Income Tax Appellate Tribunal - Mumbai
Jasani Textile Processors Pvt Ltd, ... vs The Dcit -6(3) (1) , Mumbai on 2 August, 2021
1 M/s Jasani Textile Processors Pvt. Ltd.
Assessment Year: 2015-16 आयकर अपीलीय अधिकरण "एफ" न्यायपीठ मुंबई में। IN THE INCOME TAX APPELLATE TRIBUNAL "F" BENCH, MUMBAI माननीय श्री अमरजीत स िंह, न्यासयक दस्य एविं माननीय श्री मनोज कुमार अग्रवाल ,लेखा दस्य के मक्ष। BEFORE HON'BLE SHRI AMARJIT SINGH, JM AND HON'BLE SHRI MANOJ KUMAR AGGARWAL, AM (Hearing through Video Conferencing Mode) आयकरअपील िं ./ I.T.A. No.5881/Mum/201 9 (धििाारण वर्ा / Assessment Year: 2015-16) M/s Jasani Textile DCIT-6(3)(1) Processors Pvt. Ltd. R. No. 506, 5th floor, Aayakar Bhavan बिाम/ 264, Madhav Mansion, M. K. Road, Mumbai-400 020.
Samuel Street, Vadgadi, Vs.
Mumbai-400 003
स्थायीलेखा िं ./ जीआइआर िं ./ PAN/GIR No. AAACJ-1227-F (अपीलाथी/Appellant) : (प्रत्यथी / Respondent) Assessee by : Shri Virendra Jariwala- Ld. AR Revenue by : Ms. Usha Gaikwad- Ld. DR ुनवाई की तारीख/ : 28/07/2021 Date of Hearing घोषणा की तारीख / : 02/08/2021 Date of Pronouncement आदे श / O R D E R Manoj Kumar Aggarwal (Accountant Member)
1. Aforesaid appeal by assessee for Assessment Year (AY) 2015-16 arises out of the order of learned Commissioner of Income-Tax (Appeals)-12, Mumbai [CIT(A)], dated 04/06/2019 in the matter of assessment framed by Ld. Assessing Officer (AO) u/s 143(3) of the Act on 26/12/2017. The grounds of appeal read as under: -
2M/s Jasani Textile Processors Pvt. Ltd.
Assessment Year: 2015-16
1. On facts and in the circumstances of the case and in law learned CIT (Appeals) failed to appreciate that the capital assets were transferred along with all advantages, benefits, claims, appurtenances, use and rights etc and hence the cost of assets transferred also includes the cost of acquiring such advantages, benefits, claims, appurtenances, use and rights such as water supply and electric supply for which deposits of Rs.1,49,256/-were given to MIDC, MSEB etc.
2. Alternatively on facts and in the circumstances of the case and in law learned CIT (Appeals), having found that assessee had given deposits of Rs.1,49,256/- to MIDC, MSEB etc for supply of water and electricity etc in or upon the capital asset transferred, ought to have allowed the deduction thereof as cost of improvement of such capital asset.
3. Learned CIT (Appeals) having held that written down value (WDV) of Rs.4,78,083/- of fixed assets discarded and written off in books is not deductible while computing capital gains as it does not form part of cost of acquisition or cost of improvement of assets sold and having further observed that deduction of WDV of these assets is allowable u/s 32(i)(iii) of the I.T.Act, learned CIT (Appeals) ought to have allowed the same u/s 32(i)(iii) because the appellant is entitled to the same and it was also claimed before CIT (Appeals).
4. The appellant craves leave for permission to add, amend or alter any ground of appeal at the time of hearing.
As evident, the subject matter of dispute is computation of capital gains. Having heard rival submissions, our adjudication would be as given in succeeding paragraphs.
2. The material facts are that the assessee being resident corporate assessee sold plot and shed for aggregate consideration of Rs.225 Lacs during the year. In the deed of agreement, the value assigned to land was Rs.51.47 Lacs whereas the value assigned to shed was Rs.173.53 Lacs. The agreement is composite agreement by which the assessee has transferred its interest in land as well as built up shed admeasuring 972.81 Square Meters together with outhouses, office, building, courtyard, areas compound, swear ditches fences, trees, drains, ways, paths, passages, privileges, easements etc. attached with the leasehold land as well as with shed.
