2013 (3) TMI 779 - HC - Income Tax

Summary

Issues involved: Interpretation of Section 50 of the Income Tax Act, 1961 regarding treatment of depreciable assets as short-term assets for capital gains tax purposes.

Summary:
1. The respondent sold a factory shed and earned long-term capital gains, but as the asset was depreciable, gains were computed under Section 50 of the Income Tax Act. The respondent claimed deduction under Section 54EC by investing the gains, which was disallowed by the assessing officer and upheld by the Commissioner of Income Tax (A).

2. The Tribunal allowed the respondent's claim for exemption under Section 54EC, citing a previous decision of the High Court in the matter of CIT v. Ace Builders (P) Ltd. The Tribunal applied the principles from the Ace Builders case, stating that the deeming fiction of treating long-term gains as short-term gains under Section 50 does not apply to other provisions like Section 54EC.

3. The High Court upheld the Tribunal's decision, reasoning that the deeming fiction in Section 50 is limited to that section and does not extend to provisions like Section 54EC. Therefore, the appeal by the Revenue was dismissed, with no costs awarded.