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Commissioner of Income Tax, Panji Versus V.S. Dempo Company Ltd.

2016 (10) TMI 62 - SUPREME COURT

Entitlmnet for exemption under Section 54E - AO rejected the claim for exemption under Section 54E of the Act on the ground that the assessee had claimed depreciation on this asset and, therefore, provisions of Section 50 were applicable - Held that:- HC allowed assessee claim of deduction as relying upon its own judgment in the case of “The Commissioner of Income-tax, Mumbai City-II, Mumbai vs. ACE Builders Pvt. Ltd. [2005 (3) TMI 36 - BOMBAY High Court ]. The High Court has observed that Secti .....

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ion i.e. Section 54E of the Act. Section 48 deals with the mode of computation and Section 49 relates to cost with reference to certain mode of acquisition. - Section 54E does not make any distinction between depreciable asset and non-depreciable asset and, therefore, the exemption available to the depreciable asset under Section 54E cannot be denied by referring to the fiction created under Section 50. Section 54E specifically provides that where capital gain arising on transfer of a long t .....

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na, Adv. Ms. Anil Katyari, Adv. For the Respondent : Mr. Dhruv Mehta, Sr. Adv. Ms. Akanksha Kaushik, Adv. Ms. Anupama Dhurve, Adv. Mr. Abhishek Puri, Adv. Vasvi Jain, Adv. Ms. Shobha,Adv. ORDER In the return filed by the respondent/assessee for the Assessment Year 1989-90 the assessee had disclosed that it had sold its loading platform M.V. Priyadarshni for a sum of ₹ 1,37,25,000/- on which it had earned some capital gains. On the said capital gains the .....

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Section 54E of the Act on the ground that the assessee had claimed depreciation on this asset and, therefore, provisions of Section 50 were applicable. Though this was upheld by the Commissioner of Income Tax (Appeals), the Income Tax Appellate Tribunal allowed the appeal of the assessee herein holding that the assessee shall be entitled for exemption under Section 54E of the Act. The High Court has confirmed the view of the Commissioner of Income Tax (Appeals) and dismissed the appeal of the Re .....

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mp; (2) of Section 50 has limited application only in the context of mode of computation of capital gains contained in Sections 48 and 49 and would have nothing to do with the exemption that is provided in a totally different provision i.e. Section 54E of the Act. Section 48 deals with the mode of computation and Section 49 relates to cost with reference to certain mode of acquisition. This aspect is analysed in the judgment of the Bombay High Court in the case of The Commissioner of Income-tax, .....

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tricted only to the mode of computation of capital gains contained in Section 48 and 49. Secondly, it is well established in law that a fiction created by the legislature has to be confined to the purpose for which it is created. In this connection, we may refer to the decision of the Apex Court in the case of State Bank of India vs. D. Hanumantha Rao reported in 1998 (6) SCC 183. In that case, the Service Rules framed by the bank provided for granting extension of service to those appointed pri .....

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