TaxTMI 
TaxTMI 
2026 (5) TMI 1322
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....i vide order dated 13.09.2024 passed for A.Y. 2016-17. 2. The assessee has taken the following grounds of appeal: "1. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in computing long-term capital gains amounting to Rs. 2,86,99,314/- by wrongly adopting the indexed cost of acquisition with reference to F.Y. 2010-11, being the year in which depreciation was last claimed, instead of F.Y. 2006-07, being the actual year of acquisition of the asset. 2. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in computing long-term capital gains amounting to Rs. 2,86,99,314/- by taking cost of acquisition for indexation as Rs. 73,36,162/- i.e. WDV as on 31.03.2010 instead....
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....on 50 of the Act, the Assessing Officer treated the entire capital gain arising on sale of the property as Short-Term Capital Gain (STCG), irrespective of the period of holding. The Assessing Officer did not accept the assessee's position that the asset was held for a long period and that the nature of gain should be treated accordingly. Thus, the Assessing Officer computed the gain as STCG and made an addition of Rs. 3,59,64,670/- to the income of the assessee, adopting an interpretation that once an asset falls within the block of depreciable assets, section 50 of the Act automatically mandates taxation as short-term capital gain irrespective of the holding period or other provisions. 5. Aggrieved by the assessment order, the assessee ....
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....edents such as the decision of the Hon'ble Bombay High Court in CIT vs. Ace Builders Ltd. (281 ITR 410) and tribunal decisions viz Mahindra Freight Carriers and Prabodh Investment & Trading Co., the CIT(Appeals) held that the deeming fiction under section 50 of the Act is restricted only to the computation mechanism under sections 48 and 49 of the Act and does not extend to determine the nature of capital gain for all purposes of the Act. The CIT(Appeals) held that even if capital gains are computed under section 50 of the Act, the asset can still be regarded as a long-term capital asset for purposes such as taxation rate and eligibility under other provisions, provided the period of holding exceeds the prescribed threshold. 7. Applying ....
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....als) determined the Long-Term Capital Gain at Rs. 2,86,99,314/- by applying indexation to the WDV and accordingly restricted the addition made by the Assessing Officer from Rs. 3,59,64,670/- (treated as STCG) to Rs. 2,86,99,314/- (treated as LTCG). Thus, substantial relief was granted to the assessee by correcting the legal characterization of the gain and partially modifying the computation. The CIT(Appeals) further held that levy of interest under sections 234A, 234B, 234C and 234D is mandatory and consequential in nature and directed the Assessing Officer to recompute the same in accordance with law. 10. The assessee is in appeal before us against the order passed by CIT(Appeals) partly allowing the appeal of the assessee. 11. We h....
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....iation on the asset up to assessment year 2010-11 and thereby reduced the value of the asset through the mechanism of block of assets. Having availed such benefit, the assessee cannot now seek to adopt the original cost from a much earlier year, such as F.Y. 2005-06, for the purpose of claiming indexation benefits. This would amount to claiming depreciation benefits on one hand and simultaneously seeking enhanced indexed cost on the other hand right from A.Y. 2005-06, which is not permissible under the scheme of the Act. The approach adopted by the learned CIT(Appeals) in considering the Written Down Value as on 31.03.2010 as the cost of acquisition is legally sound and in accordance with established principles governing depreciable assets.....