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TMI Blog2012 (8) TMI 919X X X X Extracts X X X X X X X X Extracts X X X X ..... d use the factory building. Referring to this, the Ld. Counsel has rightly stated that the factory building is more than 36 months old. At page-35 of the paper book, we find that there is a Municipal Corporation Tax receipt dt. 25th September, 1997 which also substantiate the claim of the assessee. It appears that the AO has wrongly taken the date as 1.10.2003 only because the assessee claimed depreciation for the first time during the year under consideration on the amount apportioned between the factory building (rented) and factory building (SOP). We have also considered the schedule of fixed assets since 1996 to March, 2004 exhibited from page 42 to 50 of the Paper Book. We find that in each of these years, the assessee has showed the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case, property given on rent being held for more than 36 months before the date of its transfer the capital gain arising on its transfer ought to be treated as long term capital gain. 3. Without prejudice to the grounds 1 & 2 above, the Ld. CIT(A) has erred in not giving direction to allow exemption u/s. 54EC of ₹ 50,00,000/- against Long Term Capital Gain of ₹ 75,53,773/- assessed on sale of land. On the basis of facts and in the circumstances of the case and in law, exemption u/s. 54EC of ₹ 50,00,000/- ought to be allowed against long term capital gain on sale of land." 3. Briefly stated the facts of the case are that the assessee is a Private Limited Company engaged in manufacturing of Rubber pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as given on rent to Shemaroo Videl Pvt. Ltd. And the rent income was shown under the head "income from house property" in earlier years. It was the contention of the assessee that as the period of holding was more than 3 years, capital gain arising from the sale of upper floor has been offered for tax as long term capital gain. However, the contentions and submissions by the assessee were not accepted by the AO in toto. The AO accepted the capital gain offered on the sale of the plot of land as Long term capital gain as per computation. However, the factory building was demarcated Factory Bldg 'A' (rented) and factory building 'B' (SOP), as the factory building marked as 'B' (SOP) was used for business purposes on which depreciation has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee is in appeal before us. The Ld. Counsel for the assessee reiterated the submissions made before the lower authorities and contended that the evidences on record clearly show that the factory building is more than 3 years old. The Ld. Counsel further submitted that inspite of the deeming provision of Sec. 50, the benefit of Sec. 54EC cannot be denied in the light of the decision of the Hon'ble Jurisdictional High Court in the case of CIT Vs ACE Builders Pvt. Ltd. (2006) 281 ITR 210 (Bom). 7. The Ld. Departmental Representative strongly supported the findings of lower authorities. 8. We have heard the rival submissions and perused the orders of the lower authorities and the paper book submitted by the assessee. The whole dispute revolv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 1996 to March, 2004 exhibited from page 42 to 50 of the Paper Book. We find that in each of these years, the assessee has showed the factory building under the head "building account under consideration". Considering all these facts in totality, we have no hesitation to hold that the factory building in dispute is more than 36 months old which make it as Long Term capital asset. We accordingly reverse the findings of Ld. CIT(A). 9. The second dispute is in relation to the denial of exemption u/s. 54EC of the Act. We find that the case relied upon by the Counsel i.e. CIT Vs ACE Builders (supra) is well founded. In that case the Hon'ble High Court has held as follows: "In our opinion, the assessee cannot be denied exemption under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that. Thirdly, 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 longterm capital asset is invested or deposited (whole or any part of the net consideration) in the specified assets, the assessee shall not be charged to capital gains. Therefore, the exemption under section 54E of the Income-tax Act cannot be denied to the assessee on account of the fiction created in section 50. It is true that section 50 is enacted with the object of denying multiple benefits ..... X X X X Extracts X X X X X X X X Extracts X X X X
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