TaxTMI 
TaxTMI 
2025 (12) TMI 1756
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....n treating the appellant as a partnership firm whereas the status of the appellant is an Association of Persons. 3. The learned Commissioner of Income-Tax (Appeals) erred in confirming the action of the Assessing officer in determining the Long Term Capital Gain at Rs. 5,52,09,964/-. 4. The learned Commissioner of Income-Tax (Appeals) erred in confirming the action of the Assessing officer in determining the Short Term Capital Gain at Rs. 61,34,440/-. 5. The learned Commissioner of Income-Tax (Appeals) erred in not allowing deduction u/s 54F and 54EC of the I.T. Act. The learned Commissioner of Income-Tax (Appeals) ought to have observed the fact that the capital gain was admitted and assessed in the assessment of the members of the AOP and, therefore, cannot be assessed in the assessment of the firm. 6. The learned Commissioner of Income-Tax (Appeals) ought to have considered the fact that the ratio laid down by the Supreme Court in the case of Murlidhar Jhawar and Purna Ginning and Pressing Factory (1966) 60 ITR 95 (SC) and the circulars issued by the CBDT are applicable to the facts of the appellant's case. 7. The learned Commissi....
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.... property but the prospective buyer had deducted the tax at source (TDS) using the PAN of the assessee firm, therefore, though the capital gains on the sale of the subject property was offered in the name of the individual members of the AOP that was offered for tax, but considering the fact that the tax was deducted at source in the hands of the assessee firm, the latter had raised a claim for credit of the same in its return of income. 5. The AO after deliberating on the aforesaid contentions of the assessee firm found it not only to be incomprehensible but also not legally tenable. The AO observed that the assessee firm had come forth before him with a set of claims, viz., (i) that as the assessee firm had discontinued its business, therefore, it had lost its identity and was thereafter to be treated as an AOP; and (ii) that the capital gains arising on the sale of the subject property was disclosed by the respective individual partners/members of the partnership firm/AOP based on the profit share ratio in their respective returns of income. 6. The AO was unable to concur with the aforesaid contentions of the assessee firm. The AO held a firm conviction that as the subject....
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....cceptance for the reasons, viz., (i) that as the building was used for the business purposes, therefore, the same could not be considered as a capital asset; and (ii) that as the assessee firm would have claimed depreciation on building, therefore, for the said reason also the claim for deduction of cost of improvement could not be accepted. Accordingly, the AO declined the assessee's claim for deduction of cost of improvement (indexed) and also the expenses related to transfer. Apart from that, the AO observed that as the assessee firm had failed to place on record any material which would substantiate the portion of the sale consideration that was relatable to the "building" which was to be subjected to short term capital gain (STCG), therefore, concluded that the entire sale consideration could not be considered as long term capital gain. Accordingly, the AO in absence of details, apportioned the sale consideration of Rs. 6,50,33,500/- as long term capital gain/short term capital gain, viz., (i) long term capital gain on sale of land: Rs. 5,52,09,964/-; and (ii) short term capital gain: Rs. 61,34,440/-. 9. The assessee being aggrieved with the order passed by the AO under sec....
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.... resultant income under the said head was substantially scaled down. 16. Controversy involved in the present appal before us hinges around multi facet aspects, viz., (i) as to whether or not the discontinuance of the business of the partnership firm, if any, on 06/02/2016 (supra) would lead to vesting of the ownership of the subject property with the partners of the assessee firm collectively in the status as that of an AOP; (ii) that whether or not the respective partners were justified in disclosing the capital gain of the sale/transfer of the subject property in their respective profit ratio in their returns of income for the year under consideration; and (iii) that as to whether or not the AO is justified in treating the subject property, viz., building (short term capital asset) and (ii) land (long term capital asset) and computing the income of the assessee under both the said respective heads of income. 17. At the threshold, we may herein observe that though it is the claim of the assessee based on a letter dated 06/02/2017 that was filed with the Assistant Commercial Tax Officer, Vanasthalipuram Circle, Hyderabad that it had discontinued its business, but the same wil....
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....en shown as the vendor-owner, therefore, the capital gain on the transfer of the subject property without any choice has to be offered for tax in the hands of the assessee firm. 20. We shall now deal with the issue as to whether or not the capital gain arising on the sale of the subject property had rightly been apportioned by the AO while framing the assessment in the ratio of 90:10 for long term capital gain (on sale of land) and short term capital gain (on sale of building). In our view, the aforesaid issue can safely be answered by referring to the registered sale deed of the assessee firm, which, as pointed out by the Ld. AR and rightly so, reveals that the subject property that was sold was the land admeasuring 7500 sq mtrs for a consideration of Rs. 6.50 crores. Based on the aforesaid facts, we are of a firm conviction that the assessee firm had vide the subject sale deed, dated 03/02/2018 only transferred the land admeasuring 7500 sq mtrs for a consideration of Rs. 6.50 crores. Accordingly, the capital gain arising on the transfer of the subject property, i.e., land is liable to be brought to tax in the hands of the assessee firm under the head long term capital gain (LT....