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TMI Blog2017 (12) TMI 599X X X X Extracts X X X X X X X X Extracts X X X X ..... condly, the benefit of section 50 is available only when the depreciation has been allowed on the asset under transfer. It is an admitted position that no such depreciation has been either claimed or allowed on factory shed in transfer. The assets sold is thus not a depreciable asset in so far as provisions of s.50 is concerned. Admittedly, assessee has claimed indexation benefit as per its submission before the CIT(A). Thus, the asset in transfer was also not understood to be a Short Term Capital Asset as contemplated under s.50 of the Act by the assessee himself. Therefore, we do not, in totality, see any substance in the plea of the assessee. A reading of the order of the CIT(A) shows that action of the CIT(A) is in confirmity with law a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s regard worked out Long Term Capital Gain (LTCG) on sale of land/factory shed at ₹ 26,42,620/- and included the aforesaid income while determining the assessed income. 3. Aggrieved, the assessee carried the issue before the CIT(A). The CIT(A) took note of the submissions made by the assessee and granted partial relief. The relevant operative para of the order of the CIT(A) reads as under:- "2.3 Decision: I have carefully considered the facts of the case, the assessment order and the written submission of the appellant. During the year the appellant has sold its land and factory shed for ₹ 42 Lacs and purchased a new land and factory shed for ₹ 33.10 Lacs. The AO did not accept the contention of the appellant that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gear P Ltd (227 ITR 278) The law we later on amended by insertion of Sec 50B w.e.f 1-4-2000. WRITTEN SUBMISSION No: 3 With reference to the above and further to the written submissions dt.l 6-9- 2013 and 11-10-2013, the .appellant begs to submit that during the course of la. f hearing on 15-10-2013, your honour had asked the appellant to establish that the business had commenced from the new factory premises, failing which the same would not form part of the block of assets and stock on sale of old factory shed would be taxable as it is. 2.1 The appellant begs to state that the following evidence produced herewith clearly establish that the appellant had handed over the possession of the old premises after the sale deed and continued pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions related to the capital gain on assets on which the depreciation has been claimed will not be applicable. It appears that neither the appellant nor the AO understood the correct implications of the sale of these assets. The capital gain shall have to be normally calculated by reducing the cost of acquisition, after taking into account the cost inflation index, from the sale consideration received by the appellant. Accordingly the AO is directed to take the sale consideration as 42 lakh and the purchase price as ₹ 16 lakh and calculate the capital gain, as per the provisions of the Act, accordingly." 4. Aggrieved, the assessee preferred the appeal before the ITAT against the aforesaid order of the CIT(A). 5. The Ld.AR for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issions and perused the orders of the authorities below. The applicability of special provisions for computation of capital gain in respect of depreciable assets is essentially in question. It is the case of the assessee that the land and factory shed purchased at ₹ 16 lakhs on 21/12/2006 forms integral and inseparable asset which is part of the 'block of asset' under s.2(11) r.w.s.32 on which benefit of set off provided in section 50 of the Act is available regardless of the fact that no depreciation has been claimed on such asset. It is further case of the assessee that as the new asset has been purchased falling in the same block and there being no excess remaining on transfer of the factory shed due to new acquisition, the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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