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TMI Blog2016 (2) TMI 270X X X X Extracts X X X X X X X X Extracts X X X X ..... s 43(6) and of special provisions u/s 50 for calculating capital gain in case of depreciable assets. The short term capital gain was calculated at ₹ 60,42,693/- by applying the provision of 50C of the Act. In our opinion the ld. CIT(A) had rightly reversed the action of AO by holding that sale of gala was part of relevant block of assets as per the provisions of section 43(6) and short term capital gain was to be computed in accordance with section 50 of the Act. Thus we do not find any infirmity in the order passed by the CIT(A). We, therefore, dismiss the appeal of the revenue by upholding the order of CIT(A). - Decided against revenue - I.T.A. No. 2928/Mum/2014 - - - Dated:- 8-1-2016 - SHRI JOGINDER SINGH, JM AND SHRI RAJESH KUMAR, AM For The Appellant : Shri Vijay Kumar Soni For The Respondent : Shri Prakash K. Jotwani ORDER PER RAJESH KUMAR, A. M: This appeal by the assessee is directed against the order dated 22.12.2011 of Commissioner of Income Tax (Appeals)-31, Mumbai (hereinafter called as the CIT(A) ) for assessment year 2009-10.The assessee has raised following grounds of appeal: 1. On the facts of the case and in law, the learned CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee that the factory gala was part of the block of asset on the ground that the assessee offered income from the said gala for 2 years as income from house property of the block asset. The AO also observed that the assessee did not claim any depreciation on the said gala for 2 years and the assesse enjoyed the fruit of rental income and deduction u/s 24 of the Act. The assessee could not be gala by virtue of section 50 of the Income Tax Act. The AO computed the short term capital gain by taking the stamp value of ₹ 66,41,733/- as sale price and reduced the purchased price of ₹ 5,99,040/- thereby workout the gain at ₹ 60,42,693/- which was incorporated in para 5 of the assessment order dated 02.12.2011. 4. The ld. CIT(A) allowed the appeal of the assessee by rejecting the conclusion arrived at by the AO of not treating factory gala as part of block of assets primarily because the said gala was let out and rental income were offered under the head income from house property by holding as under:- 5. I have carefully considered the facts relating to the grounds raised in appeal as they emanate from the impugned assessment order and the submissions m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a result of the transfer of the asset together with the full value of such consideration received or accruing as a result of the transfer of any other capital asset falling within the block of the assets during the previous year, exceeds the aggregate of the following amounts, namely:- (i) expenditure incurred wholly and exclusively in connection with such transfer or transfers; (ii) the written down value of the block of assets at the beginning of the previous year; and (iii) the actual cost of any asset falling within the block of assets acquired during the previous year, such excess shall be deemed to be the capital gains arising from the transfer of short-term capital assets; (2) where any block of assets ceases to exist as such, for the reason that all the assets in that block are transferred during the previous year, the cost of acquisition of the block of assets shall be the written down value of the block of assets at the beginning of the previous year, as increased by the actual cost of any asset falling within that block of assets, acquired by the assessee during the previous year and the income received or accruing as a result of such transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to therein will be treated as short term capital asset. No' one can doubt that assets covered by Section 50 are depreciable assets forming part of block assets as defined under Section 2(11) of the Act. Section 50 has two components; one is as to the nature of treatment of an asset, the profit on sale of which has to be assessed to capital gains. The Section mandates that a depreciable asset in respect of which depreciation has been allowed when sold should be assessed to tax as short term capital asset. The other purpose of Section 50 is to provide cost of acquisition and other items of expenditure which are otherwise allowable as deduction in the computation of capital gains and covered by Sections 48 and 49 of the Act. Here again Section 50 provides an exception for deduction of cost of acquisition and other items of expenditure otherwise allowable in the computation of capital gains under Sections 48 and 49 of the Act. In other words, Section 50 provides for assessment of a depreciable asset in respect of which depreciation has been allowed as short term capital gains and the deductions available under Sections 48 and 49 should be allowed subject to the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r under consideration. The fact that depreciation has also been claimed on the said block is also not controverted by the AO. In view of these reasons, I find that the conclusion of the AO that the factory gala in question goes out of the block of assets and of the purview of section 50 simply because rental income there from has be offered to tax under the head 'income from house property' is misplaced and cannot be upheld and the ground raised by the appellant is allowed . 5. The ld. DR submitted before us that the assessee had purposively adjusted the sale consideration by adding the same from the block of assets factory gala for evading the amount of tax on short term capital gain on the sale of gala. The ld. DR further submitted that the assessee let out the gala and income conceived from by way rent was offered as income from house property and deduction u/s 24 of the Act was claimed accordingly. Consequently the said factory gala ceased to be part of the blocked assets the moment it was given on rent and said income was shown as property income. Moreover, no depreciation was claimed for 2 years during the period the gala was given on rent and therefore the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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