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TMI Blog2016 (7) TMI 1133X X X X Extracts X X X X X X X X Extracts X X X X ..... copy of the order dated 15/07/2015 (ITA No.3258/Mum/2012). This factual matrix was not controverted by the ld. DR. 2. We have considered the rival submissions and perused the material available on record. In view of the above, we are reproducing hereunder the relevant portion from the aforesaid order dated 15/07/2015, wherein, the quantum, on the basis of which penalty was imposed, was deleted by the Tribunal, affirming the stand of the Ld. Commissioner of Income Tax (Appeal). "These cross appeals are directed against the order passed by the CIT(A)-34, Mumbai and they pertain to A.Y. 2008-09. 2. Following grounds were urged by the Revenue: - "1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the business of manufacture of Hydraulics Systems and Components. During the financial year 2007-08 assessee stopped its business and all the assets were sold for a consideration of 7.20 crores. Assessee firm declared long term capital gains of Rs. 5,79,63,425/- whereas the cost of building was shown at Rs. 67,000/- and valuation of land and building as per Valuation Report for 01.04.1981 was shown as Rs. 24,11,789/-. 4. The AO observed that as per the deed of assignment dated 18.06.2007 between the assessee and M/s. Meyer Organics P. Ltd. the assessee has assigned its leasehold rights in Plot No. B- 22 together with the building constructed on it in the year 1966, situated in Thane Industrial area. This lease of land had been obtaine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial premium works out to Rs. 19,14,400/- because of the fact that the previous rate was Rs. 14/- whereas the current rate was Rs. 6,000/- per sq.ft. The cost of acquisition of leasehold rights accordingly worked out to Rs. 44,772/- in the hands of the assessee and the cost at the time of transfer by the assessee works out to Rs. 1,91,88,000/-. The AO observed that as per the provisions of section 55(2)(a) of the Act, in the case of tenancy rights, the purchase price is to be taken as the cost of acquisition and the market value as on 01.04.1981 is not allowed to be substituted. Despite the objection of the assessee he proceeded to compute the long term capital gains at Rs. 1,84,41,306/- and short term capital gains of Rs. 5,37,54,656/-. 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion at Rs. 8,000/- per sq.mt. For a building constructed in 1966 no person will purchase the same at that price. It was therefore submitted that the amount paid by the purchaser was on account of the land cost. 8. The learned CIT(A) examined the issue and observed that the Hon'ble Bombay High Court, in the case of D.K. Sandhu Bros. Chembur P. Ltd. 249 ITR 265 had considered identical issue wherein it was held that the tenancy right was a capital right and its transfer would attract capital gains. In the instant case the assessee acquired the leasehold rights for an amount of Rs. 44,772/- and this should be treated as cost of acquisition. 9. As regards computation of capital gains the learned CIT(A) noticed that the AO had taken the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as computed under section 55(2)(b) has to be taken into consideration in the case of the building, which is more than 40 years old. It is not in dispute that the building is more than 40 years old. As per the Annexure to the cross objections the rate of depreciation of old buildings should be worked out as per the method prescribed in the Ready Reckoner and in the instant case 30% of the value should be taken into consideration which works out to Rs. 21,78,043/-. 11. We have heard the rival submissions and carefully perused the record. In our considered opinion the appeal filed by the Revenue has no merits. The AO has arbitrarily allocated the cost of land by taking into consideration the cost of the building overlooking the claim of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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