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of <h1>Tribunal affirms revision under Section 263, dismisses appeal.</h1> <h3>M/s. Abhideep Chemicals Pvt. Ltd. Versus Pr. CIT – 14, Mumbai</h3> M/s. Abhideep Chemicals Pvt. Ltd. Versus Pr. CIT – 14, Mumbai - TMI Issues:1. Application of Section 50C of the Income Tax Act to depreciable assets.2. Eligibility for exemption under Section 54 EC of the Act in relation to short term capital gains.Analysis:Issue 1: Application of Section 50C to depreciable assetsThe appeal was filed against the Principal Commissioner of Income Tax's order under Section 263 of the Income Tax Act, 1961, revising the assessment order passed by the Assessing Officer. The Principal Commissioner observed that the Assessing Officer failed to adopt the value of the property as per stamp duty valuation while computing short term capital loss on a residential property. The Assessing Officer did not apply Section 50C correctly, which requires the sale consideration to be taken at the stamp duty valuation. The order was deemed erroneous and prejudicial to the interest of revenue as per judicial pronouncements, including the Supreme Court's decision in M/s Malabar Industrial Co. Ltd. 243 ITR 83 (SC).Issue 2: Eligibility for exemption under Section 54 ECThe Principal Commissioner noted that the Assessing Officer did not address the Assessee's submissions regarding eligibility for exemption under Section 54 EC in relation to short term capital gains. The Assessee argued that the Assessing Officer had considered and accepted the submissions while passing the assessment order, granting the benefit of Section 54 EC. The Assessee cited relevant judicial decisions, including the Bombay High Court's decision in ACE Builders Pvt. Ltd. 281 ITR 210, supporting the Assessee's claim for exemption under Section 54 EC for long term capital assets.Judicial Analysis:The Tribunal analyzed the contentions of both parties and reviewed the orders of the authorities below. It was observed that the Assessing Officer did not address the applicability of Section 50C to the transfer of a depreciable asset, leading to an erroneous and prejudicial order. The Tribunal referenced judicial decisions, such as the Bombay High Court's decision in Bhatia Nagar Premises Co-Operative Society Ltd., and the ITAT Mumbai Special Bench's ruling in ITO vs. United Marine Academy, affirming the applicability of Section 50C to depreciable assets. The Tribunal concluded that the failure to apply Section 50C rendered the Assessing Officer's order erroneous and prejudicial to revenue.Conclusion:The Tribunal upheld the Principal Commissioner's decision to invoke Section 263, emphasizing the incorrect application of Section 50C by the Assessing Officer. The Tribunal clarified that the exemption allowed under Section 54 EC remained unaffected by the revision. Ultimately, the appeal of the Assessee was dismissed, affirming the Principal Commissioner's order under Section 263.Note: The judgment was delivered by Shri R. C. Sharma, AM, and Shri Ravish Sood, JM, on 15/05/2017.
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