N.K. Gems Vs ITO (ITAT Mumbai)
New Property Need Not Be Put to Use for Block of Assets – Possession Not Mandatory – Sec 50 STCG Reworked in Favour of Assessee – ITAT Mumbai
The assessee sold an office at Bharat Diamond Bourse and purchased two new office units before year-end, claiming inclusion in the block of assets. AO denied the claim stating possession was not received, only part payment was made and assets were not put to use, and computed STCG u/s 50. CIT(A) confirmed the action.
ITAT held that once the assessee acquired the new properties through registered agreements and paid consideration before 31.03.2014, they must be treated as part of the block of assets. Use of asset or physical possession is relevant only for depreciation allowance, not for determining inclusion in the block. Section 50 does not mandate actual use or possession of the asset for acquisition.
Relying on precedents including Chhabria Trust (SB), Indigogem, and Supreme Court ruling in Fibre Boards Pvt Ltd., the Tribunal observed that even advance/utilisation towards acquisition constitutes sufficient compliance. Accordingly, AO was directed to treat the new offices as part of the block of assets and recompute tax liability; STCG computation was set aside. Appeal allowed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal has been preferred by the Assessee against the order dated 19.06.2024, impugned herein, passed by the National Faceless Appeal Centre (NFAC)/Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2014-15.
