TaxTMI 
TaxTMI 
2022 (9) TMI 1242
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....ollowing grounds:- "1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in directing the AO to tax capital gain on the sale of property being shown as a depreciable asset @ 20% of Rs.3,09,74,662, as claimed by the assessee instead of at 30% on on Rs. 5,48,34,449/- as calculated by that capital ins on transfer of long term capital asset on which depreciation had been claimed and allowed in earlier years, is to be treated as short term capital gains as per section 50 of the I.T. Act and for the purpose of Section 48 & 49 of the Act? 2. Whether on the facts and circumstances of the case and in law, Ld. CIT(A) was correct in accepting the contention of the assessee that indexation was allowable to the assessee on sale of impugned capital asset even though the said capital asset was part of block of assets of the assessee on which depreciation had been claimed by the assessee and on which profit had been shown by the assessee as 'profit on sale of fixed assets' in its 'Profit & Loss A/c"? 3. Whether on the facts and circumstances and in law, the Ld. CIT (A) was correct in giving relief to the assessee on the basis of the order....
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....this issue has been put to rest by the Hon'ble Apex Court recently in the case of CIT v Dempo Co Ltd [2016] [2016] 74 taxmann.com 15 (SC) dated 05.09.2016, the relevant extract of the same is reproduced below: "1. In the return filed by the respondent assessee for the Assessment Year 1989-90 the assessee had disclosed that it had sold its loading platform M.V. Priyadarshni for a sum of Rs.1,37,25,000/- on which it had earned some capital gains. On the said capital gains, the assessee had also claimed that it was entitled for exemption under Section 54E of the Income Tax Act. Admittedly, the asset was purchased in the year 1972 and sold sometime in the year 1989. Thus, the asset is almost 17 years old. Going by the definition of long term capital asset contained in Section 2(298) of the Income Tax Act, 19951 (hereinafter referred to as the Act'), it was admittedly a long-term capital asset. Further, the Assessing Officer rejected the claim for exemption under Section 54E of the Act on the ground that the assessee had claimed depreciation on this asset and, therefore, provisions of Section 50 were applicable. Though this was upheld by the Commissioner of Income Tax (Appeals....
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....s 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 cannot be denied by referring to the fiction created under Section 50. Section 54E specifically provides that where capital gain arising on transfer of a long term capital asset is invested or deposited (whole or any part of the net consideration) in the specified assets, the assessee shall not be charged to capital gains. Therefore, the exemption under Section 54E of the IT. Act cannot be denied to the assessee on account of the fiction created in Section 50." 2. We are in agreement with the aforesaid view taken by the High Court. 3. We are informed that the Gujarat High Court....
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....nder this Act or under 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 ceases to exist as such, for the reason that all the assets in that block are transferred 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 p....
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....of the assessee has to be assessed as long term capital gain as the flat had been held by the assessee for more than three years. It has been argued that provisions of section 50 deeming the capital gain as short term capital gain is only for the purposes of section 48 and 49 which relate to computation of capital gain. The deeming provisions has, therefore, to be restricted only to computation of capital gain and for the purpose of other provisions of the Act, the capital gain has to be treated as long term capital gain. The view canvassed by the learned AR is supported by the judgment of Hon'ble High Court of Bombay in case of Ace Builders (P) Ltd. (Supra) in which it has been held that for the purpose of other provisions of the Act such as section 54EC the capital gain has to be treated as long term capital gain, if the asset is held for more than three years. The same view has been taken by the Mumbai bench of Tribunal in case of Manali Investments v. Asstt. CIT [2011] 45 SOT 128/10 taxmann.com 293 in which it has been held that the prescriptions of section 50 are to be extended only to the stage of computation of capital gain and, therefore, capital gain resulting from tra....