2012 (7) TMI 389

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....ciating the fact that the permanent structure had been built on a land and plant and machinery had been erected thereon, the plot and the structure built thereon become inseparable. 2. The brief facts of the case are that the assessee has shown capital gain of Rs. 5,79,174/- on account of sale of land for sale consideration of Rs. 25,25,000/-. The valuation certificate of the land reveals that land includes main factory building and plant & Machinery. The A.O. found that the depreciation was claimed on factory building and plant & Machinery in the previous years since the factory building and plant cannot be separated form the land and the depreciation was already claimed in earlier years. The gain from sale of land resulted in Short Term ....

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....eet filed with the Return of Income. It may be noted that no Depreciation is allowable in respect of land as held by the Hon'ble Supreme Court in the case of CIT v. Alps Theatre 65 ITR 377. Hence, Section 50 shall be not applicable in case of computing capital gain on sale of Land. After going through the details of the submission and case laws cited by the appellant and the finding of the AO, it becomes evident that appellant has not claimed depreciation on the land. Therefore, land is a capital asset forming part of a block of assets in respect of which depreciation has not been claimed or allowed under the Indian Income Tax Act 1961. In view of this fact, Section 50 of the IT Act shall be not applicable in case of computing capital gain ....

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....enue that the cost attributed to the building when it was purchased was only Rs. 68,00,000/- divided as Rs. 49,32,000/- for S-7, Green Park, New Delhi and Rs. 18,68,000/- for S-8, Green Park, New Delhi, whereas the assessee had incurred expenditure on additions to the building in the amount of Rs. 1,58,16,423/- up to 31.03.2003 and reckoned from this date, the assessee did not hold the property for more than 3 years and, therefore, the sale of land cannot be considered as a sale of a long term capital asset. From this it was sought to be argued, as was observed in para 3.3 of the assessment order, that the land is not a long term capital asset because the assessee never really purchased the land but it actually purchased the ready built bui....