Sudesh Synthetic Mills Private Limited vs. DCIT – Circle – 2(1)(2)

Parties Involved

Facts Summary

Sudesh Synthetic Mills Private Limited, a company engaged in the textiles business, sold an immovable property (factory land and building) on 02.07.2015 to M/s Diwan Silk Mills Pvt. Ltd. for Rs. 2,30,00,000/-. The assessee bifurcated the sale consideration into Rs. 1,50,00,000/- for land and Rs. 80,00,000/- for building. The assessee treated the land as a long-term capital asset and the building as a short-term depreciable asset. The Deputy Commissioner of Income-tax rejected the bifurcation and treated the entire sale consideration as relatable to land only. The assessee appealed against this order to the Commissioner of Income-Tax (Appeals) who dismissed the appeal. The assessee then filed an appeal before the Income Tax Appellate Tribunal.…

Legal Issues

• 1. Whether the assessee was justified in bifurcating the composite sale consideration towards 'land' and 'building'.
• 2. Whether the assessee was entitled to deduct the opening Written Down Value (WDV) of the building block as cost of acquisition.
• 3. Whether the assessee was entitled to deduct the cost of Rs. 2,20,126/- incurred by way of payment of transfer fee and other expenses in relation to purchase of land.
• 4. Whether the assessee was entitled to deduct the expenditure of Rs. 2,30,000/- incurred by way of brokerage for sale of the property.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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