M/S Firoz Tin Factory… v. Kotwal, Jj

Priya Soparkar 1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.124 OF 2017 Pr.Commissioner of Income Tax-23 … Appellant V/s. M/s Firoz Tin Factory… Respondent --- Mr.Sham Walve for the Appellant.Mr.Girish Dave i/by Mr.Tanzil Padvekar for the Respondent. --- CORAM : AKIL KURESHI AND SARANG V. KOTWAL, JJ. DATE : MARCH 12, 2019. P.C.:- 1.Revenue has filed this appeal against the judgment of the Income Tax Appellate Tribunal raising following questions forour consideration: “I.Whether on the facts and in the circumstancesof the case and in law, the ITAT is justified inholding that there did not exist any building onthe sold property especially in view of the fact thespecification in agreement of sale and incriminatingmaterial found in survey confirmed existence ofsuper structure on sold property?II.Whether on the facts and in the circumstancesof the case and in law, the ITAT was justified in not appreciating that property sold consisting ofbuilding and land appurtenant to the buildingneeded to be taxed as per the provisions of Section50 as single property?” 2. During the period relevant to the assessment year 2010-11the assessee had sold a piece of land and offered theconsideration to long term capital gain. During the surveyoperation however the Assessing Officer recorded the statementof the representative of the assessee-company indicating thatthere was a factory building situated on the land. The revenuetherefore, contends that such building would be subject todepreciation and for the purpose of charging capital gain thedepreciated value of the super structure should be taken intoconsideration. Learned counsel for the assessee however pointedout that such statement was promptly retracted. 3.The Tribunal by the impugned judgment held that there wasno super structure on the land, which could be subjected todepreciation. The Tribunal noted that the property remained asland and minimum structure of as shed and compound wall wasconstructed when the property was given on rent to L & T for parking their vehicles. The Tribunal held and observed as under:- “20. We are unable to agree with the viewexpressed by Ld. CIT (A) on this issue. It is the Ld.CIT (A), who has given a definite finding that theKalina property did not have any factory structure.The total value of Kalina Property (cost of land +amount spent thereon) Rs.29.15 lakhs remained thesame since 1995 onwards. There is no controversyon this fact. The assessee has given explanation thatthe amount of about Rs.26.00 lakhs was spent onland levelling, construction of compound wall and awatchman shed. This explanation of the assessee hasnot been proved to be false. The fact that theassessee has carried on its manufacturing activitiesin Kalachowki building was also accepted. Hence,the Ld CIT (A) has held that the assessee did notcarry on any manufacturing activity in KalinaProperty. Having held so, we are not able tounderstand as to how the Ld. CIT (A) could holdthat the Kalina property could have been subjectedto depreciation. The facts noted down by the Ld.CIT(A), in our view, shows that the Kalina propertyremained to be a land with a minimum structure ofa shed and compound wall. This is further fortifiedby the fact that the assessee has let out the land forcontainer parking and thereafter to Larsen &Toubro. It is an accepted fact that the rent paid byLarsen & Toubro was subjected to tax deduction atsource u/s 194I of the Act, i.e., as rent only. Thus,we notice that the assessee has received rent forletting out the land only. 21. We notice that the Ld. CIT (A) has decidedthis issue against the assessee mainly for the reasonthat the assessee could not produce assessmentrecords pertaining to period prior to AY 1996-97.It is pertinent to note that both the assessee andthe revenue did not have assessment record prior tothat period. The assessee was asked to produce the assessment records for the periods from AY 1975-76onwards during the course of assessmentproceedings undertaken in the year 2012. It may benoticed that considerable time has elapsed by thattime and it would be difficult for anyone to produceold records, that too, more than 20 years old. Thisis fortified by the fact that the revenue also did notpossess the old records. Under these set of facts, weare of the view that the tax authorities are notjustified in taking adverse view of the matter. Whenthe Ld. CIT (A) has come to a define conclusionthat the Kalina property was not used for factorypurposes, we are of the view that there is no reasonsto hold that the assessee could have claimeddepreciation on the Kalina property, simply for thereason that the assessee did not produce assessmentrecords. Accordingly, we are of the view that theLd. CIT (A) was not justified in holding that theassessee could have claimed depreciation on theKalina property, as the said view is based onsurmises and conjectures.” 4.Perusal of the documents on record and in particular theimpugned judgment of the Tribunal would show that the entireissue is factual. The Tribunal having considered the relevantmaterials on record has come to conclusion which has not shownto be perverse. No question of law arises. Income Tax Appeal isdismissed. (SARANG V.KOTWAL,J.) (AKIL KURESHI,J.)