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2017 (10) TMI 582 - AT - Income TaxSale of block of assets by the amalgamated entity - Excess of sales consideration received over Written Down Value (WDV) of the block of plant and machinery - Short Term Capital Gain - Held that:- There is no dispute that even after the transfer of the said assets the assessee was still having balance in the block of assets of plant and machinery. Therefore the conditions as stipulated under Section 50 of the Act have not been satisfied so that any capital gain arising in the hand of the assessee can be deemed as per the provisions of Section 50 of the Act. It is also not in dispute that the assessee while filing the revised return of income has claimed depreciation on the consolidated block of assets and thereby the claim of depreciation was reduced after giving effect to the transfer of the asset in question. Therefore though the transfer of block of assets by the erstwhile entity Makino Asia Pte Limited had resulted STCG in the hand of the said entity but it exists only so long there was no merger/amalgamation. Once the merger / amalgamation was effected from 1.4.2002 ail the transactions thereafter would be treated as transactions of the new entity post amalgamation. Thus when there is no extinguishment of block of assets of plant and machinery in the hand of the assessee then the transfer of assets in question after 1.4.2002 would not result in deemed capital gain under Section 50 of IT Act. The revenue has not disputed the facts relating to the transfer of the assets and therefore the question of invoking the provisions of Section 50 of the Act does not arise. We hold that the enhancement made by the CIT (Appeals) is not sustainable and accordingly the addition on account of enhancement being STCG is deleted. - Decided in favour of assessee.
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