TaxTMI 
TaxTMI 
2017 (11) TMI 56
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....ration received on sale of factory building with furniture and fixtures as 'Short Term Capital Gain' unjustified Rs. 22,06179/-: i. The Id. CIT(A) erred in confirming the action of the AO in treating the sale of factory building with furniture and fixtures as Short Term Capital Gain without appreciating the facts and circumstances of the case. The Appellant, therefore, prays that the addition of Rs. 22,06,779/- under the head Short Term Capital Gain is without any basis and the same may be deleted. ii. The Ld. CIT(A) failed to appreciate that the factory building with furniture and fixtures has been transferred in the previous year relevant to the Assessment Year 2011-12. Hence, the Appellant has declared the Long Term Capital Gain on sale of factory premises in the next Assessment Year 2011-12. The Appellant, therefore, prays that the addition on account of Short Term Capital Gain amounting to Rs. 22,06,779/- is unjustified and the same may be deleted. 3. Addition on account of Long Term Capital Gain on sale of factory land unjustified - Rs. 24,32,370/-: i. The Id. CIT(A) erred in confirming the action of the Id. A.O. in making addition ....
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....ly mentioned in the agreement that the assessee shall make out a clear and marketable title to the said land, free of all encumbrances, to the satisfaction of the purchaser's advocate and after fulfilling the other conditions it will execute and register a Deed of conveyance in the favour of Purchaser. Accordingly, the assessee entered into sale Deed dated 09.12.2010 with the Purchasers, which was registered on same date. On execution of the said Sale Deed assessee received balance amount of Rs. 20,00,000/- and handed over the possession said of the said property to the Purchaser. It was claimed by the assessee that the actual transfer has taken place on 09.12.2010 i.e. in the A.Y. 2011-12. The assessee has offered the STCG of Rs. 22,06,779/- derived from sale of factory building and LTCG of Rs. 24,32,370/- derived from sale of land in the A.Y. 2011-12 and department also accepted the same in the A.Y. 2011-12. 4. But according to AO, in the agreement of sale at page 4 point 4(a), it is mentioned that a sum of Rs. 65,00,000/- paid by way of earnest money on execution of the agreement dated 26-02-2010 vide cheque No. 0271659 of HDFC bank Ltd. through RTGS to Shamrao Vithal Co-....
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....tained taxation of Capital Gain in this year. Aggrieved, now assessee is in second appeal before Tribunal. 6. We have heard rival contentions and gone through facts and circumstances of the case. We find from the facts of the case that the assessee is a Private Limited Company engaged in the business of manufacturing and job work of plastic molded articles. During the relevant assessment year, assessee availed the cash credit and Term Loan facilities from the Shamrao Vithal Co-op Bank Ltd against the security of the Industrial Plot with Industrial shade at Gat No. 1233. Sanaswadi. Tal-Shirur, District-Pune owned by the assessee (Including land and factory building along with furniture and fixture. Further due to the financial crisis assessee decided to sell the said plot and shade. Thus, the assessee entered into an Agreement to Sale' on 26.02.2010 with Mr. Sunil Nagarhalli and others (Purchasers). A copy of the said agreement is enclosed at pages 1 to 18 of the assessee's paper book. As per clause 4(a) of the said agreement total consideration was Rs. 85,00,000/- out of consideration was Rs. 85,00,000/- out of which Appellant received an amount of Rs. 65.00,000/- as an earn....
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....of any immovable property transfers its property, it has to pay income tax. If it is holding the immovable property as capital asset or investment, then it is liable to pay capital gain tax till 31 March, 2010 in the absence of a registered conveyance deed, if owner of an immovable property had put the purchaser in possession of immovable property, he was not required to pay capital gains tax. The law was amended to rectify this loophole and the clause 'v' was inserted in the section 2(47) of the Act. Till recently it was interpreted in layman's language that possession is synonymous with transfer. It was believed that the possession of immovable property is a transaction and liability for capital gains tax arises when this transaction of possession takes place. However, recent decision of Hon'ble Bombay High Court in the case of Chaturbhuj Dwaarakadas Kapadia vs. CIT (2003) 260 ITR 491 (Bom.) has compelled many assessee's to rethink as to the correct interpretation of clause (v) of section 2(47) whether transaction of possession or whether transaction means transaction of possession or whether transaction means act of entering into an agreement laying down the term....
