Appeal allowed, remanded for property usage verification. Importance of depreciation & deduction eligibility emphasized.

The appeal was allowed for statistical purposes, and the matter was remanded to the Assessing Officer for further evaluation. The decision underscored the significance of verifying the actual usage of the property to ascertain the applicability of depreciation and the eligibility for deduction under section 50(1)(iii) based on whether the property was utilized for business purposes.

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Issues:
Deduction of new asset purchased under section 50(1)(iii).

Analysis:

1. Issue of Deduction of New Asset:
The appeal pertains to the deduction of a new asset purchased under section 50(1)(iii). The assessee sold its factory premises and purchased an apartment, claiming a short-term capital gain. The Assessing Officer disallowed the deduction, considering the apartment as a residential property eligible for 5% depreciation, unlike the factory building eligible for 10% depreciation. The Commissioner of Income-tax (Appeals) upheld this decision, stating the property was residential and not suitable for office use. The assessee argued that the property was used as office premises, supported by a no objection certificate. The Income-tax Appellate Tribunal referred to a previous case where it was held that the assessee could claim the deduction even if not carrying on the same business. The Tribunal emphasized that the new asset should fall under the same block of assets to be eligible for deduction under section 50(1)(iii).

2. Verification of Property Usage:
The Tribunal directed the Assessing Officer to verify if the property was indeed used as office premises, considering factors like municipal taxes and society permissions. If confirmed, depreciation at 10% would be allowed, potentially reducing the written down value of the business premises to zero. If not used for business purposes, depreciation may not be applicable. The Tribunal remanded the matter to the Assessing Officer for a detailed examination of the property's usage to determine the eligibility for deduction under section 50(1)(iii). The assessee was granted the opportunity to present relevant evidence and arguments.

3. Conclusion:
The appeal was allowed for statistical purposes, and the matter was sent back to the Assessing Officer for further evaluation. The decision highlighted the importance of verifying the actual usage of the property to determine the applicability of depreciation and the eligibility for deduction under section 50(1)(iii) based on whether the property was used for business purposes.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision, emphasizing the legal principles and requirements for claiming deductions under the relevant tax provisions.

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