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TMI Blog2017 (2) TMI 726X X X X Extracts X X X X X X X X Extracts X X X X ..... 71(1)(c) of the Act. 2. We first come to assessee's pleadings. Its former appeal raises two substantive grounds inter alia challenging validity of reopening and action of both the lower authorities in treating its long term capital gains arises from sale of building as short term capital gains by invoking Section 50 of the Act. This follows assessee's alternative plea raising claim of indexation benefit on the abovestated factory building sold. The assessee's latter appeal seeks to delete Section 271(1)(c) penalty of Rs. 5,52,290/- imposed by both the lower authorities in view of the above quantum addition. Learned counsel representing assessee states very fairly that he does not wish to press for its legal plea challenging validity of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce from 01.04.1993 with four partners up to the abovestated retirement deed. He then observed that assessee's returns had been filed from 1997-98. We notice from page 3 of the Assessing Officer's order that assessee's factory building in question was in fact use for the purpose of its business and also included in the assets relevant for the purpose of claiming depreciation. He further declined to accept assessee's plea that its unabsorbed depreciation brought forward from all preceding assessment years pertained to plant and machinery, electric fitting along with furniture and fixtures. The Assessing Officer accordingly treated assessee's above stated long term capital gain as short term capital gains u/s.50 of the Act. 4. The CIT(A) con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laimed plant and machinery and fixtures as depreciable assets. The appellant replied to the AO that all in the past years depreciation has been claimed only on plant and machinery, electric fittings and furniture and fixtures. As per the appellant no depreciation was claimed on factory building. However, the appellant could not produce any documentary evidences and details in support of its claim. The reply of the appellant was that since the matter was old and therefore it was not able to produce the income tax return and evidences etc. But the fact to be considered is that the manufacturing was carried out by the appellant in the factory premise and it has claimed depreciation on plant and machinery and furniture etc. In my opinion if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h factory premise. But the fact is that once the depreciation on factory premise has been claimed by the appellant in the very beginning of the year, then this factory premise has to be treated as depreciable asset and if the same is sold in any of the subsequent years, the capital gain arising on account of the same will have to be treated as short term capital gain as per provisions of section 50 of the IT Act. The appellant itself has admitted that it stopped claiming depreciation on factory premise since 1999- 2000 as its business was closed down and depreciation was not allowable u/s 32 of the IT Act. In my opinion if depreciation has been claimed on the factory premise for any of the year, the same has to be treated as depreciable bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1961 Act or even 1992 Act as short term capital gains. The dispute however between the parties is more a factual one wherein the assessee strongly claims throughout that it has never sought depreciation relief qua the factory building in question. It has further elaborated to have carried forward its unabsorbed depreciation not including the factory building in question in the relevant block of assets. It emerges that neither of the lower authorities has controverted the same by quoting any factual evidence. They rather proceed on assumptions and presumptions that assessee must have claimed depreciation relief qua its factory building sold. The assessee's evidence quoting all the above narrated material and facts stands simply brushed aside ..... X X X X Extracts X X X X X X X X Extracts X X X X
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