Capital gain on sale of a shop – Ultimate Investments Pvt. Ltd. Versus Addl. CIT Range-18 New Delhi – ITAT New Delhi

Ultimate Investments Pvt. Ltd. Versus Addl. CIT Range-18 New Delhi

Capital gain on sale of a shop – though the shops were shown in the balance-sheet but the same were not being used for the purpose of business – whether no gain or loss is taxable on an asset forming block of assets unless the block ceases to exist? – interpretation of Section 50(1), Section 50A of the IT Act read with Section 48 & 49 of the I.T Act – Held that:- Respectfully following the ratio laid down by the Hon’ble High Court on the applicability of the provisions laid down u/s 50(2) in the case of CIT Vs. Ansal Properties and Infrastructures Ltd (2012 (10) TMI 181 – DELHI HIGH COURT) hold that the assessee has rightly submitted that it should have reduced the sale consideration from the block of assets instead of treating it as a separate asset. The provisions of Section 50 of the Act are also not applicable in the present case because the shop sold was not a business asset and depreciation was not being claimed/allowed and in such a situation the sale of the shop can be taxed only under the head “Capital Gain.” Thus, the addition also deserves to be deleted because real sense there was no capital gain. Both the additions in question are accordingly deleted. Having taxed the gain of ₹ 1,97,008/-, the same was again taxed u/s 50 read with Section 50A of the Act for the reason that gain on sale of depreciable asset was taxable under the head capital gain. It is the second addition which has been questioned by the assessee on the basis that when provisions Section 50 of the Act are not applicable, there is no question of application of Section 50A of the Act. – Decided in favour of assessee.

Source – TMI

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