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TMI Blog2016 (12) TMI 1351X X X X Extracts X X X X X X X X Extracts X X X X ..... learned CIT(A) which was never claimed before the A.O. during assessment proceedings. In fact no application u/r 46A of Income Tax Rules, 1962 has been filed before the learned CIT(A) with respect to said claim of ₹ 16,27,010/-. The assessee has only stated that they were repairs by nature and the learned CIT(A) rejected the contentions of the assessee for inclusion of ₹ 16,27,010/- to the block of asset, and hence short term capital gain of ₹ 9,25,880/- was brought to tax by the ld. CIT(A) while the assessee has contended that the same being the payment of stamp duty for purchase of office, this has to be further enquired and verified by the authorities below and finding of the facts has to be recorded by the A.O. on merits after due enquiry /verifications for which we deem it fit and proper to set aside and restore this issue back to the file of the A.O. for necessary verification and enquiry so that the AO can record his finding of fact. Needless to say proper and adequate opportunity of hearing shall be provided by the AO to the assessee in accordance with the principles of natural justice and in accordance with law. We also direct the A.O. to compute the sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat there are two types of premises under the collective block under the head office premises and Industrial Premises . d. The CIT(A) erred by isolating Office Premises from Industrial Premises and taxed the surplus of Office Premises in-spite of the fact that there is enough WDV in the A/c Head of Industrial Premises. e. The CIT(A) erred in appreciating the fact that the ITAT vide in appeal no. 3992/Mum/2010 has accepted the said office premises to be a depreciable asset and has uphold the relief given by CIT(A)-33 in appeal no. CIT(A)- 33/IT/1347/09-10 to the appellant firm. f. CIT(A) erred in concluding that the asset bought during the P.Y. 2007-08 for ₹ 16,27,010/- was not put to use and therefore wrongly concluded that there was no asset left for setting off the sale of the assets under the head Office Premises g. CIT(A) erred in making the said addition without appreciating the fact that the said block of asset was never empty. 3. The Brief facts of the case are that the assessee firm is engaged in the business of trading in foundry chemicals. During the course of assessment proceedings u/s 143(3) read with Section 143(2) of the Act, the A.O. observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction and there was no light or electricity in the building. The said premise was situated in the ground floor and forceful possession was taken by the assessee from the developer to create pressure on the developer to execute conveyance of the said property. The assessee could not afford the costly civil suit proceedings for the said property and hence took the route of forceful possession. The A.O. after verifying the contention of the assessee observed that the assessee earned profit of ₹ 9,25,880/- on transfer of office 605, 6th floor, Maithili s Signet, Plot No. 39/4, Sector-30A, Vashi, Navi Mumbai which was not offered for taxation by the assessee. The premise was not used for the business purpose and hence the depreciation was not allowed to the assessee for the assessment year 2007-08. It was also observed by the A.O. that even if the contention of the assessee is accepted that the block of assets i.e. Office premises do not exist during the assessment year 2008-09, the assessee himself transferred the block of asset i.e. Office Premises to Industrial Premises , the details are as under:- Description of assets Rate of deprecia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 683266 6765018 It was observed by the A.O. that the assessee s intention to transfer the value of ₹ 59,30,490/- during financial year 2006-07 was purposely made to office premises to evade tax on profits on sale of shop No. 605, 6th floor, Maithili s Signet, Plot No. 39/4, Sector-30A, Vashi, Navi Mumbai in subsequent assessment year. It was also observed that to keep the block of assets of office premises alive, the assessee has made additions to office premises of ₹ 15 lacs showing purchase of office No. 8(A), Plot No. 260, Sector 10, Kharghar,Navi Mumbai and the details of payments are as under:- 17-12-2007 ₹ 10,00,000/- 04.02.2008 ₹ 5,00,000/- It was observed that the assessee had tried to show the transaction as business in order to claim depreciation in respect of office No. 8A, Plot No. 260, Sector 10 , Kharghar ,Navi Mumbai by producing the evidence of transfer of files to Office NO. 8A, Plot No. 260, Sector 10, Kharghar,Navi Mumbai and to this effect affidavit of Mr. Vinod Shankar More,Peon was also furnished st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered, then there is negative block of assets under Office Premises as under:- Description of assets Rate of depreciation WDV as on 1.4.2007 Additions Apr-Sep Additions Oct-Mar Sales Depreciation allowable WDV as on 31.3.08 A B C D E F G H Office premises (2006-07) 10 129839 0 7529610 0 389464 7269985 Office premises (2007-08) 10% 7269986 115400 - 84,55,490 - (1070104) Thus, it was held by the AO that there is no block of assets office premises existed as on the date of sale of office No. 605, 6th Floor, Maithili's Signet, Plot No.39/4, Sector-30A, Vashi, Navi Mumbai and as such the assessee is liable to pay short term capital tax on the said transact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned CIT(A) agreed with the AO that short term capital gain of ₹ 9,25,880/- was to be brought to tax and upheld the assessment order of the A.O. .The enhanced amount of ₹ 16,27,010/- to the cost of block of asset was rejected by the ld. CIT(A) by appellate orders dated 11.03.2013. 