Tribunal allows appeal on shop sale classification as long-term capital gain

The Tribunal condoned the delay in filing the appeal due to inadvertence and work pressure on the Chartered Accountant. Regarding the treatment of shop sales as short term capital gain, the Tribunal ruled in favor of the appellant, considering the shop as a long term capital asset despite being part of a block of assets. The absence of depreciation claims and the holding period supported this decision, emphasizing that section 50 aims to tax business assets with claimed depreciation benefits. The appeal was allowed, overturning the AO's classification of the shop as short term capital gain.

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Issues:
1. Condonation of delay in filing appeal.
2. Treatment of sales of shop as short term capital gain.

Condonation of Delay:
The appellant filed an appeal 89 days late, citing inadvertence and work pressure on their Chartered Accountant. The Tribunal, considering the reasons and the concession by the Senior DR, condoned the delay and admitted the appeal.

Treatment of Sales as Short Term Capital Gain:
The appellant sold a shop and declared long term capital gain, but the AO treated it as short term capital gain under section 50 of the Income Tax Act. The CIT(A) upheld this decision, stating that the shop was a depreciable asset forming part of a block of assets. However, the Tribunal analyzed the facts and relevant legal provisions. It found that the appellant did not claim depreciation on the shop, and the asset was held for over 36 months. Referring to precedents, the Tribunal concluded that the shop should be considered a long term capital asset. Even though the shop was part of the block of assets, the absence of depreciation claims indicated its long term nature. The Tribunal emphasized that the intention of section 50 was to tax business assets with claimed depreciation benefits. Therefore, the Tribunal allowed the appeal, considering the shop as a long term capital asset, and ruled in favor of the assessee.

The judgment was delivered by Sri Mahavir Singh, JM, on August 23, 2017, in the case before the Appellate Tribunal ITAT Mumbai.

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