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2023 (7) TMI 1142 - AT - Income TaxDeduction u/s 54EC - LTCT or STCG - Investment of consideration against sale of depreciable assets - claim denied as asset transfer should be long term capital asset whereas in this case the assessee himself has offered short term capital gains (STCG) on the sale of office premise - AO also levied tax @ 30% on STCG computed u/s 111A of the Act as against 15% tax rate on the same as claimed by the assessee - HELD THAT:- As in the light of the decision rendered in case of Aditya Medisales Ltd. [2013 (11) TMI 576 - GUJARAT HIGH COURT] and Ace Builders (P.) Ltd. [2005 (3) TMI 36 - BOMBAY HIGH COURT] we are of the considered view that section 54EC of the Act does not make any distinction between depreciable assets and non depreciable assets and as such exemption otherwise available to the assessee under section 54EC of the Act cannot be denied by resorting to the fiction created under section 50 of the Act. Because legal fiction created by the statute under section 50 of the Act is only to deal with capital gain as STCG and not to deem the assets as short term capital assets. Section 50 cannot convert long term capital assets into short term capital assets. So the assessee is entitled for benefit of section 54EC of the Act as it has capital gain arisen out of long term capital assets invested in specified assets and as such the assessee is not liable to be charged capital gains and is entitled for exemption u/s 54EC - AO is directed to allow the same. Grounds No.1 to 3 are decided in favour of the assessee. Tax @30% on STCG computed under section 111A levied - assessee drew our attention towards consolidated account statement available - HELD THAT:- All these documents relied upon by the assessee have not been examined by the AO as well as the Ld. CIT(A). It is not clear from the record if the funds qua which STCG is to be taxed was an equity or in the mutual fund. To consider the same u/s 111A all these documents are required to be examined by the AO. In order to decide the issue once for all we set aside the findings returned by the CIT(A) and remit this issue back to the AO to decide ground No.4 afresh after providing opportunity of being heard to the assessee.
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