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TMI Blog2013 (9) TMI 409X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant year due to change in the registered office of the company. The ld. CIT(A) having allowed part relief, i.e., qua applicability of section 50C of the Act, the assessee was not inclined to prefer an appeal in the first instance, and that only upon it coming to its notice that the Revenue had filed an appeal that it was decided to contest the matter in full, i.e., qua the applicability of section 50 of the Act as well. 3.2 After hearing the parties in the matter, we are inclined to admit the assessee's C.O. inasmuch as it gives the assessee the scope to contest the impugned order, and that all the relevant issues are deliberated upon. There could possibly be no vested right in the assessee not appealing earlier; the non-receipt of the appeal memo (in the Department's appeal) due to change of address being a matter of record, and which has not been disputed by the Revenue. The assessee's C.O. was, accordingly, admitted and the hearing in the matter proceeded with. 4. The brief facts are that the assessee-company owns two house properties, namely Flat No.602, Arun Commercial Premises Co-operative Society Ltd., Tardeo Main Road, Mumbai-400 034, by the name 'Arun Chambers', and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter, capital gains, computed u/s.50 r/w s. 50C, works to Rs.0.27 lacs (Rs.72.63 lacs - Rs.72.36 lacs). The Revenue, however, has allowed reduction only of the WDV of the Arun Chambers as on 31.03.2005, i.e., Rs.50,000/-, assessing the balance Rs.72.13 lacs as Short Term Capital Gain (STCG), which is contrary to the clear provision of law, adverting to section 50, which per sub-section (1) clearly provides for the reduction of the WDV of the relevant block of the assets as at the beginning of the relevant previous year. This constitutes the assessee's grievance per its cross objection. On a query by the Bench as to how could it be so, i.e., as claimed by the assessee, inasmuch as the only other property constituting the relevant block, i.e., Nariman Bhavan, stands since let (i.e., in July, 2005), so that it no longer formed part of the relevant block of assets, the ld. AR would submit that the law provides no exception, and the WDV as at the beginning year would have to be deducted nevertheless, though, of course, no deprecation would be exigible in its respect inasmuch as the only asset 'comprising' the block being let out, it is no longer put to use for business. The law, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set is an asset forming part of a block of assets in respect of which depreciation has been allowed under this Act or under the Indian Income-tax Act, 1922 (11 of 1922), the provisions of sections 48 and 49 shall be subject to the following modifications :- (1) where the full value of the consideration received or accruing as a result of the transfer of the asset together with the full value of such consideration received or accruing as a result of the transfer of any other capital asset falling within the block of the assets during the previous year, exceeds the aggregate of the following amounts, namely :- (i) expenditure incurred wholly and exclusively in connection with such transfer or transfers; (ii) the written down value of the block of assets at the beginning of the previous year; and (iii) the actual cost of any asset falling within the block of assets acquired during the previous year, such excess shall be deemed to be the capital gains arising from the transfer of short-term capital assets; (2) where any block of assets ceases to exist as such, for the reason that all the assets in that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue of the block would represent the short term capital loss or gain, as the case may be (section 50C(2)); sub-section (2) being only an extension or specie of sub-section (1). 6.4 Continuing further, the underlying presumption in the foregoing computation of the WDV, as well as in the manner of computing the capital gain u/s.50, is that all the assets comprising the block for the time being continue to be business assets and, thus, eligible for being considered as a part of the relevant block of assets. However, when a capital asset, as the Nariman Bhavan property in the instant case, is let by the assessee, the same no longer qualifies as a business asset. That is, it becomes ineligible for being considered as part of the relevant block of assets. The question of computing either depreciation or capital gains with reference to its value, therefore, just does not arise. It is to highlight this aspect of the matter that the ld. AR was posed a query during the hearing qua the claim of depreciation in a case where, instead of a higher sale consideration, the same were to be at an amount lower than the carrying value (opening WDV) of Rs.72.36 lacs. As rightly stated by him, no deprec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , stands imported in section 50; making the same harmonious with sections 32 and 43(6). Further, it is due to this changing composition that the law contemplates a state where the block ceases to exist. As such, as also noted earlier, where an asset itself is removed by the assessee from the relevant block, as where the same is converted into stock-in-trade or, as in the instant case, let, the same has to be excluded from the relevant block, with concomitant financial implications. The incidents of 'transfer', 'discard', etc., on the other hand, are toward 'moneys payable'. 6.5 In our clear view, therefore, the assessee's case clearly falls u/s. 50(2); the only asset, namely, the property at Arun Chambers, Mumbai, constituting the block at the relevant time, being sold in September, 2005, with no subsequent additions to the block. It would, we may though clarify, again, not matter if the other property rented out was so done subsequently, and not prior thereto in July, 2005. This is as the question of applicability of sec. 50(1) or s. 50(2) is to be seen as at the year-end, whereat only the depreciation u/s.32 as well as capital gain u/s.50 is to be computed, taking the entire tra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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