TaxTMI 
TaxTMI 
2004 (11) TMI 507
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....rship firm carrying on business as dealers in Non-Ferrous metals. The firm had a branch in Bombay. A flat was purchased in Bombay for a consideration of Rs. 1,01,971. The flat was purchased in the accounting year ending on 31-3-1974. The break up of the cost of the flat is as follows : Flat Rs. 95,000 Garage Rs. 5,000 Deposits Rs. 1,500 Shares Rs. 250 Charges Rs. 221 Total Rs. 1,01,971 3. The assessee-firm capitalized the cost of building at Rs. 95,000 in the books of the firm as its office for the branch in Bombay. The assessee also claimed depreciation on the said ....
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....ubsequent assessment years 1996-97 and 1997-98 also, even though the assessee claimed that the flat was not used for business purposes. He therefore invoked the provisions of section 50A of the I.T. Act and treated the surplus on sale of the flat as short-term capital gains. The quantum of the short term capital gain has been determined at Rs. 67,82,874. 8. In first appeal, even though various legal contentions were raised before the CIT(Appeals), the CIT(Appeals) considered the matter on a question of fact and disposed of the first appeal. The CIT(Appeals) observed that the flat was in the control of the assessee-firm, which was used as a branch office and there was no evidence to show that the flat was not used for its business purpose....
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.... assessee has not claimed any depreciation on the flat thereafter. Therefore the same value has been brought down under the head 'Investments' for the succeeding accounting years ending on 31-3-1996 and 31-3-1997. Thereafter the property was sold during the accounting year ending on 31-3-1998. 13. The facts before the sale of the flat were accepted by the Assessing Officer on the basis of the books of account maintained by the assessee-firm. But the Assessing Officer refused to accept the facts of the case after the sale of the flat as stated by the assessee-firm, as reflected in its books of account. The version of the assessee-firm is not accepted for the reason that according to the Assessing Officer, the business was still carried on....
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....5. Therefore, it is our considered view that the lower authorities have erred in coming to a conclusion that the assessee-firm had in fact used the flat for its business purposes even after 31-3-1995. There is no basis for arriving at such a factual conclusion. The said conclusion has been arrived at by the lower authorities only on the basis of intelligent presumption. 16. We have to therefore accept the contention of the assessee-firm that the flat was not used for its business purpose after 31-3-1995. Therefore it is to be accepted that the Bombay flat ceased to be a business asset/depreciable asset on and with effect from 31-3-1995. The flat was acquired by the assessee-firm way back in 1974. Therefore the character of the flat durin....