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TMI Blog2017 (8) TMI 179X X X X Extracts X X X X X X X X Extracts X X X X ..... i. The learned CIT(A) erred in disallowing an amount of Rs. 3,08,904/- out of total expenses under section 14A of the Act read with Rule 8D as attributable towards earning of tax exempt income; namely, dividend and interest on UTI tax free bonds. He erred in not appreciating the fact that the appellant company has not incurred any expenditure directly relating to income which does not form part of total income. ii. The learned CIT(A) further erred in considering interest paid on cash credit in calculating disallowance under section 14A read with Rule 8D(ii) without appreciating the fact that the same is not attributable to earning of exempt income. Ground No. 2 - Computation of short term capital gains under section 50(1) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14384 14800278 333035 14467243 4.1. The Assessing Officer (A.O.) observed that there are assets physically available in the block of motor vehicles @ 15%. Therefore, assessee's claim of short term capital loss is erroneous. The old motor vehicles were sold during the year. The new motor vehicles worth Rs. 50,14,384/- were purchased during the year. The motor vehicles purchased during the year were not sold or disposed off. The assessee continues to have these assets in its possession. Some of the old motor vehicles were sold during the year for a consideration of Rs. 3,33,035/-. As the block value remains there, there cannot be any short term capital loss. The A.O. disallowed the claim of set off of short term capital gain on sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,39,25,708/- from Rs. 16,32,46,224/- because the same is added in computation of income under the head Profits u/s 41(1). Thus, the AO calculated short term capital gain on sale of assets at Rs. 14,93,20,516/-. 5. Aggrieved by the order of the A.O., the assessee filed an appeal before the Ld. CIT(A). We find that the Ld. CIT(A) agreed with the reasons given by the A.O. and dismissed the appeal filed by the assessee. 6. Before us, the Ld. Counsel of the assessee relied on the decision in the case of CIT vs. Ansal Properties & Infrastructure Ltd. (2012) 20 taxmann.com 770 (Delhi) and the order of the ITAT ' F' Bench Mumbai in the case of M/s Filmkraft Productions (I) Ltd. vs. Additional CIT (ITA No. 7358/Mum/2012). 7. On the other hand, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Section 50 including subsection (2) of the Act was not applicable. Accordingly, the gain was taxable as short term capital gain and the new assets purchased by the assessee would not form part of the block of assets relating to the paper division. In other words, he differentiated between the block of assets belonging to the paper division and the block of assets relating to other division of the assessee. The Hon'ble High Court held that block of assets for purpose of section 50 would mean assets of all units of assessee having same rate of depreciation and not assets of one division or unit having same rate of depreciation. In the case of M/s Filmkart Productions (I) Ltd. (Supra) the assessee is a film producer, distributor and ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or cars are same (i.e. 15%) and both the assets fall under the same class of assets (i.e. plant and machinery) therefore, while calculating the capital gains, the clubbing of the two block of assets is correct.' On the other hand, it is the contention of the A.O. and the Ld CIT(A) that motor car and plant and machinery are separate group of assets and therefore, capital gains is to be calculated on both the groups separately. Be it stated that a "block of assets" includes assets of all units of the assessee having the same rate of depreciation and not assets of only one unit. Block 5 is depicted below: Number Nature of asset Rate of depreciation Block 5 Plant machinery - Any plant or machinery (not covered by Block 6, 7, 8, 9, 10, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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