Case Law Details
Thomas Cook (India) Limited Vs ACIT (ITAT Mumbai)
ITAT Mumbai held that benefit of indexation of cost of acquisition is to be given to the assessee while computing long term capital gain for the purpose of section 115JB of the Income Tax Act.
Facts- During the year, a compensation of ₹.8,69,06,480/- was paid to the tenant for surrendering of their tenancy right and also stamp duty of ₹.43,76,000/- was paid on registration of this deed. Therefore, total amount spent is ₹.9,12,82,480/-. However, the said amount has been added to the block of Building (10%) and the assessee claimed depreciation on the same. AO observed that premises were let out by the assessee, accordingly he disallowed the depreciation claimed by the assessee.
Further, with regard to addition on account of disallowance while computing the book profits under section 115JB of the Act, during the course of assessment proceedings AO observed that assessee has reduced an amount of ₹.21,98,18,240/- from its book profits and the said item was reduced as others. AO rejected the submissions of the assessee by observing that the provisions of section 115JB of the Act empowers AO to add or reduce only such items which are mentioned in section 115JB of the Act and restricts AO from making any addition / reduction in any other items which is not covered under section 115JB of the Act. Accordingly, rejected the claim of the assessee. Therefore, they added back of ₹.21,98,18,240/- by stating that the benefit of indexation shall not be available while computing the book profits as per provisions of section 115JB of the Act.
Conclusion- Held that the assessee has claimed only the depreciation for the period after surrender of the tenancy rights by the tenant. Therefore, it is not relevant whether actually utilizes for the remaining period, as long as it is in its position and the depreciation can be claimed for utilization as well as based on the concept of passage of time during which the property was in its control and possession. Therefore, the above said depreciation cannot be denied to the assessee.
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