6. Aggrieved by the appellate orders dated 11-03-2013 passed by the ld. CIT(A), the assessee filed appeal before the Tribunal. 7. The ld. Counsel for the assessee submitted that there was a sale of office premises No. 605, 6th Floor, Maithili's Signet, Plot No.39/4, Sector-30A, Vashi, Navi Mumbai to M/s Hi-Tech Infra Projects (India) Pvt. Ltd. for a consideration of ₹ 25,25,000/- on 19th December, 2007. The said office premises were purchased by the assessee on 21st February, 2007 for a total consideration of ₹ 15,99,120/- , and the gain arising from the sale of the said office was brought to tax as short term capital gain by the Revenue . The ld. Counsel submitted that the said asset being office premises was used for business purposes on which depreciation of 10% is available being a building not used for residential purposes and since the block of asset is cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he afore-stated case of Ansal Properties and Infrastructure Limited (supra) has held that the depreciation is rate specific and not division/ asset specific. The learned counsel referred to the definition of Block of Asset as is contained in Section 2(11) of the Act. The ld. Counsel also drew our attention to the tax audit report whereby the depreciation was allowed @ 10% under the head office premises and industrial premises . It was submitted that even if the said office premises i.e. shop no. 8(A), Plot No. 260, Sector 10, Kharghar, Navi Mumbai is excluded to be included in block of asset, still no capital gain can be brought to tax as per scheme of the Act as contained in provisions of Section 50 of the Act because there will still be positive figure in the block of assets. It was submitted that the findings of authorities with respect to holding that repair is included in block of asset is perverse, as the same is stamp duty paid on transfer of asset. 8. The ld. D.R. submitted that the assessee has purchased new asset being office premises i.e. shop No. 8(A), Plot No. 260, Sector 10, Kharghar, Navi Mumbai for which payment of ₹ 15 lacs was made and the commencement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial purposes on which depreciation @10% is provided. Secondly, with respect to the contention of the assessee that the block of asset which shall constitutes and include office premises and industrial premises both as the buildings which are not used for residential purposes on which depreciation @ 10% is provided and hence shall be part of the same block of assets as defined u/s 2(11) of the Act, we agree with the assessee that the assessee has rightly included the same in the block of asset of building which is not used for residential purposes carrying depreciation @ 10%. Our view is further fortified by the decision of Hon ble Delhi High Court in the case of Ansal Properties and Infrastructure Limited(supra). Thirdly, with respect to the contention of the assessee that assessee has paid ₹ 15 lacs for the purchase of office shop No. 8(A), Plot No. 260, Sector 10, Kharghar, Navi Mumbai, whereby the possession was forcefully taken by the assessee on 06-02-2008 against which building commencement certificate to start construction was received by the Builder Hi-tech Infra Projects (India) Private Limited on 19th March, 2008 and no conveyance deed was executed by the builde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has added ₹ 16,27,010/- to the block of assets which are in the nature of repairs, this is a new claim made by the assessee before the learned CIT(A) which was never claimed before the A.O. during assessment proceedings. In fact no application u/r 46A of Income Tax Rules, 1962 has been filed before the learned CIT(A) with respect to said claim of ₹ 16,27,010/-. The assessee has only stated that they were repairs by nature and the learned CIT(A) rejected the contentions of the assessee for inclusion of ₹ 16,27,010/- to the block of asset, and hence short term capital gain of ₹ 9,25,880/- was brought to tax by the ld. CIT(A) while the assessee has contended that the same being the payment of stamp duty for purchase of office, this has to be further enquired and verified by the authorities below and finding of the facts has to be recorded by the A.O. on merits after due enquiry /verifications for which we deem it fit and proper to set aside and restore this issue back to the file of the A.O. for necessary verification and enquiry so that the AO can record his finding of fact. Needless to say proper and adequate opportunity of hearing shall be provided by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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