TaxTMI 
TaxTMI 
2017 (10) TMI 1000
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....r of Income Tax (Appeals) - 44, Mumbai [hereinafter referred to as "Ld. CIT(A)"] erred in confirming the action of the Ld. A.O. in making addition of Rs. 12,50,767/- on account of profit on sale of factory building treating the same as Income from Other Sources without appreciating the facts and circumstances of the case. Hence, the addition of Rs. 12,50,767/- under the head Income from Other Sources is unjustified and the same may be deleted. 2. The Ld. CIT(A) failed to appreciate the fact that the factory building purchased and improved upon during the year was acquired exclusively for the purpose of manufacturing activity of the Appellant. Thus, the same is duly reflected under the "block of asset- Buildings" in the fixed assets sched....
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....Written Down Value (WDV) lying in the block of 'factory building'. The Assessing Officer required the assessee to explain as to why the surplus on the sale of the property was not offered to tax. The stand of the assessee was that the treatment accorded by it was in accordance with the provisions of the Act whereby the sale value was reduced from the value of the respective block of asset, and only on the resultant WDV, depreciation was claimed, and it was emphasised that the property in question was a fixed asset. The Assessing Officer, however, disagreed with the treatment accorded by the assessee as, according to him, there was a profit on the purchase and sale of property of Rs. 12,50,760/-, which was required to be assessed as 'income ....
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....y on its improvement and extension as assessee was planning to expand its manufacturing capacity. So however, in the absence of good business prospects, without putting the factory building to use for manufacturing, it was sold. It was, therefore, contended that it has been wrongly treated as a transaction involving investment in a business asset. 6. On the other hand, the ld. DR appearing for the Revenue has relied upon the reasoning advanced by the lower authorities, which I have already noted in the earlier paras and is not being repeated for the sake of brevity. 7. I have carefully considered the rival submissions. The undisputed factual matrix is that the assessee has purchased a property comprising of land and factory building durin....
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....time, even the treatment by the Assessing Officer of assessing the surplus on the sale of factory building as 'income from other sources' is also untenable. Pertinently, the factory building is a capital asset and merely because assessee has acquired it and sold during the year itself would not change its character. Therefore, it is a case where the capital asset on which depreciation has not been allowed has been sold within a period of less than 12 months of its acquisition and, therefore, the resultant surplus is a Short Term Capital Gain. Such a surplus ostensibly cannot be assessed as 'income from other sources' and the decision of the Hon'ble Supreme Court in the case of Universal Plasts Ltd. (supra), relied upon by the Assessing ....