TaxTMI 
TaxTMI 
2010 (8) TMI 682
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.... appeal in assessee's appeal read as under: - 1. "The ld. CIT(Appeals) has erred in law in holding that land appurtenant to a building forms a part of a block of assets, within the meaning of sec.2 (11) of the Income Tax Act, 1961 for purposes of sec. 50 of the Act, for computation of capital gains. 2. The ld. CIT(Appeals) has erred in not fully allowing the contention that land and building are separate assets, for the purposes of computation of capital gains. 3. The ld. CIT(Appeals) has erred in not holding that the short term capital loss and the long term capital loss, as computed in the Income Tax Return, should be accepted." 2. Common issue involves in these appeals. The assessee has sold land, building and equipments vide sale deed dated 28th August, 1996 for a consolidated amount of Rs. 30,50,000/- in which the price assigned to building and equipment is stated at Rs. 50,000/-. Copy of sale deed is placed at pages 6 to 14 of the paper book. According to the version of the assessee, it was operating cold storage ....
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....96 Mode of Transfer : Sale Sale Consideration of Land at Panipat (As per Sale Deed dated 28-8-1996) 30,00,000 Less : Deductions (i) Expenditure incurred in transfer (a) Brokerage 57,000 (b) Legal Expenses 2,000 (c) Travelling Expenses 7,505 66,805 (ii) Indexed cost of Acquisition Market Fair/Value of Land as on April, 1981 (As per Valuation Report dated 22-5-1993 attached) = 12,22,875 - Indexed cost of Acquisition 12,22,875 x 305 100 37,29,769 37,96,574 Long Term Capital Loss : Rs. 7,96,574 4. The AO did not accept such computation made by the assesee. The AO is of the opinion that after construction of building ....
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.... gain. The department in its appeal is aggrieved by the decision of ld. CIT(A) vide which he has excluded the land from computation of short term capital gain of 8,175 sq. yds. The assessee in its appeal is aggrieved by the decision of ld. CIT(A) vide which it has been held that the land which was occupying the building became part of the building hence sec. 50 was not applicable. According to assessee, sec. 50 could not be applied to any part of the land. 6. Therefore, the short issues involved in both these appeals is regarding applicability or otherwise of sec. 50 on the component of consideration related to land and also the issue whether the assessee has rightly allocated a sum of Rs. 50,000/- out of total sale consideration of Rs. 30,50,000/- towards the other assets as claimed by the assessee in the sale deed. 7. So far as it relates to applicability of sec. 50 on the value of land. It may be mentioned here that the meaning of word "depreciation" was considered by Hon'ble Supreme Court in the case of CIT Vs. Alps Theatre 65 ITR 377 and it was observed that its meaning according to Webster's new word dictionary is "a decrea....
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....the provisions, regarding capital gain, it was observed that there cannot be any dispute that land is a capital asset and, therefore, it is liable to tax and if the price of two capital asses has been charged at one consolidated price, then the assessee is entitled to bifurcate the same. It will be relevant if the following observations are reproduced from the said decision: - "Land is a capital asset in terms of sec. 2(14) of the Act and, in accordance with the scheme of the Act, it is treated as a separate asset. Even for the purpose of sec. 32, a building which is entitled for depreciation would mean only the superstructure and would not include the site. Under section 48 of the Act, the income chargeable under the head "Capital gains" has to be computed by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset in the manner provided in this section. It is not in dispute that land is a capital asset and only then (sic) it is liable to tax. If the price of ....
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....ain u/s 50 of the Act. We hold that no part of the sale price relating to land can be taxed u/s 50 so as to enable the department to assess the gain arising there from as short term capital gain u/s 50. Therefore, the appeal filed by the revenue to that extent is dismissed. 11. Now coming to the second issue which relates to whether the allocation made by the assessee to the super structure and other items of a sum of Rs. 50,000/- only is sufficient. Both of the parties were heard on this issue. The investment made by the assessee in the super structure and the other equipments is very old. Since F.Y. 1975-76 the same has not been used. For the purpose of computing long term capital gain the assessee has relied upon the valuation obtained by it from a registered valuer who has valued the asset as on 01.04.1981 vide report dated 22nd May, 1993. This valuation has been obtained by the assessee much prior to the date of sale. Ld. AR of the assessee stated before us that&nbs....