TMI Blog2013 (7) TMI 873X X X X Extracts X X X X X X X X Extracts X X X X ..... be situated in residential premises, the same if used as office premises, there cannot be any objection for allowing depreciation at 10 per cent. Therefore, what is required to be examined is whether the assessee is using premises for office purposes. - property is used as office premises, the depreciation allowable is at 10 per cent. Therefore, the said asset falls in the same block of asset for deduction under section 50(1)(iii). In that case the written down value of the business premises may become zero, if the adjustment sought by the assessee was allowed in the computation of capital gains. This aspect required to be considered while working capital gains. Consequential adjustment for allowance of depreciation in later year(s) may req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (11) of the Act and definition of written down value of block of assets under section 43(6) read with section 32(1), the Assessing Officer considered that the apartment purchased was a residential apartment on which depreciation was allowable at 5 per cent. Since factory building was eligible for depreciation at 10 per cent. the Assessing Officer was of the opinion that since the asset purchased does not belong to the same block, the deduction cannot be allowed in the computation of capital gains. Accordingly, he computed the capital gains on the sale of the factory premises without reducing the cost of new asset. He also did not make any adjustment for the depreciation on the new asset in the computation of income. The matter was carried t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Mum). The learned Departmental representative, however, referred to the provisions of the Act and relied on the findings of the authorities. 5. We have considered the issue and examined the rival contentions. As far as legal principles are concerned, the co-ordinate Bench in the case of Artic [1999] 68 ITD 462 (Mum), held that the assessee would be entitled to claim set off of cost of new asset acquired in the previous year, even if the assessee was not carrying on the same business or the other business. This is also one of the contentions of the Assessing Officer that the assessee stopped business, which was also contested by the assessee. The co-ordinate Bench in the above referred case held as under : Section 50 ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of any asset falling within the block of assets but refers only to the depreciation rates being prescribed in the rules. Section 50 refers to a capital assets forming part of a block of assets in respect of which depreciation has been allowed . This means that the asset which is sold and the capital gains relating to which is the subject-matter of computation must have been used in a business carried on by the assessee. That condition was satisfied in the present case and there was no dispute about the same. The requirement for allowing deduc tion in respect of the new asset under section 50(1)(iii) is that it should be an asset falling within the block of assets which means that it should be an asset which falls within a class of build ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hased should be one in respect of which the same rate of depreciation, as is prescribed in respect of the other buildings, has been prescribed by the rules. If the assessee carries on a business, in that case he would also be eligible for an allowance on account of depreciation at that rate. In the case of an assessee who does not carry on a business, the result would be that he would not be entitled to any allowance on account of depreciation in respect of the asset. If at a future date he decides to commence a business, he would be entitled to the depreciation allowance in respect of the new asset, provided he satisfies the authorities that the new asset was used in that business. In the absence of any express requirement in the sta tutor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ti Arcade Park, Flat 804 on 8th Floor of the building in Wing-1. Therefore, this aspect whether the property is used as office premises requires examination by the Assessing Officer not only with reference to actual usage but also with reference to taxes paid to municipal authorities and permissions if any required from society if any. In case the property is used as office premises, the depreciation allowable is at 10 per cent. Therefore, the said asset falls in the same block of asset for deduction under section 50(1)(iii). In that case the written down value of the business premises may become zero, if the adjustment sought by the assessee was allowed in the computation of capital gains. This aspect required to be considered while workin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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