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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 ..... assets so as to be granted depreciation relief thereupon. It is now clear in view of our findings on merits that the impugned Section 271(1)(c) penalty has no legs to stand since the quantum disallowance/addition arising from re-computation of long term capital gains/loss by applying Section 50 of the Act itself stands deleted. - Decided in favour of assessee - ITA Nos.973 & 974/Ahd/2014 - - - Dated:- 13-2-2017 - SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI S. S. GODARA, JUDICIAL MEMBER. For The Assessee : Shri T. P. Hemani, A.R. For The Revenue : Shri Prasoon Kabra, Sr. D.R. ORDER PER S. S. GODARA, JUDICIAL MEMBER These two assessee s appeals for assessment year 2008-09 arise against CIT(A)-I, Baroda s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y building sold was a depreciable asset giving rise to application of Section 50 of the Act prescribing special treatment for computation of capital gains in such cases. The assessee appears to have strongly contested the said reason by pleading that it had not carried out any business activity since assessment year 2000-01. Its building sold was also not included in the block of assets for claiming depreciation even before setting down its above stated business. The assessee thus explained that Section 50 of the Act would not apply in given facts of the case. It further highlighted that it had closed the factory premises in question since 1996-97 and also that it had never claimed any depreciation qua the same. The Assessing Officer framed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in. With regard to these grounds of appeal, the submission of the appellant as filed vide letter dated 27/01/2014 as reproduced in preceding paragraphs of this appellate order is not found to be acceptable. In the case of appellant, the returns of income have been filed for A.Yrs from 1997-98 to AY 2008-09. The AO in the assessment order u/s 143(3) r.w.s. 147 has mentioned that the factory building (i.e. the factory building on which long term capital gain has been claimed by the appellant) was used for the purpose of business of the appellant and the depreciation was claimed as applicable to the business till 1999-2000. As per the AO thereafter no depreciation was claimed, but the asset shown in the balance sheet was as it is, i.e. at S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preciation. The appellant has not been able to furnish details and evidences to show that the depreciation was not claimed on such factory premise. Non filing of evidences and details would lead to the conclusion that the treatment of the asset i.e. factory building by the appellant as long term capital gain was not logically correct. The main contention of the appellant is that it had closed down factory and there was no manufacturing activity since long time and it stopped claiming depreciation on it as it is not allowable u/s 32 of the Act. As per the appellant now that since it did not claim depreciation on the factory premise since 1999-2000, it should not be classified as Depreciable Asset and hence, provisions of section 50 of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asset is sold subsequently, the capital gain arising on account of such sale has to be treated as short term capital gain in terms of provisions of section 50C of the IT Act. On this issue I agree with the stand of the AO. Considering all these facts, it is held that the AO has correctly treated the long term capital gain shown by the appellant on sale of factory premise as short term capital gain. Thus, the action of the AO is confirmed and ground of appeal no. 2.01 and 2.02 of the appellant are dismissed. 5. We have heard both the parties. Case file perused. There can hardly be any dispute so far as Section 50 of the Act is concerned that the same applies in the nature of a special provision for computation of capital gains arising ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebutted except the fact that both the lower authorities have drawn their respective conclusions only on presumptive basis. We thus conclude that the Assessing Officer as well as CIT(A) have erred in invoking Section 50C of the Act qua assessee s factory building sold giving rise to the long term capital loss in question without proving that the same ever found part of a block of assets so as to be granted depreciation relief thereupon. That being the case, all other observations of both the lower authorities stand rendered academic. The assessee s second substantive ground on merits in its quantum appeal ITA No.973/Ahd/2014 succeeds. 6. We now advert to assessee s penalty appeal ITA No.974/Ahd/2014. It is now clear in view of our finding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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