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TMI Blog2017 (10) TMI 936X X X X Extracts X X X X X X X X Extracts X X X X ..... computation of taxable gain and not for other purposes. Since the capital asset in question was held for a period exceeding three years, it was in the nature of long term capital asset and, therefore, gain realized on transfer of long term capital asset is qualified for concessional tax rate provided in Section 112 of the Act - Decided against revenue Deduction on account of amortization of upfront fees - Held that:- CIT(A) has deleted the disallowance by observing that in the past assessments also the assessee’s claim for pro-rata deduction was consistently allowed and assessee's such claim was in conformity with the decision of Hon’ble Supreme Court in the case of Madras Industrial Investment Corporation Limited Vs CIT (1997 (4) TMI 5 - SUPREME Court ). Since the issue is identical with the issue raised in AY 2005-06, which is squarely covered in favour of the assessee and the Ld. DR could not controvert the aforesaid finding of the Tribunal by producing any material before us and there is no change in law or facts, we respectfully following the aforesaid order of the Tribunal, cited supra, dismiss this ground of appeal of the revenue - I.T.A. No. 159/Kol/2016 - - - Dated:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the earlier years. From the impugned order I note that the AO has not disputed the fact that the exchange fluctuation loss related to working capital loan obtained by the assessee in foreign currency. It is also not disputed by the AO that such working capital loans taken earlier were outstanding on the earlier balance sheet dates. As per the consistent practice followed the assessee stated in his books the foreign currency working capital loans at the exchange rates prevailing on the respective balance sheet dates. If any loss occurred on such restatement, the same was debited to the P L A/c as an item of expense and if any gain was made, then the same was credited as income in the P L A/c of the relevant year. This method of accounting was consistently followed by the assessee in the past years. In the circumstances the issue of allowability of such loss arose in the assessee's own case for AYs 1998-99 to 2002-03. In assessments of these years the loss incurred on restatement of working capital loan was disallowed as being contingent in nature but on appeal the disallowance was deleted by the appellate authorities. I also note that the AO has admitted that on account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of the Tribunal in Assessee s own case on identical issue and keeping in mind the fact that the liability in question is on revenue account, the order of the CIT(A) does not call for any interference. Accordingly, ground no.2 raised by the Revenue is dismissed. Since the issue is identical with the issue raised in AY 2005-06, which is squarely covered in favour of the assessee and the Ld. DR could not controvert the aforesaid finding of the Tribunal by producing any material before us, following the aforesaid order of the Tribunal, cited supra, we dismiss the ground of appeal of the revenue. 3. Ground no. 2 of revenue s appeal reads as under: 2. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in directing to recompute assessee s tax liability in respect of capital gain on sale of property by applying tax rate prescribed u/s. 112 of the Income Tax Act, 1961 when the said property was held by the assessee as depreciable assets. 3.1. Briefly stated facts are that ground No.2 relates to computation of deemed short term capital gain assessed in respect of sale of residential property at Golf Link, New Delhi. At the time of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the opening WDV, the assessee made net gain of ₹ 4,69,23,115 which was liable to be assessed under the head Capital Gains in the manner prescribed in Section 50 of the Act. It was the assessee's contention before the AO that even though the income assessable was ₹ 4,69,23,115 yet such income was earned by the assessee on transfer of a long term capital asset and therefore the same was entitled for availing the concessional rate of tax prescribed in Section 112 of the Act. In support of this contention the assessee had relied on the judgment of the Bombay High Court reported in 195 CTR 1. In the impugned order the AO has not given any detailed reasoning for rejecting the assessee's contention even though the admitted fact was that the capital asset in question was held for period exceeding three years prior to the date of sale. From examination of the facts material on record, I find that the property in question was admittedly a depreciable asset and therefore came within the ambit of Section 50 of the Income Tax Act, 1961 when the sale proceeds exceeded the opening WDV of the building block. At the same I also note that the property in question was acqu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts as narrated by the Ld. CIT(A) in his order were not disputed by the ld. DR at the time of hearing before us. Hence, we refrain from repeating the facts again. We find that the property in question was admittedly a depreciable asset and therefore came within the ambit of Section 50 of the Income Tax Act, 1961 when the sale proceeds exceeded the opening WDV of the building block. At the same we also note that the property in question was acquired by the assessee in March 1956 and therefore its character was long term in nature. Sec. 50 is the special provision for computation of capital gain in case of depreciable assets and the deeming provision of sec. 50 is only for the purpose of section 48 49 relatable to computation of taxable gain and not for other purposes. Since the capital asset in question was held for a period exceeding three years, it was in the nature of long term capital asset and, therefore, gain realized on transfer of long term capital asset is qualified for concessional tax rate provided in Section 112 of the Act. We note that identical issue was adjudicated by the Tribunal (Mumbai) Benches in the case of Smita Conductors Ltd. Vs. DCIT 41 taxmann.com 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tenure of the original loan was to expire in October 2006. It was therefore the assessee's contention that benefit of upfront fee payment was to be derived over the unexpired period of 59 months from the date of conversion. The assessee did not claim deduction for upfront fees paid in computing its taxable income of FY 2001-02 being the year in which conversion was allowed. According to the assessee since the benefit of upfront fees accrued to the assessee pro rata over the unexpired tenure of the original loan, the assessee opted to amortize the expenditure of ₹ 20 crores over a period of 59 months commencing from December 2001. For the FY 2005-06 relevant to AY 2006-07, the pro-rata expenditure amounted to ₹ 406.78Iacs. In the FYs 2001-02 to 2003-04, the assessee accounted amortization of these expenses on pro-rata basis by debiting the appropriate sums to the Profit Loss Account. In FY 2004-05 however the entire unamortized sum of ₹ 1050.85 lacs was set off against the Revaluation Reserve in the Balance Sheet consequent to which no amount was debited in the P L A/c, of FYs 2004-05 2005-06 towards amortization. In the computation of income for AY 2005-0 ..... 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