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2013 (11) TMI 682 - AT - Income TaxComputation of capital gain u/s 50 - sale of depreciable assets - block of assets - AO rejected the claim of assessee of deducting actual cost of new office premises acquired during the previous year relevant to the assessment year under consideration from the full value of consideration received on sale of office premises at Prasad Chamber (ibid) while computing the capital gain on the ground that the new office premises cannot form part of block of assets (i) that the assessee failed to take possession of the new office premises (ii) that the said premises were residential property and required to be utilized for that purpose only and thereby not forming part of block of assets – Held that:- No justificationi to deny the claim of the assessee to allow adjustment of cost of new premises acquired as he has not considered the provisions of section 50(1) of the Act correctly - As per Clause (iii) to section 50(1) of the Act, only requirement is that the assessee must acquire the assets which form part of the block assets during the previous year and if so the actual cost of the said acquired assets has to be deducted from the sale proceeds received by assessee on transfer of the assets while computing the capital gains u/s 50 of the Act. Reliance has been placed on the Special bench judgment in the case of Chhabria Trust V/s ACIT [2003 (5) TMI 479 - ITAT MUMBAI], wherein it was held that for the purpose of section 50, it is not necessary that the newly acquired assets must be used for the purpose of business during the year under consideration – Again, reliance has been placed on the judgment in the case of Oceanic Investment Ltd. v. Asstt. CIT [1996 (9) TMI 581 - ITAT MUMBAI], wherein held that use of an asset which has been acquired out of transfer proceedings of the depreciable assets forming part of block of assets is not condition precedent for making adjustment in Block of assets – Following the above decisions, assessee is entitled to take actual cost of new premises aggregating to Rs.54,82,500/- which falls within the block of asset during the previous year to be deducted from the value of consideration received of Rs.67,68,750/- on transfer of earlier business premises whose WDV was NIL, while computing the capital gains u/s 50 of the Act – Decided in favor of Assessee. Whether exemption u/s 54EC is available only for long term capital gain – Held that:- Reliance has been placed on the decision in the case of CIT V/s ACE Builders Pvt Ltd [2005 (3) TMI 36 - BOMBAY High Court ], wherein it was held that even if the assets were depreciable, but held for more than 36 months, the sale proceeds could be invested under the provision of the sec 54EC of the IT Act, 1961 – Decided in favor of Assessee.
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