ITO Vs Amira Apparels Pvt. Ltd. (ITAT Delhi)
The appeal before the Income Tax Appellate Tribunal, Delhi Bench concerned the tax treatment of capital gains arising from the sale of land comprising two distinct portions—one with a factory building and the other claimed as agricultural land. The Assessing Officer denied indexation on the factory building, treated it as a depreciable asset taxable under section 50, and rejected the agricultural land claim due to lack of evidence of agricultural activity, resulting in substantial long-term capital gains additions. The Commissioner (Appeals) deleted both additions, relying on changes in land-use classification and revenue records. On Revenue’s appeal, the Tribunal held that once depreciation had been claimed, even for a single year, the factory building retained its character as a depreciable commercial asset and had to be taxed strictly under section 50, regardless of later usage or classification. However, with respect to the remaining land, the Tribunal found inadequate factual examination under section 2(14)(iii) and remanded the issue to the Assessing Officer for fresh verification. The appeal was partly allowed.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. The present appeal arises from order, passed u/s 250 of the Income Tax Act, 1961 (hereafter as “the Act”), dated 30.05.2025, passed by Ld. CIT(A)-NFAC, Delhi. In this case, it is seen that the assessee did not file any return of income u/s 139(1) of the Act. The Ld. AO received certain information indicating that sometime deposits were purchased by the assessee and also some payments had been received in respect of transfer of immovable property. The facts in brief are that the assessee sold a property comprising of land and factory building for Rs.1,92,27,000/-. The assessee had claimed indexation benefit on the cost of acquisition from 31.03.1993. The Ld. AO has recorded that the assessee did not submit any document supporting the cost of acquisition or cost of improvement of the property. The Ld. AO has given a finding that the benefit of indexation cannot be allowed for any depreciable asset, being the factory building in this case. Thereafter, the Ld. AO considered only the cost of land as cost of acquisition and recomputed the capital gains. Furthermore, a second portion of the same plot of land was also sold as agricultural land but the Ld. AO is seen to have denied this claim on the ground that the assessee did not give any proof of agricultural activity being conducted on the said land. Thus, the facts that emerge are that the assessee sold two portions from a plot of land measuring 5 acres. The first portion comprising 1.51 acres also had a factory building on it and the second part comprising 3.49 acres was claimed to be agricultural land. Thereafter, the Ld. AO added long term capital gains at Rs.1,82,30,107/- for one parcel of land and Rs.1,04,55,911/- for the second parcel.
