Criteria for selection whether an asset is a long term capital asset or a short term capital asset

Last updated: 07 September 2021

Save Share

Quick Summary

This Income Tax Appellate Tribunal ruling clarifies the distinction between long-term and short-term capital assets. The tribunal considered whether indexation benefits for the cost of acquisition should be applied based on instalment payments and the relevant year of payment. Ultimately, the assessee's appeal was allowed, indicating a favourable outcome regarding the classification and associated tax benefits.

Court :
ITAT Mumbai

Brief :
This appeal in ITA No.7111/Mum/2019 for A.Y.2013-14 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-3, Mumbai in appeal No.CIT(A)-3/IT-10174/2016-17 dated 19/09/2019 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) of the Income Tax Act, 1961.

Citation :
ITA No.7111/Mum/2019

IN THE INCOME TAX APPELLATE TRIBUNAL, ‘E‘ BENCH MUMBAI
BEFORE: SHRI M.BALAGANESH, ACCOUNTANT MEMBER
&
SHRI AMARJIT SINGH, JUDICIAL MEMBER
ITA No.7111/Mum/2019 (Assessment Year :2013-14)

M/s. Toshvin Analytical Pvt. Ltd.,

103, S.J. House Sitaram Mill Compound,

N.M. Joshi Marg Lower Parel Mumbai – 400 011

PAN/GIR No.AABCT4482D

Deputy Commissioner of Income Tax Circle – 1(3)(2)

Room No.540, Aayakar Bhavan,

Maharshi Karve Marg, Mumbai – 400 020

Assessee by Shri Ruturaj Gurjar
Revenue by Shri Vijay Kumar Menon
Date of Hearing 16/08/2021
Date of Pronouncement 30/08/2021

O R D E R

We have heard rival submissions and perused the materials available on record. We find that assessee is a private limited company engaged in the business of marketing, installation and servicing of high technology, analytical and laboratory instruments, the returned income for the A.Y.2013-14 was electronically filed on 30/09/2013 declaring total income of Rs.6,93,07,420/-

2. Having held that the asset transferred is a long term capital asset, the next question that arises for our consideration is whether the indexation benefit for cost of acquisition should be allowed to the assessee, based on the payments made in instalments and applying the cost inflation index in the relevant year of payment. We find that assessee itself had claimed indexation benefit by applying the cost inflation index in the year of payment of instalments.

3. The ground No.iv raised by the assessee is challenging the disallowance of foreign travel expenditure @20% of total expenditure on an adhoc basis by the ld. AO.

4. In the result, appeal of the assessee is allowed. Order pronounced on 30/08/2021 by way of proper mentioning in the notice board.

Please find attached the enclosed file for the full judgement

FAQ :

The main issue is determining whether an asset transferred is a long-term or short-term capital asset and whether indexation benefits for the cost of acquisition should be allowed based on instalment payments.

The assessee claimed indexation benefits by applying the cost inflation index in the year of payment for the asset's instalments.

The assessee's appeal was allowed by the Income Tax Appellate Tribunal.

The assessment year for this case was 2013-14.

The assessee also challenged the disallowance of foreign travel expenditure at 20% of the total expenditure on an ad hoc basis by the Assessing Officer.