Parking spaces independent of the apartment sold to other members should be valued as current assets: ITAT
The Mumbai Income Tax Appeal Court ruled that parking spaces independent of the apartment and apart from the cost of the improvement were rightly treated as short-term fixed assets by the department when they were sold to other members of society.
The assessee, an individual, bought the apartment in question for Rs.1,29,15,665/- while the balance sheet for the year under review reflected it at Rs.1,23,90,665/-. When asked, the appraiser explained that the difference of Rs.5,25,000/- relates to the cost of two underground car parks sold with the apartment. The only issue in this appeal is whether the capital gain realized on the sale of three parking spaces could be treated as a long-term capital gain. The appraiser has retained the same as a short-term capital gain because, in his opinion, the parking spaces are independent of the apartment in question and the appraised has sold the three parking spaces within 36 months of their purchase.
The court bench consisting of Shri Sandeep Singh Karhail (Judicial Member) and Shri Gagan Goyal (Accounting Member) observed that with respect to the other two parking areas, we find that the Valuation Officer has registered a clear conclusion that the assessee himself has accounted for the assets in different entities; therefore, the assets are independent of the apartment and separate from the improvement cost.
“In addition, parking spaces can be sold and purchased from members of the company independently. Also, according to the books of the business in which the assessee is a partner, the parking spaces were transferred to the assessee in fiscal year 2012-13 only. Therefore, in our opinion, the capital gain resulting from the sale of these two parking spaces is only a “short-term capital gain”. In view of this, we must necessarily confirm the conclusion of the scholar CIT(A) that the parking spaces are independently identifiable assets at different dates, the capital gain arising from the sale of these two parking spaces is ‘Plus- short-term value’. The valuation agent correctly assessed the gain as a short-term capital gain in the case of the other two parking spaces,” the court said.
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