Rs. 21,23,807/- deducted in the fixed assets schedule of Land cost. Since the development cost of the land is recovered and included in the sale of bungalow units, the land development cost recovered can be allowed as expenditure. 2. Written down value of building demolished Rs. 19,45,692/-As explained earlier during 2005-06 a portion of Factory Building (75%) is demolished and utilized the same vacant land for construction of dwelling units and sold the dwelling units as sale of Bungalow units. The above sale amount is inclusive of the development cost which includes cost of building demolished. Here cost is 75% of the opening WDV value as on 01.04.2005 (Rs. 81,48,770/-). The 75% WDV value i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss purposes and hence the depreciation is claimed in our return of income." 5. We have considered the written submissions filed by the assessee, as also the submissions made by the Ld. DR. Perusal of the provisions of Sec. 32(1) shows that the words used therein are "used for the purpose of the business or profession". Admittedly, the assessee was in the business of offset printing and typesetting. In 2003, the assessee admittedly had converted this land and factory building into stock in trade. The Minute of the assessee company did the conversion of the land and factory building into stock in trade, the business assets of the assessee no more survived as the business asset eligible for depreciation. Once this happens, the business of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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