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2015 (3) TMI 977 - AT - Income TaxComputation of the long-term capital gains on sale of the asset - Assessing Officer completing the assessment adopted the cost inflation index of the financial year 1994- 95 being year of conversion of the asset into stock-in-trade instead of year of sale as per assessee - Held that:- Market value as on the date of conversion into stock-in-trade of the financial year 1994-95 and applying cost inflation index of the financial year 2006-07 is found to lack lucidity. By applying the cost inflation index of the financial year 2006-07, it is perceived that the conversion also happens in the financial year 2006-07. The hon'ble Madras High Court in the case of M. Nachiappan v. CIT [1996 (11) TMI 27 - MADRAS High Court] had held that the condition which must be satisfied in order to attract the charge to tax under section 45 is a property converted must be a capital asset as on the date of conversion. In the instant case, during the financial year 2006-07 the asset was held as stock-in-trade. Only during the financial year 1994-95 the asset was a capital asset. Therefore, the market value and the cost inflation index applicable for the financial year 1994-95 should be applied together and not disparagingly like the one claimed by the assessee, in adopting the cost inflation index of year in which the asset was converted into stock-in-trade in computing long-term capital gains, the reasoning of the Assessing Officer appears to be correct and logical. In the circumstances, we are in agreement with the view of the Assessing Officer that the cost inflation index as stood in the year of conversion only has to be applied not the cost inflation index as stood in the year of taxation of capital gains of the asset - Decided against assessee. Set off of unabsorbed depreciation prior to the assessment year 1997-98 denied -Enhancement proposal of the Assessing Officer accepted by CIT(A) - Held that:- This issue is squarely covered in favour of the assessee by the decision of the hon'ble Gujarat High Court in the case of General Motors India P. Ltd. v. Deputy CIT [2012 (8) TMI 714 - GUJARAT HIGH COURT] wherein held that unabsorbed depreciation from 1997-98 up to assessment year 2001-02 got carried forward to the assessment year 2002-03 and became part thereof and was available for carry forward and set off against profits and gains of subsequent years without any limit whatsoever.any unabsorbed depreciation available to an assessee on the 1st day of April 2002 (assessment year 2002-03) will be dealt with in accordance with the provisions of section 32(2) as amended by the Finance Act, 2001. And once the Circular No. 14 of 2001 clarified that the restriction of 8 years for carry forward and set off of unabsorbed depreciation had been dispensed with, the unabsorbed depreciation from the assessment year 1997-98 up to the assessment year 2001-02 got carried forward to the assessment year 2002-03 and became part thereof, it came to be governed by the provisions of section 32(2) as amended by the Finance Act, 2001 and were available for carry forward and set off against the profits and gains of subsequent years, without any limit whatsoever - Decided in favour of assessee.
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