ACIT Vs M/s. Punjab Steel Rolling Mills (Baroda) Pvt. Ltd. (ITAT Ahmedabad)
In this case Transfer of land for a long period to lessee could not be construed as actual transfer of the said land because by giving of lease, assessee did not lose its ownership right over the land. Since the land which was leased out to lessee did not cease to belong to the assessee, therefore, the ownership remained with assessee and accordingly the amount received for transfer of lease right held by assessee (lessee) was taxable under the head “Capital gains”.
FULL TEXT OF THE ITAT JUDGMENT
1. This appeal by the Revenue and cross objection of the assessee are directed against the order of the Ld. CIT(A)-III, Baroda dated 31.03.2014 pertaining to A.Y. 2010-11.
2. The substantive grievance of the revenue read as under:-
1. On the facts and in the circumstances of the case and in law the learned CIT(A) erred in deleting the addition of Rs. 3.11 crores, treated by the AO as income from other sources and directing to consider the same as Mong term capital gain’ and to allow the cost of acquisition without appreciating the fact that the assessee company had transferred the ownership rights of the property in 1972 to M/s. Star Steel Limited itself by handing over the possession of the property under lease of 98 years and the receipt of Rs. 3.11 crores was a lumpsum receipt received by the assessee for no litigation and to refrain from causing delay and creating legal complications.
2. On the facts and in the circumstances of the case and in law the learned CIT(A) erred in deleting the addition of Rs. 59,48,904/- without appreciating the fact that the scheme for gratuity approval was approved with effect from 07.01.2010 by the Commissioner of Income-tax (i.e. from the date of application made by the assessee), whereas the payment made by the assessee was on 31.12.2009 i.e. prior to the approval of the scheme.
3. Briefly stated the facts of the case are that the assessee is in the business of manufacturing and sale of steel bars. The return for the year was filed on 28.09.2010 declaring total income at Rs. 6.12 crores. The return was selected for scrutiny assessment and accordingly statutory notices were issued and served upon the assessee.
4. The A.O. found that the assessee has shown long term capital gains as under:-
Long term capital gains:
In the computation of Income, the assessee has shown long term capital gain of Rs. 2,23,07,514/- as under:
