1/8 itxa-1506-12.doc IN HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1506 OF 2012 Commissioner of Income Tax-5 ...Appellant v/s. M/s.Cadbury India Ltd. ...Respondent Mr.Sureshkumar for Appellant. Mr.Farook Irani with Mr.Sameer Chitnis for Respondent. ... CORAM : S.C.DHARMADHIKARI & A.A. SAYED, JJ. DATED : 14 NOVEMBER 2014 P.C. Heard Mr.Sureshkumar appearing for Revenue in support of this Appeal and Mr.Irani appearing for Assessee. order passed on 25 May 2012 in Income Tax Appeal No.975/Mum/2005 is subject matter of this Appeal. 2. According to Mr.Sureshkumar, four questions at paras 4(a) to (d) are substantial questions of law. He submits that amount being meager or small should not prevent this Court from considering questions, because they are indeed substantial questions of law. He submits that on each one of them there were reasons assigned by Assessing Officer and by Uday Kambli 1/8 ::: Uploaded on - 20/11/2014 ::: Downloaded on - 25/03/2020 12:56:56 ::: 2/8 itxa-1506-12.doc Commissioner. Tribunal does not refer or deal with them. It comes to conclusion and in relation to question at page 4, which did not either approve or modify view of Assessing Officer and Commissioner. It is this approach of Tribunal, which raises substantial questions of law. 3. For instance, our attention is invited by Mr.Sureshkumar to claims covered by these grounds to submit that Tribunal erred in holding that Assessee is entitled to capital gain on sale of property, in respect of which deprecation is claimed by Assessee. In that regard, it is submitted that computation has not been done as has been noted by Tribunal in para 8.4 of its order. departmental representative had pointed out as to how Commissioner was right in concluding that bifurcation into two parts i.e. land and building is done only for purposes of Assessment Year in question namely 2001-02. Therefore, that was not permissible and Tribunal should have considered as to whether Commissioner was justified in conclusion that he reached. Our attention is invited to Commissioner's order in that regard. Uday Kambli 2/8 ::: Uploaded on - 20/11/2014 ::: Downloaded on - 25/03/2020 12:56:56 ::: 3/8 itxa-1506-12.doc 4. Mr.Irani, appearing on behalf of Assessee, on other hand, submits that questions as raised at page 4 cannot be termed as substantial questions of law. They have been answered in accordance with law laid by this Court and at least two decisions have been referred to by Tribunal in that regard. Merely because claim has been upheld and benefit is given to Assessee does not mean that this Court should entertain Appeal. He, therefore, submits that Appeal be dismissed. 5. After hearing both sides, what we have noted is that return declaring total income of Rs.78,82,04,357/- was filed on 30 October 2001 alongwith copies of Balance Sheet, Profit & Loss account and Tax Audit Report under section 44AB. This return was processed and details regarding several aspects were called for. Assessment was completed on 30 October 2001. Assessing Officer observed that Assessee had transferred land and building at Colaba for consideration of Rs.8 crores and agreement in that regard has been referred to. property was purchased in year 1973. Assessee computed Long Term Capital Gain separately in respect of land and in respect of building, treating building as non depreciable asset. capital gain Uday Kambli 3/8 ::: Uploaded on - 20/11/2014 ::: Downloaded on - 25/03/2020 12:56:56 ::: 4/8 itxa-1506-12.doc claimed was exempted under section 54EC, as Assessee has made investment in NABARD Bonds. Assessing Officer observed that land and building was purchased as composite unit and sale was also composite. In such circumstances, bifurcation or segregation was made in Assessment Year 2001-02 and earlier years no bifurcation has been made by Assessee. bifurcation was made only in 2002 to claim benefit of deduction. Assessing Officer, therefore, computed Short Term Capital Gain under section 50 of Income Tax Act, 1961 and which came to Nil. With regard to claim that income has to be computed as generated from house property, Assessing Officer held that asset held by Assessee as business asset, which was not let out and depreciation on which had been claimed. Therefore order of Assessing Officer resulted in disallowance of excess depreciation of Rs.80 lakhs. He also observed that there was no Capital Gain and hence no question of allowing deduction under section 54EC arises. 