9911796707
TMI Blog2016 (7) TMI 1097X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Nos.1 and 2 is in respect of wrong direction to AO to allow deduction u/s 54EC of the Income Tax Act, 1961 thereby directing the AO to allow deduction in respect of short capital gain arising on sale of depreciable assessee by the ld. CIT(A) by wrongly relying on the decision in the case of ITO V/s ACE Builders (281 ITR 210) without appreciating the facts in the present case, the facts are different and distinguishable than the case law cited above. 3. The facts in brief are that the assessee, a partnership firm, filed its return of income on 28.7.2012 declaring total income of Rs. 22,45,585/-. The return was processed at Centralized Processing Centre vide order u/s 143(1) dated 19.11.2013 assessing total income at Rs. 72,29,513/- and b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he period of its holding by the assessee). This view is supported by the decision of jurisdictional High Court of Bombay in the case of ITO Vs ACE Builders reported in 281 ITR 210 and therefore is the law applicable on the issue at hand to the authorities functioning within the territorial jurisdiction under the Hon'ble Court. Thus the issue, which was debatable before the cited decision of the Jurisdictional High Court, now stands clarified and the law as it stands, is against the view taken by the Assessing Officer. In view of these facts, the adjustment by the AO made is beyond the scope of section u/s 143(1). The information in the e- return filed by the appellant nowhere indicates that the fixed asset sold was a short-term asset an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant did not get any opportunity to remove defect in the return filed. The ld. CIT(A) further observed that the direction u/s 54EC is allowed on the gain should resulting from transfer of Long Term capital asset and it is immaterial whether the corresponding gain is a short term capital gain by virtue of deeming fiction under section 50 of the Act. As per the provisions of section 50 of the Act only gains resulted from sale of assets on which the depreciation is claimed, is deemed to be short term capital gains and the said provision does not stipulate that the asset on the sale of which, the said gains arise will be considered as a "short term capital assets " regardless of the period of its holding by the assessee. The finding of the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital gains. Therefore, the exemption under section 54E could not be denied to the assessee on account of the fiction created in section 50. [Paras 24 and 25] It is true that section 50 is enacted with the object of denying multiple benefits to the owners of depreciable assets. However, that restriction is limited to the computation of capital gains and not to the exemption provisions. In other words, where depreciation has been availed on long-term capital asset, then the capital gain has to be computed in the manner prescribed under section 50 and the capital gains tax will be charged as if such capital gain has arisen out of a short-term capital asset, but if such capital gain is invested in the manner prescribed in section 54E, then th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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