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2016 (5) TMI 1319 - AT - Income TaxValidity of reopening of assessment - notice to company being dissolved - Held that:- The company was not in existence at the time when the notice was issued u/s.148, therefore, respectfully following the decision of the Delhi Bench of the Tribunal in the case of Impsat Pvt. Ltd. Vs. ITO [2004 (7) TMI 299 - ITAT DELHI-A ] we hold that the issue of notice u/s.148 after the company was dissolved and its name struck off the register of the Registrar of Companies is without jurisdiction, invalid and unlawful in the eyes of law. The subsequent proceedings on the basis of such invalid notice are also not tenable, therefore, ground of cross objection No.1 raised by the assessee is allowed. Set off of carried forward business losses against the capital gains computed u/s.50 of the Act in view of provisions of section 72 - whether the deeming fiction created under section 50 is restricted to section 50 only or is it applicable to section 54E of the Income-tax Act as well ? - Held 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 Income-tax Act cannot be denied to the assessee on account of the fiction created in section 50. The benefit of section 54E will be available to the assessee irrespective of the fact that the computation of capital gains is done either under sections 48 and 49 or under section 50. The contention of the Revenue that by amendment to section 50 the longterm capital asset has been converted into a short-term capital asset is also without any merit. As stated hereinabove, the legal fiction created by the statute is to deem the capital gain as short-term capital gain and not to deem the asset as shortterm capital asset. Therefore, it cannot be said that section 50 converts a long-term capital asset into a short-term capital asset. The assessee in our opinion is entitled to set off the brought forward business loss from the deemed short term capital gain. Therefore, the order of the CIT(A) is upheld and the ground rasied by the revenue is dismissed.
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