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TMI Blog2015 (11) TMI 491X X X X Extracts X X X X X X X X Extracts X X X X ..... of the I.T. Act, 1961, on short term capital gain u/s 50 of the Act on depreciable assets of shops following the decision in the case of CIT v/s Ace Builder Pvt. Ltd., 281 ITR 210, as facts of the case is different." 2. The solitary issue involved in this appeal filed is with regard to claim of the assessee made under section 54EC of the Income Tax Act, 1961 (for short 'the Act') which was rejected by the Assessing Officer but was allowed by the learned CIT(A). 3. The brief facts are that the assessee is an individual engaged in the business of photography. During the year under consideration, the assessee earned income from business as well as income from other sources. The assessee also earned long term capital gain, which was claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt ruled in a case where exemption had been sought u/s 54E but on the same analogy benefit under section 54EC shall be' available to an assessee in the case of depreciate asset, if it is held for more than 36 months. The exemption provisions in Section 54E / 54EC / 54F etc. are not linked to section 50. Therefore, if the assessee complies with conditions necessary under section 54E, he will be entitled to the benefit envisaged in section 54EC, even on transfer of depreciable assets held for more than 36 months. In the impugned order, the A.O. has noted the decision of the Bombay High Court in the case of CIT Vs ACE Builders (cited supra), but has observed that the said decision was not accepted in principle by the Department and the SLP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ets under the Act (refer: CIT v. Alps Theatre [1967] 65 ITR 377 (SC) and CIT v. Citi Bank N.A. [2003] 261 ITR 570 (Bom)). The super-structure being a depreciable asset, on which depreciation had been allowed, as noted by the ld. CIT(A) (refer para 3 of the impugned order), the capital gain arising on its transfer would be, in terms of section 50 of the Act, a short-term capital gain (STCG), to be computed in the manner prescribed therein. To this extent, there is no dispute. The assessee, however, claims that the building having been held for a period in excess of three years, it would by definition qualify to be a long-term capital asset (LTCA) u/s.2(29A), and the capital gain arising on its transfer eligible for exemption u/s. 54EC. We, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xhausted on its deployment and user for the purpose of business/profession over its useful life. The depreciation allowed represents the depletion of an asset to that extent, i.e., over the holding period, so that it signifies its consumption to that extent. How could it cost, thus, remain constant? The constancy of cost, i.e., as crystallized, is the premise for deducting the cost of acquisition of a capital asset on its transfer in computing the capital gains. Further, the user for business purposes, as in the instant case, forms the basis of the charge against business profits. Though, therefore, by definition a capital expenditure, depreciation, which is amortization of the cost over a definite period is allowed as expenditure where the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... V of an asset, which u/s.50 substitutes for its' cost, is itself not determinable, i.e., where depreciable, forming part of a block of assets, even as held by the Hon'ble Courts. Section 50 is thus a self contained code for determining the nature and the quantum of the capital gain arising on the transfer of depreciated assets. The deeming of section 50, even otherwise separately provided for (per s. 50(2)), would thus prevail. We, therefore, find merit in the contention of ld. DR with regard to this aspect of the matter. So, however, the Hon'ble jurisdictional High Court, even as noticed by the ld. CIT(A), has in Ace Builders (P.) Ltd. (supra), clearly held deduction u/s.54EC to be available on the capital gains computed u/s.50 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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