6. With regard to other claims and which are factual basic facts are set out in paras 3 & 3.4 of Paper Book. Uday Kambli 4/8 ::: Uploaded on - 20/11/2014 ::: Downloaded on - 25/03/2020 12:56:56 ::: 5/8 itxa-1506-12.doc 7. With regard to all questions and most of which emanate from ground No.12 before First Appellate Authority, Tribunal came to conclusion that payment of Rs.1.5 lakh and which has been made to consultant in connection with framing of scheme, Rs.96,450/- towards gifts and Rs.1,67,000/- towards incentive to ex-employees who opted for VRS, deduction may have been claimed under section 34DDA of Act. It is only sum of Rs.96,450/- paid to employees at time of Voluntary Retirement, which could be allowed as deduction under section 35DDA. payment made to ex-employees is not eligible for deduction. Even other expenditure of Rs.1.5 lakh was not liable under section 35DDA. However, deduction could have been claimed and allowed under section 37 of Act only in relevant year. Hence, merely invoking wrong provisions should not disentitle Assessee from claiming deduction if same can be otherwise claimed and granted and with recourse to another provision in Income Tax Act, 1961. In present case, that was permitted and reasons for same as assigned in para 9.2 cannot be termed as vitiated by any error of law apparent on face of record. Tribunal's approach also cannot be termed as perverse. We are of view, therefore, that questions (a) & (b) cannot be said to be substantial questions of law. Uday Kambli 5/8 ::: Uploaded on - 20/11/2014 ::: Downloaded on - 25/03/2020 12:56:56 ::: 6/8 itxa-1506-12.doc 8. With regard to questions (c) and (d), Tribunal noted that records would indicate that section 50 was invoked and ought to be applied, in case of depreciation asset land does not fall within same and therefore capital gain has to be computed in respect of land separately as long term capital gain. bifurcation of land and building into separate part for purpose of capital gain may have been done in Assessment Year in question, but that was permissible and in that regard Tribunal relied upon judgment of this Court in case of CIT v.s. Citibank (261 ITR 570), hence bifurcation as made ought not result in total denial of claim is conclusion reached. Tribunal has referred to relevant facts in paras 8.3 and 8.4. It found that gain in respect of land portion has to be computed as long terms capital gain and Assessee has invested this gain in NABARD bonds. Therefore, it would be entitled to deduction under Section 54EC of Act. It would be so entitled in respect of short term capital gain under under section 50 in respect of building portion, if same was held for more than three years. That is conclusion reached relying on another judgment of this Court in case of CIT v/s. Ace Builders (281 ITR 210). It is for purpose of recomputing Uday Kambli 6/8 ::: Uploaded on - 20/11/2014 ::: Downloaded on - 25/03/2020 12:56:56 ::: 7/8 itxa-1506-12.doc capital gain, but in tune with this judgment that matter was restored to file of Assessing Officer. We have perused both judgments, copies of which have been placed before us. 9. Division Bench in case of Ace Builders (supra) deals with situation where there was firm in which Assessee was partner. It was dissolved. Assessee was allotted flat against balance standing to its credit in capital account with firm. That flat was shown as capital asset in books of account and depreciation was claimed and allowed from year to year. In previous year relevant to assessment year 1992-93 that flat was sold and net sale proceeds were invested in `UTI capital gains scheme' with view to claim deduction. Nil income was declared under head income from capital gains for assessment year 1992-93. There also Assessing Officer denied relief and on identical grounds as are found in present case. Assessing Officer's exercise was upheld by Commissioner. However, before Tribunal, section 50 was considered and together with deeming fiction. Tribunal, therefore, allowed exemption under section 54E, that has been upheld by this Court. Division Bench held that there was nothing in section 50 Uday Kambli 7/8 ::: Uploaded on - 20/11/2014 ::: Downloaded on - 25/03/2020 12:56:56 ::: 8/8 itxa-1506-12.doc to suggest that fiction created is not restricted in its application to sections 48 & 49, but to other provisions as well. Section itself makes it clear that deeming fiction created in sub-sections 1 & 2 is restricted only to mode of computation of capital gains contained in sections 48 & 49. In other words, section 50 does not convert long term capital asset into short term capital asset. Once this is view taken by Division Bench of this Court and which has been followed by Tribunal in present case, then we are of view that Tribunal's order even with regard to questions (c) & (d) does not raise any substantial question of law. 10. Appeal is , thus, devoid of merits and is dismissed. No costs. (A.A. SAYED, J.) (S.C.DHARMADHIKARI,J.) Uday Kambli 8/8 ::: Uploaded on - 20/11/2014 ::: Downloaded on - 25/03/2020 12:56:56 ::: Commissioner of Income-tax-5 v. Cadbury India Ltd