2012 (2) TMI 748

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....te element of CENVAT, under Section 145A, to the extent of Rs. 10,59,593. It is prayed that the addition to total income of Rs. 10,59,593 be deleted from the income of the Appellant. 2. On the facts and in the circumstances of the case, the CIT (A) has legally erred in confirming disallowance of Rs. 99,200, being annual membership fees paid to. the clubs. 3. On the facts and in the circumstances of the case, the CIT (A) has legally erred in confirming the action of the learned Assessing Officer that the capital gains of Rs. 2,67,28,939 under section 50 of Income-tax Act, 1961, arising on sale of long-term capital asset, is chargeable to tax at the rate applicable to short term capital gains instead of the rate a....

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....ssessee by the decision of Hon'ble Bombay High Court in the case of Otis Elevators Co Ltd vs CIT reported in 195 ITR 682 (Bom) wherein it has been held that club membership fee is an allowable expenditure u/s 37(1) of the act. Since the CIT (A) has followed the decision of the jurisdictional High Court and in absence of any contrary material brought to our notice, the ground raised by the revenue is dismissed." 5.2 Thus, it is clear that the issue is covered in favour of the assessee by the decision of the Hon'ble jurisdictional High Court in the case of Otis Elevators Co Ltd reported in 195 ITR 682(Bom), which has been followed by the Tribunal in assessee's own cased for the earlier assessment years. Accordingly, respectfully following t....

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...., namely:- (i) expenditure incurred wholly and exclusively in connection with such transfer or transfers; (ii) the written down value of the block of assets at the beginning of the previous year; and (iii) the actual cost of any asset falling within the block of ass etc. acquired during the previous year, such excess shall be deemed to be the capital gains arising from the transfer of short-term capital assets: (2) where any block of assets ceases to exist as such, for the reason that all the assets in that block are transferred during the previous year, the cost of acquisition of the block of assets shall be the written dawn value of the black of assets at the beginning of the previous year, as increased by the actual cost of a....

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....d to the assessee after the said date, and as adjusted. ". 21 On plain reading of the above section shows that the excess in question shall be deemed to be the capital gains arising from the transfer of a short term capital asset. Both the section 54EC and section 74, do not speak about short term capital gain or long term capital gain. These sections deal with capita gains / loss arising from transfer of long term capital assets. Section 112, also deals with income arising from transfer of long term capital assets. Section 112(b)(i) and (ii) specifically mentions "long term capital gain". When section 50 deems that income earned from a depreciable asset has to be deemed as short term capital gain, the question of applying the rate of ta....