2017 (3) TMI 685

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....ing Officer(AO)completed the assessment,u/s.143(3)of the Act on 29/12/2008, determining its income at Rs. 14. 85 crores. 2.First ground of appeal is about disallowance made by the AO,u/s. 14 A of the Act.During the assessment proceedings,the AO found that assessee had earned dividend income of Rs. 77.78 lakhs,that same was claimed exempt u/s.10 (34) of the Act, that it had disallowed Rs. 77,789/-, being 1% of the dividend income is disallowance u/s.14A.The AO,directed the assessee to explain as to why disallowance as per provisions of Rule 8D of the Income Tax Rules,1962 (Rules)should not be made after considering the submission of the assessee,the AO made a disallowance of Rs. 10.18 lakhs(Rs.8.65 lakhs as per rule 8D(2)(ii)+Rs.2.46 lakhs-....

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....consideration, that the loan was sanctioned for specific purposes, that the assessee had sufficient results and surplus to make investment he referred to the cases of Marico Ltd.(ITA/8858/Mum/2011-AY.2007-08,ITA/8713/Mum/2011, dated 18/05/2016) and Allahabad Bank(ITA/466/Kol/2013-AY.2002-03,dtd.13/01/2016 and argued alternatively that the disallow - ance should be restricted to reasonable limit.The Departmental Representative (DR) stated that matter could be decided on merits. 2.3.We have heard the rival submissions and perused the material before us. We find that the AO had applied the provisions of rule 8D for making disallowance u/s. 14 A of the Act. The honorable Bombay High Court has already held that rule 8D had no applicability for ....

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....f Rs. 1.93 crores on assignment of leasehold rights on leased land at Jalgaon,that the assessee had claimed that provisions of section 50 were not applicable to the sale of leased land. He directed it to provide detailed working an explanation of the claim made an to justify as to why the provisions of section 50 could not be applied on sale of leased the land. After considering the submissions of the assessee dated 15/10/2008 and 23/10/2008 he held that the plots of land were alerted to the assessee by Maharashtra Industrial Development Corporation(MIDC),that it had right to enjoyed the property,including the right of construction of immovable structure and right of transfer, that the leased right were in the nature of lease in perpetuity,....

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....alue for working out capital gains. Accordingly the capital gain of Dombivali and Jalgoan properties was enhanced to Rs. 1 26,18, 825/- and Rs. 42,95,630/- respectively. 3.2.During the course of hearing before us, the AR stated that provisions of section 50 were not applicable to leasehold land/building. He referred to the case of Greenfield Hotels and Estates (P.) Ltd. (389 ITR 68). The Departmental Representative (DR) left the matter to the discretion of the bench. We find that in the case of Greenfield Hotels (supra) the Department had caused the following question of law before the Hon'ble High Court: "whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in upholding the order of the CIT (A)....

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....e's case where the assessee has sold the lease hold rights. The learned CIT(A) has followed the decision of the Tribunal, Mumbai Bench, in Atul G. Puranik v/s ITO, ITA no.3051/Mum./2010, order dated 13th May 2011. 12. Before us, the learned Departmental Representative has submitted that there is no difference in the title of the property in question being the land, therefore, the provisions of section 50C, are applicable in the case of assessee. He relied on the order of the Assessing Officer. 13. The learned Counsel for the assessee, on the other hand, submitted that the lease hold rights cannot be equated with the ownership of the land and, therefore, the deemed provisions of section 50C, cannot be applied in case of transfer of l....

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....A, shall be deemed to be the owner of that building or part thereof. Firstly, this provision has been expressly limited in its application to sections 22 to 26 of the Act, which deal with the computation of the income under the head "Income from house property". It has not been made applicable to the computation of capital gains. Secondly, the rights mentioned in the provision are rights over the building and any rights over the land have not been included in the section. In any case, since the section 27(iiib) has not been extended to the computation of capital gains u/s. 45 and is limited to the computation of the income under the head "Income from house property", the conclusion of the CIT(A) that section sac cannot be invoked where leas....