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TMI Blog2015 (2) TMI 622X X X X Extracts X X X X X X X X Extracts X X X X ..... hat it should have reduced the sale consideration from the block of assets instead of treating it as a separate asset. The provisions of Section 50 of the Act are also not applicable in the present case because the shop sold was not a business asset and depreciation was not being claimed/allowed and in such a situation the sale of the shop can be taxed only under the head “Capital Gain.” Thus, the addition also deserves to be deleted because real sense there was no capital gain. Both the additions in question are accordingly deleted. Having taxed the gain of ₹ 1,97,008/-, the same was again taxed u/s 50 read with Section 50A of the Act for the reason that gain on sale of depreciable asset was taxable under the head capital gain. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplied the provisions of law. 2. We have heard and considered the arguments advanced by the parties in view of orders of the authorities below and material available on record, and the decisions relied upon. GROUND NOS. 1 TO 3 3. The AO made addition of ₹ 1,97,008/- on account of capital gain on sale of a shop. The AO held that where the capital asset is an asset in respect of which a deduction on account of depreciation under clause (i) of Sub-Section(1) of Section 32 has been obtained by the assessee in any previous year, the provisions of Section 48 49 shall apply to the modification that the written down value as defined in Clause (6) of Section 43 of the asset as adjusted shall be taken as the cost of acquisition of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the revised return filed on 10/1/2006 depreciation was added back as was advised by its Chartered Accountant (Page Nos. 8 9 of the paper book). Though in the A.Y 2004-05 depreciation was allowed, however, since the shops were not being used for the purpose of business but were let out, the assessee has advised did not claim depreciation in the A.Y 2005-06. The return was again revised on 14/5/2007 and by the second revised return, even the brokerage of ₹ 16,50,960/- was added back (Page Nos. 10 11 of the paper book). 5. The Ld. AR pointed out further that in the A.Y 2006-07 under consideration, one shop (No. 47) was sold for ₹ 45 lac and the other shop was let out. In the accounts for the A.Y 2006-07 two entries were made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer that the taxability of in income is different from the accounting treatment. Since an asset (shop) appearing in the balance-sheet was sold, therefore, the same was to be reflected in the accounts. The profit on sale of assets at ₹ 1,97,008/- represents the profit on sale of one of the shops situated at Centre Stage Mall. In-fact the assessee had required these two shops in the financial year ending 31/3/2004 for its own office use etc. and therefore, depreciation was also claimed in the A.Y 2004-05. The depreciation was initially disallowed by the A.O but allowed by the Ld. CIT(A). The cost of the shops were thereby reduced and shown as WDV. Thereafter, although assessee charged depreciation in books but the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that Section 50 was not applicable because the shop sold was not a business asset and depreciation was not being claimed/allowed, then the sale of the shop can be taxed only under the head Capital Gain and in that case also, the addition made deserves to be deleted because actual there was no capital gain. 9. The Ld. DR on the other hand tried to justify the orders of the authorities below on the issue raised in the grounds. 10. Having gone through the decision of Hon ble Delhi High Court in the case of CIT Vs. Ansal Properties and Infrastructure Ltd (Supra)(2012) 20 Taxman.com 770 (Delhi), we find that in that case the Hon ble High Court has been pleased to hold as 18. Section 50(2) applies wherein block of assets ceases to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 004 for its own office use etc and therefore, depreciation was also claimed in the A.Y 2004-05. The depreciation was initially disallowed by the A.O but was allowed by the Ld. CIT(A). The cost of the shops where thereby reduced and shown as WDV. Thereafter although the assessee had charged depreciation in books but the same was not claimed as allowable under the I.T Act as the properties were let out and not used for own business. It was submitted that the amount of ₹ 1,97,008/- represents gain on sale of one of the shops over its WDV as per books. It was submitted that the taxability of an income is different from the accounting treatment. Since an asset (shop) appearing in the balance-sheet was sold, the same was to be reflected in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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