2021 (4) TMI 1083

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....ACIT/ITO/ AO) for the A.Y. 2014-15 vide order dated 19.12.2016 under section 143(3) of the Income-tax Act, 1961 (hereinafter 'the Act'). 2. At the outset, the learned Counsel for the assessee has raised the additional ground in regard to computation of capital gains under section 50 of the Act which is a legal ground and goes to the route of the matter. The relevant ground raised read as under: - "1. The Ld. CIT(A) as well Assessing Officer failed to appreciate the computation of capital gain to be made under sec. 50 of the Act i.e. on Sale of any asset falling in the block of assets, the same has to be reduced for the WDV of the said block of Asset any not from the individual asset as done by Assessing Officer. 2. The ....

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....e before Assessing Officer claimed that the property was held for more than 3 years and rental income was declared under the income from house property, hence, the assessee has rightly claimed the gain arising out of sale proceeds after indexation as Long Term Capital Gains. It was also submitted that no deprecation was claimed on these 17 units since Financial Year 2011-12. But the Assessing Officer treated the gain on sale of these units as short term capital gain under section 50C of the Act and computed the capital gain as Rs. 63,93,920/- by observing in Para 3.5 as under : - "3.5 Considering the above mentioned facts, as assessee has claimed depreciation till 31.03.2011 @ 10% on this property. Hence, WDV of the property of Rs.....

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.... 6. We have heard the rival contentions and gone through the facts and circumstances of the case. We noted that the assessee has claimed depreciation on the property sold as Lunkard Sky Max of 17 units in AYs 2010-11 and 2011-12. But from AY 2012-13 i.e. Financial Year 2011-12 out of 17 units 7 units were given on rent and accordingly rental income was shown as income from house property and no depreciation was claimed on this property. As argued by the learned Counsel for the assessee that once the property let out it loses its character as a business asset and no depreciation was allowable on it. This fact has not been denied by the Revenue. We noted that this issue has been decided by Co-ordinate Bench of Mumbai in the case of M/s Prabo....

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.... subject to the modification that the written down value of the asset, as adjusted, shall be taken as the cost of acquisition. Relying on this provision the Tribunal held that but for the difference in the cost of acquisition, a past claim of depreciation does not change the character of the asset as such. This order of the Tribunal supports the assessee's case before us. In the present case also the assessee had stopped claiming depreciation in the income tax return for the assessment years 1992-93 and 1993-94. It had claimed depreciation in respect of the flat only in the assessment years 1990-91 and 1991-92. For the assessment year 1994-95 and all subsequent years the assessee had made a Note in its accounts filed with the returns clarif....