TMI Blog2003 (12) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... ) : R. JAYASIMHA BABU., S. R. SINGHARAVELU. JUDGMENT The judgment of the court was delivered by R. JAYASIMHA BABU J.-The assessment year is 1994-95. The assessee, who is a senior advocate, sold 371 volumes of books, all of which except 14 volumes, had been purchased between 1984 and 1988 and the remaining 14 between 1988 and 1993, for a sum of Rs. 1,25,000. Out of that, a sum of Rs. 15,500 was paid as commission to the bookseller. The assessee claimed 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 aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax Act, 1922 (11 of 1922), the provisions of sections 48 and 49 shall be subject to the following modifications:--..." It is not necessary to refer to sub-section (1) thereunder, as that admittedly does not apply to the facts of the assessee's case. Sub-section (2) however is relevant and material. That sub-section (2) reads as under: "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 previous year, as increased by the actual cost of any asset falling within that block of assets, acquired by the assessee during the previ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ets must form part of a group, which fall within the same class and for the members of which group, depreciation prescribed is of the same percentage. It is the books on which the assessee had received depreciation, which books were regarded by the assessee, as also by the Revenue, as falling within the class "plant". It is not in dispute that the depreciation had been claimed under section 32 in respect of each book and that all the books that were 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 cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assets at the beginning of the previous year and adjusted,... 43. (6)(c)(ii) in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 1989, the written down value of that block of assets in the immediately preceding previous year as reduced by the depreciation actually allowed in respect of that block of assets in relation to the said preceding previous year and as further adjusted by 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eciation had been allowed under section 32(1), proviso, having regard to the value of those assets being less than the amount specified in that proviso, the amount of depreciation so allowed being the full value of the cost of acquisition. It was also his submission that the reference to depreciation being at the same rate for the group of assets falling within the same class in the definition of "block of assets" would also indicate that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from that sale was therefore was required to be treated as and has rightly been treated as capital gain arising from the transfer of short-term capital asset. The assessee's claim that he should have the right to indexing the cost of acquisition by invoking sections 48 and 49, is untenable. The assets sold by the assessee being depreciable assets, what is provided in sections 48 and 49 is subject to the modifications set out in section 50 and, therefore, the assessee is not entitled to any indexing. It would appear that the object of introducing section 50 in order to provide different method of computation of capital gain for depreciable assets, was to disentitle the owners of such depreciable assets from claiming the benefit of indexi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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