AI Drafter 
TaxTMI 
TaxTMI 
2003 (12) TMI 38
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....d that the balance of Rs. 1,09,500 was not liable to be taxed, as that amount was the sale proceeds of capital assets and that amount was less than the indexed cost of acquisition of those capital assets. That claim was uniformly rejected by the Assessing Officer, the appellate authority, as also by the Tribunal, by placing reliance on section 50 of the Income-tax Act. It is not in dispute that the books sold by the assessee are capital assets, in respect of which depreciation had been allowed under section 32(1) of the Act. The extent of the depreciation was the whole of the actual cost of the books, as the value of each book did not exceed Rs. 5,000. The first proviso to section 32(1) as it stood between April 1, 1984, and April 1, ....
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.... during the previous year, the cost of acquisition of the block of assets shall be the written down value of the block of assets at the beginning of the previous year, as increased by the actual cost of any asset falling within that block of assets, acquired by the assessee during the previous year and the income received or accruing as a result of such transfer or transfers shall be deemed to be the capital gains arising from the transfer of short term capital assets." Clause (42A) of section 2 defines "short-term capital asset" as meaning a capital asset held by an assessee for not more than 36 months immediately preceding the date of its transfer. That period is reduced to 12 months in respect of shares or other security it held in a ....
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....e sold belong to the same group, being books, all of which are within the same class "plant". Section 50(2) refers to the written down value of the block of assets. Written down value is defined in section 43(6) of the Act. Section 43(6)(b) is the relevant sub-clause for the purposes of this case. Section 43(6)(b) reads thus: "in the case of assets acquired before the previous year, the actual cost to the assessee less all depreciation actually allowed to him under this Act, or under the Indian Income-tax Act, 1922 (11 of 1922), or any Act repealed by that Act, or under any executive orders issued when the Indian Income-tax Act, 1886 (2 of 1886) was in force: Provided that in determining the written down value in respect of buildin....
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.... the increase or the reduction referred to in item (i)." Explanations thereunder are not material for the purpose of this case. What is significant in section 43(6)(c) is that the written down value of the block of assets is stated to be the aggregate of the written down values in sub-clause (i), and the written down value of the block of assets in the immediately preceding previous year in sub-clause (ii). In order to ascertain the written down value referred to in sub-clause (c) of section 43(6), one has to look at the definition of "written down value" in section 43(6)(a) and (b). In section 43(6)(a), in the case of assets acquired in the previous year, it is the actual cost to the assessee, and in section 43(6)(b), in the case of ....
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....t it is only assets which are depreciated at a rate which is less than 100 per cent. that can be taken note of for the purpose of section 50 of the Act. Having regard to the relevant provisions of the Act which we have set out earlier and the effect of the same which also have been set out, we do not find it possible to accept the submissions so made for the appellant/assessee. The assessee does not dispute the fact that the books are "plant" and that depreciation claimed has been actually allowed on that basis. Plant is a depreciable asset for which, rates of depreciation have been prescribed in the Depreciation Table in Appendix I of the Income-tax Rules with reference to different items falling within the class of "plant". The fact....