TaxTMI 
TaxTMI 
2017 (11) TMI 1072
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....horities below and found that it is second round of appeal before the Tribunal. In the first round the Tribunal has restored the matter back to the file of the AO vide its order dated 23/10/2013 with certain observations and directions. 4. The Tribunal has restored the matter back to the file of the AO for considering assessee's claim of depreciation, claim of deduction u/s.80HHC and deduction u/s.80IB. 5. In the set aside proceedings, AO again disallowed assessee's claim and the CIT(A) confirmed the action of the AO after observing as under:- "6.2. The Ground No.4 relates to calculation of the fair market value of the fixed asset, the sale of which has been treated as STCG by the AO. This issue is connected to the grounds no. 2 & 3. Ho....
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....wise transferred by him and, for the purposes of section 48, the fair market value of the asset on the date of such conversion or treatment shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of the capital asset" 6.2.1. It is clear from the provisions of the section 45(2) of the Act, that the fair market value of the asset will be the full value of consideration received or accrued on transfer of the particular asset. In this case the asset has been sold within three months of the conversion for Rs. 71,11,978/-. By considering the short span of time, it cannot be claimed that the amount received on sale is appreciation on the book value shown by the appellant, wherein there is ITA N....
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....en retired from active use and are held for disposal are stated at the lower of their net book value and net realizable value and are shown separately in the financial statement. b. Clause 24 of AS 10 i. Material items retired from active use and held for disposal should be stated at the lower of their net book value and net realizable value and shown separately in the financial statements. c. Assessee in compliance with the requirement of AS 10, removed retired moulds out of block of fixed assets at book value at the time of conversion of Moulds from Fixed Assets to Stock in trade. 7. It was further argued that the Ld. CIT (A) erred in estimating and determining the fair market value of the Moulds at the date of its conversion from ....
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....aximum 11.75 times of the original purchase value. All these Moulds which have been exported have been exported after lot of business and marketing efforts of 2 to 11 months after they were converted from Fixed Assets into stock in trade by the assessee and have earned precious foreign exchange. AO has treated Export proceeds earned on sale of these Mould Stock as fair value and deemed value at the time of conversion of Fixed Assets into Stock in trade. 9. It was also argued by learned AR that the Ld. CIT (A) erred in taxing the export proceeds of the stock-in-trade as consideration for Capital Gains purposes u/s. 45(2) r.w.s. 50 and also the Ld. CIT (A) erred in holding that the assessee had sold fixed assets whereas in fact during the re....
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....come but it liable to tax as capital gains. Therefore, the claim of deduction u/s. 80HHC as claimed by the assessee was disallowed. 14. From the record I found that the assessee had during the year converted the moulds reflected as fixed assets in the block of assets in to Stock-in-Trade at its book value amount of Rs. 34,56,581/-. Consequently, the figure of block of assets of the mould does not include the said amount. Besides, the fresh purchase of moulds, effected by the assessee, during the year have been added to the block of assets at the end of the year which has resulted into positive balance in the block of assets of moulds. What the assessee had sold is the Stock-in-Trade and not the fixed assets as held by the Assessing Officer....
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....ation of Rs. 4,28,671/- with the premise that block of assets of moulds has been reduced to Rs. NIL. The assessee during the relevant year had made fresh purchase of moulds worth Rs. 29,64,000/- which is reflected in its Balance Sheet and the depreciation has been claimed on the fresh purchase of mould forming part of block of assets and not on the mould which had been converted into Stock-in-Trade. Therefore, the disallowance of depreciation u/s. 32 is uncalled for. 15. I also found that the assessee had claimed deduction u/s. 80IB for an amount of Rs. 9,74,142/- which the Assessing Officer has allowed the reduced claim for Rs. 2,33,741/- as the result of which the difference amount of Rs. 7,40,401/- has been disallowed. The action of the ....