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2017 (5) TMI 780 - AT - Income TaxLoss arising on the demolition of a depreciable asset - whether demolition of asset does not constitute transfer of capital asset? - Held that:- From the Depredation Statement shown under Annexure I to the 3CD Tax Audit Report for the said assessment year 2003-04, it is seen that Building has been shown as a depreciable asset with opening written down value (WDV) of ₹ 1087702/-. A reference to the depreciation statement of earlier years would also show that depreciation has been claimed on the said Building every year. Therefore the asset under question is a depreciable asset. Once an asset is a depreciable asset and forms apart of a Block, and such block of assets has ceased to exist at the end of the previous year the provisions of Section 50 of the Act become applicable which deals with capital gain relating to depreciable assets Thus a harmonious reading of sections 43(6)(c) and section 50 of the Act would bring out the fact where an asset is demolished, and the block of asset ceases to exist, the difference between the written down value and the salvage received shall have to be treated as short term capital gain or short term capital loss, as the case may be. In view of the above discussion, the action of the Assessing Officer in adding back the short term capital loss of (-) ₹ 9,87,702/- to the Income of the assessee is erroneous and is not in accordance with the Law. Therefore, direct the AO to delete the addition made on this count. Accordingly, the grounds raised by the assessee are allowed.
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