Self-Occupied Property cannot enter into the block of Depreciable Asset: ITAT rejects Sonu Nigam’s Plea [Read Order]

The Income Tax Appellate Tribunal (ITAT), Mumbai bench recently rejected Bollywood singer Sonu Nigam’s plea by holding that the self-occupied property cannot enter into the block of a depreciable asset.

The assessee sold a flat for a sum of Rs. 161,75,480/- out of which the appellants 50% share was Rs.80,87,740/-. The Assessing Officer observed that in the block of depreciable assets the WDV of these assets was only Rs. 3,81,661/-. Therefore, as per the provisions of section 50 of the Act short term capital gains of Rs,67,06,074/- were assessable.

The assessee claimed that the said block was not extinguished as during the year the assessee had purchased property worth Rs.1,24,68,460/- in Lakhani Centrium’. It was also claimed that he was using a part of his residential premises (Namah building) for office purposes, which was purchased in earlier years for Rs. 1,02,49,0407-, and the cost of the said building was also part of the depreciable block.

However, the Assessing Officer rejected the claims for the reason that both the properties were not part of the depreciable block. According to him, the income from ‘Lakhani Cenfrium” was being offered under the head ‘income from house property’ and on the ‘Namah’ building the assessee had not claimed any depreciation in the past or in the present, in the circumstances the AO concluded that the provisions of section 50 were attracted as the block of assets ceased to exist.

The Tribunal noted that the assessee, in this case, has sold flat on which depreciation was claimed earlier. The written down value of the flat was Rs. 3,81,661/- the sale value of the flat was Rs. 80,87,740/-.

“The Assessing Officer has computed short term capital gain as per section 50 of the I.T. Act. The assessee has objected in as much as it is the claim of the assessee that the block of the asset did not cease to exist. It is the claim of the assessee that the assessee was already having residential premises “Namah”, part of which is claimed was used as his office. We find that these premises were treated as self-occupied property. When the property was self-occupied property, it cannot enter into the block of a depreciable asset. Hence, this claim of the assessee is not at all sustainable. The assessee has also pleaded that assessee was using the part of the said premises for office purposes. Hence it is claimed that the property cannot be said to be not forming part of a depreciable asset. We find that firstly there is no basis of this claim. Secondly, since the assessee has not claimed any depreciation on the same in the earlier period the assessee’s claim of the part of the building used for official purposes can only be said to be an afterthought,” the Tribunal said.