TaxTMI 
TaxTMI 
2019 (3) TMI 1804
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....s of the case and in law, the CIT (Appeals) erred in confirming the applicability of the provisions of S. 50C of the Income-tax Act 1961, inspite of the fact that the difference between the FMV of Rs. 5,79,47,500/- and the sale consideration of Rs: 5,25,00,0007- is less than 10% and held by various decisions. 4. On the facts and in the circumstances of the case and in law the CIT (Appeals) grossly erred in not applying the land rate of Rs. 15,960/- per sq. mt. as per MIDC and instead working out the market value of land by some arbitrary proportionate method at Rs. 2,42,87,930/- and that of the building at Rs. 3,36,59,570/-. 5. On the facts and in the circumstances of the case and in law the CIT (Appeals) erred in rejecting the appellant's/claim in respect of the write off of project expenses amounting to Rs. 3,02,372/-. 6. The appellant craves leave to, add to, alter, modify, delete and/or change all or any above grounds or before the hearing of the appeal." 3. The issue raised in ground No.1 is against the order of Ld. CIT(A) upholding the order of AO wherein the provisions of section 50C of the Act has been held to be applicable to the assessee's case ignoring the f....
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....e ground that the property in question which was sold for a consideration of Rs. 5,25,00,000/- was a leasehold property and assessee was not the absolute owner of the said property and therefore the provisions of section 50C of the Act are not applicable to the sale of lease rights. The Ld. CIT(A) ,after admitting the additional ground, dismissed the appeal of the assessee by observing and holding as under: "4.7. I am unable to accept the contention that section 50C does not apply since the land was leased from MIDC. Here the transfer is of a composite property comprising of land and building and not merely the lease of land. As per the appellant's books the value was WDV of Rs. 115,57,936 for the building and Rs. 83,38,927 for the land. I find that on similar facts the hon'ble ITAT Mumbai bench in the decision reported in [2013] 33 taxmann.com 491 (Mumbai - Trib.) IN THE ITAT MUMBAI BENCH 'E' in the case of Shavo Norgren (P.) Ltd. v. Deputv Commissioner of Income-tax, Circle 3(3) DECEMBER 14, 2012 held that section 50C is applicable. The head notes reads as follows. Not only the above, as seen from deeds of assignment, assessee transferred the rights in the plo....
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....risdictional High Court in the case of CIT vs. Green Hotels and Estates Pvt. Ltd. & Ors. in ITA No.735 of 2014 vide order dated 24.02.2016 wherein the identical issue was decided by the Tribunal was upheld by the High Court by dismissing the appeal of the Revenue. The relevant observation of the High Court is as under: "2. The Revenue urges the following question of law for our consideration: "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) in deleting the addition of Long TermCapital Gain of Rs. 80,58,000/ on the ground that provisions ofsection 50C of the IT Act, 1961 were not applicable to transferof land and building, being a leasehold property? 3.The impugned order of the Tribunal has dismissed the Revenue's appeal from the order dated 15 June 2012 passed by the Commissioner of Income Tax (Appeals). The issue before the Tribunal was whether Section 50C of the Act would be applicable to transfer of leasehold rights in land and buildings. The impugned order of the Tribunal followed its decision in Atul G. Puranik vs. ITO (ITANo.3051/Mum/2010) decided on 13 May 2011 which held th....
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....of section 50C of the Act are not applicable to the assessee, therefore this ground is infructuous and needs no adjudication. 11. The issue in ground No.4 is against the order of Ld. CIT(A) in not applying the rate of Rs. 15,960/- per sq. mtr. Which is as per MIDC a Govt body and instead calculating the market value arbitrarily of the land at Rs. 2,42,87,930/- and building at Rs. 3,36,59,570/-. 12. The facts in brief are that in the assessment proceedings the AO calculated the capital gain by taking the index cost of land at Rs. 1,33,02,663/- and the opening WDV of building at Rs. 1,15,57,936/- aggregating to Rs. 2,49,40,599/- thereby computing the taxable capital gain at Rs. 3,30,06,901/-. 13. In the appellate proceedings, the Ld. CIT(A) bifurcated the sale proceeds in the ratio of book value of land and building thereby dividing the sale consideration between land and building at Rs. 2,42,87,930/- and Rs. 3,36,59,570/- respectively by observing and holding as under: "4.10. This rate translates to Rs. 574,56,000/- for 3600 sq. mts . of plot whose book value was Rs. 83,38,927/-and adopting the same would mean that the building sale value was only Rs. 4,91,500/- for built up ar....
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....nd which is even lower to valuation as per MIDC rate. Accordingly, we direct the AO to take the sale consideration for land at Rs. 4,09,42,000/- for the land and Rs. 1,15,58,000/- for the building as there is no objective and fair basis for allocation of the sale consideration other than this. Accordingly, the ground of the assessee is allowed. 15. The issue raised in ground No.5 is against the order of Ld. CIT(A) rejecting the assessee's claim in respect of written off project expenses amounting to Rs. 3,03,02,372/-. 16. The facts in brief are that the AO during the course of assessment proceedings observed that assessee has debited a sum of Rs. 3,02,372/- on account of project expenses written off in the profit & loss account and accordingly asked the assessee to produce the details and justification thereof. It was submitted by the assessee that it is engaged in the business of manufacturing of electronic UPS for railways and other services. Sometimes the assessee incur expenses on the products which have to be abandoned in view of the non acceptance thereby the customer. So the expenses are written off as being relating business of the assessee wholly and exclusively . The AO....
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....(A) noted that in the balance sheet the said expenses were shown under the head project expenses and a part of expenditure is being written off every year. According to Ld. CIT(A) the said expenditure was capitalized in 2009-10 and in connection with the project for 180 KVA which has been kept on hold by the customer and thus there is no reason to claim the said expenditure and thus dismissed the appeal of the assessee. 19. Before us the Ld. A.R. submitted that the assessee is engaged in the business of manufacturing of electronic UPS for railways and other services and therefore has to make sample in the form of educational order for soliciting further orders if the project suits the requirements of the customers. The Ld. A.R. submitted before us that this is a routine course of action of business of the assessee. The Ld. A.R. took us through the pages 157, 158, 159 & 160 which are the copies of supply order by the Indian Railways for educational order specifying make and quality. The Ld. A.R. submitted that it is not necessary that the project expenses which are incurred for making the UPS would necessarily result into the earning of income and soliciting of further order. There....