2017 (5) TMI 369

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.... loss would be capital in nature liable to be set off only against capital gains. On the other hand, the stand of the assessee was to the effect that the loss was business in nature, liable to be set off against business profits. While initially a stand was taken to the effect that the assessee was also engaged in the trading of cars, it was not pursued. The assessee sought the benefit of the provisions of section 32(1)(iii) of the Income Tax Act (Act), that read as follows: "32. (1) In respect of depreciation of (i) Buildings, machinery, plant of furniture, being tangible assets; (ii) know-how, patents, copyrights, trademarks, licences, frachises or any other business or commercial rights of similar nature, being....

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....g officer to the transaction in question was erroneous. 3. The arguments of the assessee were to the effect that no depreciation was provided for foreign cars for the relevant period and the written down value thus ought to be taken to be the cost of acquisition. The CIT(A) refers to the definition of written down value (WDV) in section 43(6) and notes that the actual cost of an asset, would be the amount the asset actually cost, less depreciation actually allowed under the act. Upon examining the provisions of section 50 of the Act, the CIT(A) concludes that it would not be applicable to the transaction in question. Following the rationale of the decision of the Madras High Court in the case of the Guindy Machine Tools Private Limtied, ....

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....Sri. Lakshmi Ratan learned counsel appearing for the assessee and Mr. T.Ravikumar, learned Senior Standing Counsel appearing for the Revenue. 5. Section 50 of the Act invoked by the Revenue applies to a capital asset forming part of a block of assets, in respect of which, depreciation has been allowed. In the present case, the foreign cars do not form part of a block of assets and, admittedly, have not been granted depreciation in so far as depreciation was not allowable in respect of foreign cars for the relevant period. The provisions of section 50 of the Act are thus inapplicable to the present case. 6. Let us now examine the provisions of section 32(1)(iii). The clause, as relevant for the period in question was inserted by Financ....