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2009 (2) TMI 230 - AT - Income TaxCondonation of Delay - late by 214 days - ld counsel for the assessee contended that the assessee was entertaining a bona fide belief that the relief will be allowed by CIT in the rectification proceedings which was erroneously denied - HELD THAT:- In our considered opinion there is a just and sufficient cause for not filing the present appeal in time. We, therefore, condone the delay in the light of the aforesaid judgment of the Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. MST. Katiji & Ors.[1987 (2) TMI 61 - SUPREME COURT] and admit this appeal for hearing on merits. Denial of exemption u/s. 54EC - assessee is a doctor by profession following cash system of accounting - She sold her business premises during the year for sum which resulted into capital gain - said sum was invested in Rural Electrification Corporation Bond (REC) - HELD THAT- From the language of s. 50 it is clearly proved that where a capital asset forming part of a block of assets, in respect of which depreciation has been allowed, is transferred and the block of assets ceases to exist, then the resultant capital gain shall be deemed to be from the transfer of short-term capital asset. It is no doubt true that block of assets as defined in s. 2(11) clearly means a group of assets falling within the block of assets comprising inter alia, the buildings in respect of which percentage of depreciation is prescribed. Therefore, we observe that the assessee sold her building in which she was carrying on her profession. The building as such is a capital asset on which depreciation rate has been prescribed, hence such building will fall within the definition of "block of asset". Where the assessee has not claimed depreciation or not furnished requisite particulars then should the depreciation be mandatorily granted by the AO - When the matter was finally taken up by the Hon'ble Supreme Court in the case of CIT vs. Mahendra Mills [2000 (3) TMI 3 - SUPREME COURT] it was held that if the assessee does not claim depreciation and does not furnish particulars for claiming depreciation, the depreciation cannot be thrust upon him. The sum and substance of this judgment is that the AO has no authority for allowing depreciation u/s. 32 when the assessee has not claimed it in computing the income u/s. 29. We note that the building transferred by the assessee was held by her for a period more than 36 months, which is a condition precedent for classifying any asset under "long-term capital asset" as per s. 2(29A). Sec. 54EC is an independent provision not controlled by s. 50. If the capital asset is held for more than 36 months, the benefit of s. 54EC cannot be snatched away because s. 50 is restricted only to the mode of computation of capital gain contained in ss. 48 and 49 and this fiction cannot be extended beyond that for denying the benefit otherwise available to the assessee u/s.54EC, if the other requisite conditions of the section are satisfied. Our view is also fortified by CIT vs. Assam Petroleum Industries [2003 (6) TMI 23 - GAUHATI HIGH COURT]. We, therefore, overturn the impugned order and direct that the exemption under this section be allowed to the assessee because of her having made investment in eligible bonds out of the sale proceeds from the transfer of long-term capital asset. The other appeal by the assessee is against the order passed in CIT(A) rejecting her request for the rectification of the order u/s. 154. In view of our decision on the former appeal supra, the assessee's contention in this appeal also merits acceptance ex consequenti. We, therefore, set aside the impugned orders and accept the assessee's claim. The appeals are allowed.
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