TaxTMI 
TaxTMI 
2013 (11) TMI 576
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....ct, without appreciating that exemption under Section 54EC of the Act was not allowable in the case of assets covered by the provisions of Section 50 of the Act, since, Section 50 of the Act being special provision cannot be overridden by provisions of Section 54EC of the Act? (C) Whether the Tribunal was right in law in not appreciating that benefit under Section 54EC is granted on capital gains and not on sale proceeds of capital assets and that capital gain in respect of depreciable assets can be arrived at only under Section 50 of the Act and therefore, deeming provisions of Section 50 cannot be ignored for the purpose of Section 54EC of the Act?" 2. We have heard learned Counsel, Mr. K.M. Parikh for the Department and also examined closely the material on record as also the law on the subject. 3. The only question that deserves to be addressed by this Court is, whether the exemption available under Section 54EC of the Income-tax Act ('Act' hereinafter) on long term capital gain is also available in respect of short term capital gain when such capital gain is from transfer of 'long term capital assets' in wake of deeming fiction created under Section....
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....the Indian Income-tax Act, 1922 (11 of 1922), the provisions of Sections 48 and 49 shall be subject to the following modifications:- (1) Where the full value of the consideration received or accruing as a result of the transfer of the asset together with the full value of such consideration received or accruing as a result of the transfer of any other capital asset falling within the block of the assets during the previous year, exceeds the aggregate of the following amounts, namely:- (i) expenditure incurred wholly and exclusively in connection with such transfer or transfers; (ii) the written down value of the block of assets at the beginning of the previous year; and (iii) the actual cost of any asset falling within the block of assets acquired during the previous year, such excess shall be deemed to be the capital gains arising from the transfer of short-term capital assets; (2) where any block of assets ce....
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....cost of such long-term specified asset as provided in Clause (a) or, as the case may be, clause (b) of Sub Section (1) shall be deemed to be the income chargeable under the head "Capital gains" relating to long-term capital asset of the previous year in which the long-term specified asset is transferred or converted (otherwise than by transfer) into money. Explanation.- In a case where the original asset is transferred and the assessee invests the whole or any part of the capital gain received or a accrued as a result of transfer of the original asset in any long-term specified asset and such assessee takes any loan or advance on the security of such specified asset, he shall be deemed to have converted (otherwise than by transfer) such specified asset into money on the date on which such loan or advance is taken. (3) Where the cost of the long-term specified asset has been taken into account for the purposes of clause (a) or clause (b) of sub-section (1)- (a) a deduction from the amount of income-tax with reference to such cost shall not be allowed under Section 88 for any a....
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....ion Limited, a company formed and registered under the Companies Act, 1956 (1 of 1956).' 4.7 Section 45 of the Act is a charging Section, which provides that in any profit or gains arising from the transfer of a capital asset effected in the previous year, shall, save as otherwise provided in Sections 54, 54B, 54D and 54E, chargeable to income tax under the head 'capital gains' and shall be deemed to be the income of the previous year in which the transfer took place. 4.8 Sections 48 and 49 are machinery Sections for computation of capital gains. 4.9 Section 50 is an exception in relation to the depreciable assets and provides that where depreciation is claimed and allowed on the assets the computation of capital gain on transfer of such asset under Sections 48 and 49 shall be modified under Section 50. Thus, Section 50 is meant for computation of capital gains in case of depreciable assets. It provides for a method of computation of capital gains in relation to capital assets on which depreciation is allowable. 4.10 As could be noted from the findings of the Tribunal it has essentially relied upon the decision of the Bombay High Court and concurred with the finding of the CIT(....
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....lature has to be confined to the purpose for which it is created. In this connection, we may refer to the decision of the Apex Court in the case of State Bank of India v. D. Hanumantha Rao [1998] 6 SCC 183. In that case, the Service Rules framed by the bank provided for granting extension of service to those appointed prior to July 19, 1969. The respondent therein who had joined the bank on July 1, 1972, claimed extension of service because he was deemed to be appointed in the bank with effect from October 26, 1965, for the purpose of seniority, pay and pension on account of his past service in the army as Short Service Commissioned Officer. In that context, the Apex Court has held that the legal fiction created for the limited purpose of seniority, pay and pension cannot be extended for other purposes. Applying the ratio of the said judgment, we are of the opinion, that the fiction created under Section 50 is confined to the computation of capital gains only and cannot be extended beyond that. Thirdly, Section 54E does not make any distinction between depreciable asset and non-depreciable asset and, therefore, the exemption available to the depreciable asset under Section 54E cann....