3. The shed formed part of depreciable fixed assets. While computing short-term capital gains from shed, the assessee deducted not only the 3 M/s Jasani Textile Processors Pvt. Ltd.
Assessment Year: 2015-16 WDV of shed but also deducted WDV of other assets and deposits as per MIDC (authority) for Rs.13.21 Lacs. These include assets written-off for Rs.4.78 Lacs and deposits written-off for Rs.1.49 Lacs. The deduction of these two components was denied by Ld. AO.
4. During appellate proceedings, the assessee submitted that it had given various deposits to MIDC towards water, additional water etc. These deposits were part and parcel of allotted land which also got assigned in favor of assignee. The MIDC would not refund the deposits as long as the said premises were occupied by assignee. The assessee received composite consideration for assignment of land along with deposits & claims. However, Ld. CIT(A) rejected the same since the write-off do not constitute cost of acquisition or cost of improvement of the property.
5. Regarding other assets written-off, the position was summarized as under: -
No. Particulars WDV as on Remarks
31/03/2014
1. Air Conditioner 990 Remaining useful life was less
2. Computer 135 No scrap value
3. Electric Installation 81,361 It could not be removed as it was fitted
4. Fax Machine 2,088 Remaining useful life was less
5. Furniture & Fixture 35,769 It could not be removed as it was fitted
6. Plant & Machinery 3,49,006 It was outdated and embedded in Earth
7. Telecom System 1,284 Remaining useful life was less
8. Typewriters 542 Remaining useful life was less
9. Vehicles 1,290 Remaining useful life was less
10. Weighing Machinery 3,091 Remaining useful life was less
11. Refrigerator 2,527 Remaining useful life was less
Total 4,78,083/- Remaining useful life was less
it was submitted that the lease of land was granted by MIDC in the year 1984 and the above assets installed at the land & shed were outdated or could not be removed. The cost of removing would be more than cost of 4 M/s Jasani Textile Processors Pvt. Ltd.
Assessment Year: 2015-16 scrap. Since these assets were discarded, the deduction of the same should be allowed u/s 32(1)(iii). Though Ld. CIT(A) concurred that the deduction could be allowed u/s 32(1)(iii) but the same could not be a part of cost of acquisition. Aggrieved, the assessee is in further appeal before us.
6. So far as the write-off of deposits is concerned, we find that the rights in land and shed have been assigned along with all the rights, privileges etc. through composite agreement. The deposits have been paid to MIDC for various purposes in connection with lease of land and therefore, these form part & parcel of the land & shed. Since, the rights have been transferred, these would also stand transferred to the assignee. This being so, there is no reason as to why the deduction of the same is not available to the assessee while computing the capital gains. Therefore, we direct Ld. AO to allow the deduction of the same. So far as the write-off of other assets is concerned, we find that fixed assets have been reduced to nil at year-end which is evident from assessee's Balance Sheet as placed on record. Hence, the fixed asset block has ceased to exist. Therefore, the deduction of WDV of assets as attached to above land & shed would be available to the assessee. We order so. The Ld. AO is directed to allow the same.
7. The appeal stands allowed.
Order pronounced on 2nd August, 2021.
Sd/- Sd/-
(Amarjit Singh) (Manoj Kumar Aggarwal)
न्यासयक दस्य / Judicial Member लेखा दस्य / Accountant Member
मुिंबई Mumbai; सदनािं क Dated : 02/08/2021 Sr.PS, Dhananjay 5 M/s Jasani Textile Processors Pvt. Ltd.
Assessment Year: 2015-16 आदे शकीप्रधिधलधपअग्रेधर्ि/Copy of the Order forwarded to :
1. अपीलाथी/ The Appellant
2. प्रत्यथी/ The Respondent
3. आयकरआयुक्त(अपील) / The CIT(A)
4. आयकरआयुक्त/ CIT- concerned
5. सवभागीयप्रसतसनसध, आयकरअपीलीयअसधकरण, मुिंबई/ DR, ITAT, Mumbai
6. गार्ड फाईल / Guard File आदे शािसार/ BY ORDER, उप/सहायक पुंजीकार (Dy./Asstt.Registrar) आयकरअपीलीयअधिकरण, मुिंबई / ITAT, Mumbai.