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....n in the case of Times Guaranty Limited (Supra). Aggrieved, assessee is in second appeal before Tribunal. 10. We have considered the rival contentions and gone through the facts and circumstances of the case. We find that this issue is squarely covered by the decision of Hon'ble Gujarat High Court in the case of General Motors India (P.) Limited Vs. DCIT [2013] 354 ITR 244 (Gujarat), wherein the issue regarding unabsorbed depreciation available to assessee as on 01-04-2002 will be dealt in accordance with provisions of section 32(2) as amended by the Finance Act 2001 and not by the provisions of Section 32(2) of the Act as it stood before the amendment. Hon'ble Gujarat High Court in General Motors India (P.) Limited (supra), finally held as under: - "37. The CBDT Circular clarifies the intent of the amendment that it is for enabling the industry to conserve sufficient funds to replace plant and machinery and accordingly the amendment dispenses with the restriction of 8 years for carry forward and set off of unabsorbed depreciation. The amendment is applicable from assessment year 2002-03 and subsequent years. This means that any unabsorbed depreciation available to an a....
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....ciation and it is taken to the next succeeding year. Where there is current depreciation for such succeeding year the unabsorbed depreciation is added to the current depreciation for such succeeding year and is deemed as part thereof. If, however, there is no current depreciation for such succeeding year, the unabsorbed depreciation becomes the depreciation allowance for such succeeding year. We are of the considered opinion that any unabsorbed depreciation available to an assessee on 1st day of April 2002 (A.Y. 2002-03) will be dealt with in accordance with the provisions of section 32(2) as amended by Finance Act, 2001. And once the Circular No.14 of 2001 clarified that the restriction of 8 years for carry forward and set off of unabsorbed depreciation had been dispensed with, the unabsorbed depreciation from A.Y. 1997-98 upto the A.Y. 2001-02 got carried forward to the assessment year 2002-03 and became part thereof, it came to be governed by the provisions of section 32(2) as amended by Finance Act, 2001 and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever." Respectfully following the Hon'ble Gujarat....
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....- Rs. 6,88,237/ - The Ld. CIT(A) erred in confirming the action of the Ld. A.O. in making addition of Rs. 6,88,237/ - under section 41(1) of the Act without appreciating the facts and circumstances of the case. The Appellant prays that the provision of section 41(l) of the Act is not applicable to the facts of the Appellant's case. Hence, the addition of Rs. 6,88,237/- under section 41(1) of the act is unjustified and the same may be deleted. 10. Addition on account of outstanding liability under section 41(1) of the Act Rs. 3,20,008/-. The CIT(A) erred in confirming the action of the Ld. A.O. in making addition of Rs. 3,20,008/- under section 41(1) without appreciating the fact that there is no cessation of liability of M/s. Agrawal Plastics. Hence, the addition of Rs. 3,20,008/- made under section 41(1) of the Act and the same may be deleted." 14. Brief facts relating to as regard to the issue of above ground 8 regarding disallowance of interest of Rs. 19,23,194/- are that the AO noted that for AY 2006.07 the assessee claimed interest expenditure of Rs. 76,937/- in the P & L Account but not offered any disallowance under section 43B of the Act an....
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....As regards to balance amount of Rs. 7,70,084/- the contention of the assessee is not tenable because it has admitted that an amount of Rs. 73,685/- is excess claim of interest and balance amount of Rs. 8,96,399/- is related to prior period expenses. Hence, even on payment basis such expenditure cannot be allowed. Thus, the disallowance of Rs. 7,70,084/- is also sustained. Aggrieved, assessee is in second appeal before Tribunal. 16. We have heard the rival contentions and gone though the facts and circumstances of the case. As regards to Ground No. 8 i.e. the disallowance of interest of Rs. 19,23,19/- u/s 43B of the Act, we find that the interest received by the bank on settlement of the outstanding Loan & Cash credit Account of Rs. 7,70,084/-. The AO has made addition of Rs. 11,53,110/- considering that the assessee has not made any payment during the year but settled the account with the bank. We have noted the fact that the AO has not appreciated the fact that the assessee has paid the entire amount of Rs. 65 lacs received as earnest money from sale of land and factory building to the Shamrao Vithal Co-op Bank Ltd for paying off outstanding dues inclusive of outstanding intere....