TMI Blog2010 (1) TMI 659X X X X Extracts X X X X X X X X Extracts X X X X ..... ciable asset and was being used for business purposes, sale of the same attracts tax on short-term capital gains under section 50 of the Act. - 759 of 2009 - - - Dated:- 6-1-2010 - RAMACHANDRAN NAIR C. N., MOHANAN V. K., JJ. JUDGMENT C. N. Ramachandran Nair J.- This is an appeal filed by the Revenue challenging the orders of the Income-tax Appellate Tribunal cancelling the short-term capital gains assessment on profit arising to the respondent-assessee on the sale of a building on which depreciation was allowed for several years by declaring that such profit is chargeable to tax as long-term capital gains because no depreciation was claimed or allowed for two years prior to the previous year in which the building was sold. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e's contention before the Assessing Officer was that it stopped using the flat for business purposes after the assessment year 1995-96 and thereafter the flat was treated as investment and was so shown in the balance-sheet. The Assessing Officer did not accept the assessee's contention that the flat at Mumbai was discontinued to be used for business purposes in the two years following the assessment year 1995-96 because according to him the assessee's attempt was only to avoid payment of tax on short-term capital gains. In the appeal filed by the assessee, the Commissioner of Income-tax (Appeals), also concurred with the Assessing Officer and held that the building being depreciable asset and was being used for business purposes, sale of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e previous year relevant to the assessment year 1998-99 without using it for business purposes for two years preceding the year of sale and in respect of which depreciation was neither claimed nor allowed for those two years. Since the controversy is on the scope of sections 50 and 50A we extract hereunder the said sections for easy reference : "50. Special provision for computation of capital gains in case of depreciable assets.-Notwithstanding anything contained in clause (42A) of section 2, where the capital asset is an asset forming part of a block of assets in respect of which depreciation has been allowed under this Act or under the Indian Income-tax Act, 1922 (11 of 1922), the provisions of sections 48 and 49 shall be subject to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital asset is an asset in respect of which a deduction on account of depreciation under clause (i) of sub-section (1) of section 32 has been obtained by the assessee in any previous year, the provisions of sections 48 and 49 shall apply subject to the modification that the written down value, as defined in clause (6) of section 43, of the asset, as adjusted, shall be taken as the cost of acquisition of the asset." 4. While the contention of the Revenue is that the asset in respect of which depreciation has been claimed when sold should always be assessed as short-term capital gains, the contention of the assessee is that unless the asset sold forms part of the block asset in the previous year in which sale took place, it cannot be as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure otherwise allowable in the computation of capital gains under sections 48 and 49 of the Act. In other words, section 50 provides for assessment of a depreciable asset in respect of which depreciation has been allowed as short-term capital gains and the deductions available under sections 48 and 49 should be allowed subject to the provisions provided in sub-sections (1) and (2) of section 50. Section 50A also deals with assessment of depreciable asset that too as short-term capital gains and it actually supplements section 50. In our view, the purpose of section 50A is to enable the assessee to claim deduction of the written down value of the asset in respect of which depreciation was claimed in any year as defined under section ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
