2017 (2) TMI 914 - AT - Income Tax

Appellant wins appeal on depreciation claim & capital gains assessment under Income Tax Act

SAI Flipped Coils Ltd. Versus Addl. Commissioner of Income Tax (OSD), Circle-8, Ahmedabad

SAI Flipped Coils Ltd. Versus Addl. Commissioner of Income Tax (OSD), Circle-8, Ahmedabad - TMI Issues:Assessment of short term capital gains arising from the sale of motor vehicles with other block of assets for depreciation claim.Analysis:The appeal for the assessment year 2009-10 involved the challenge of the Assessing Officer's action disallowing depreciation claim and assessing short term capital gains under Section 50 of the Income Tax Act. The appellant sought to merge the short term capital gains arising from the sale of motor vehicles with the block of assets of plant and machinery. The Assessing Officer rejected this claim, stating that the assets could not form one block under the Income Tax Rules. The CIT(A) upheld the Assessing Officer's decision, emphasizing that assets must fall under the same class to be considered a block of assets. The appellant's claim was dismissed based on this interpretation.The appellate tribunal, after hearing both parties, considered whether the appellant could merge the block of assets of plant and machinery with motor vehicles. Referring to a co-ordinate bench decision and a high court ruling, it was concluded that the relevant appendix prescribing the same rate of depreciation for both plant and machinery and motor vehicles formed a single category of block of assets. The tribunal found the appellant's justification for merging the assets to be valid under the provisions of the Act. Consequently, the Assessing Officer was directed to compute the necessary consequential adjustments based on the revised depreciation schedule filed by the appellant during the assessment proceedings. As a result, the appellant's appeal was allowed, and the decision was pronounced on February 13, 2017.