| The Tax Publishers2019 TaxPub(DT) 7161 (Chen-Trib) INCOME TAX ACT, 1961
Section 50
Since assessee had not given bifurcation of assets and its value which were capitalized and also had claimed depreciation all along even on the value of acquired land, there was no infirmity in the findings of CIT(A) that AO had rightly taken value of land at Nil and treated resulting profit as short-term capital gain.
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Capital gains - Applicability of section 50 - Sale of land after improvement - Assessee had been claiming depreciation
Assessee has purchased rice mill such as land and building, machineries etc in 2000, value of which as per its books was Rs. 1,05,24,960. It capitalised in its books at Rs. 1,19,05,102 including the improvements and had claimed depreciation in earlier years, say from assessment year 2001-02 onwards, on the entire capitalized amount which included cost of the land. The assessee sold them as a composite sale in 'as is where is' condition to one of its Directors 18-6-2003 i.e., during the assessment year 2004-05, and credited with Rs. 95,61,762 towards goodwill in its books without obtaining any money from him. Since property was used by assessee for its business and depreciation has been claimed by it in earlier years, AO held that profit from the transfer would be short-term capital gains. For the purpose of arriving at market value of land under section 50C, AO required assessee to provide break up of capitalized amount including cost of land and assessee could not furnish any details. In absence of such data from revenue also, the AO could not arrive at cost of acquisition of impugned land. Further, the AO noticed found that assessee had been claiming depreciation, all along, on the entire value of capitalization which included even cost of land, therefore, AO held that there was no element of cost involved in respect of acquisition of the land and hence held that the cost of acquisition of land was Nil. Assessee challenged this.Held: Since assessee had not given bifurcation of assets and its value which were capitalized and also had claimed depreciation all along even on the value of acquired land, there was no infirmity in the findings of CIT(A) that AO had rightly taken value of land at Nil and treated resulting profit as short-term capital gain.
REFERRED :
FAVOUR : Against the assessee.
A.Y. : 2007-08
INCOME TAX ACT, 1961
Section 80G
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