TaxTMI 
TaxTMI 
2026 (7) TMI 127
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....ed by another entity on land leased to that entity by the assessee. The assessee also challenges the findings of the lower authorities, including the denial of business expenditure and the disturbance, in assessment year 2020-21, of the written down value of the block of assets for assessment year 2010-11 without any basis. 3. Briefly, the assessee is a partnership firm engaged in manufacturing toughened safety glass. It was allotted two acres of land at Plot No. 41, Peenya Industrial Area, Bengaluru, by the Karnataka Industrial Areas Development Board under allotment dated 29 May 1975. The allotment was confirmed by letter dated 11 November 1975, possession was delivered under possession certificate dated 27 May 1976, and a sale deed dated 19 June 1986 was later executed in favour of the assessee, followed by certain changes in its name. Of the two acres, the assessee used one acre for its own factory purposes and leased the other acre to Southern Auto Products under an agreement dated 10 November 1986. Under that agreement, Southern Auto Products was permitted to construct a factory for its own use and paid a lease deposit to the assessee. It accordingly constructed a substant....
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....ed that it had computed long-term capital gain after reducing the indexed cost of acquisition and had set off short-term capital loss arising from the demolished factory building. The assessee also submitted the detailed computation and fixed asset schedule showing the relevant written down value and the adjustment of Rs.99,762,929 while arriving at the returned total income of Rs.160,333,270. 7. Upon examining the claim, the learned Assessing Officer disallowed the addition of Rs.59,459,326 to the factory building account, being the agreed cost of the building acquired from Southern Auto Products under the cancellation arrangement. He observed that the assessee had not claimed depreciation on these assets for several years, beginning with assessment year 2011-12. He further held that, although the assessee had shown the opening WDV of the asset for assessment year 2011-12 at Rs.251,382,475, the WDV of the building as on assessment year 2010-11 should have been only Rs.181,544. On that basis, he allowed only Rs.56,268 as the WDV of the factory building at the time of sale of the plot and restricted the claimed short-term capital loss of Rs.99,762,929 to Rs.56,268. 8. The lear....
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....referred to the fixed asset schedules from financial years 2010-11 to 2019-20 and details of major additions for assessment year 2011-12 to demonstrate that the declared assets, including land and building under the glass block, stood at Rs.253,082,475. She also referred to the income-tax returns for assessment years 2019-20 and 2020-21. Her submission was that the learned Assessing Officer rejected the payment of Rs.59,459,326 towards compensation for the building constructed by the tenant, despite supporting documents such as the agreement, bank statement, and TDS certificate. She argued that the assessee had been assessed for several decades and that the Assessing Officer had no basis to hold, in assessment year 2020-21, that the gross block shown in financial year 2010-11 was incorrect. Referring to section 50 of the Income-tax Act, she submitted that there is no dispute regarding the availability of short-term capital loss; the dispute is only about its quantum. The assessee claimed Rs.99,762,929, whereas the Assessing Officer restricted it to Rs.56,268. She submitted that the assessee maintained regular books and fixed asset schedules for all relevant years, which were reject....
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....he brought-forward written down value by referring to assessment year 2010-11 and adopting Rs.181,544 as the WDV of the building. The assessee, however, has shown that the opening WDV at the beginning of assessment year 2011-12 was Rs.253,052,473 and has supported this figure by filing the opening WDV, additions and closing WDV of the factory building from 1 April 2009 to 31 March 2019. The learned Assessing Officer appears to have confused the absence of further additions to the building after 2010 with the continued existence of the block of assets. Except for the subsequent acquisition of the building from Southern Auto Products for Rs.59,459,326, the assessee consistently carried forward the same block in its books and returns, which were placed before the lower authorities. No contrary material has been brought on record to dislodge these regularly maintained accounts and accepted returns. We therefore fail to see how the Assessing Officer could, in assessment year 2020-21, disturb the block of assets accepted in earlier years and reduce the WDV to Rs.56,268 merely on an estimate or assumption relating to assessment year 2010-11. 17. As regards the increase in the block of ....