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TMI Blog2024 (9) TMI 155X X X X Extracts X X X X X X X X Extracts X X X X ..... n which deduction u/s 32 (1) (ii) has been claimed and allowed, is required to be taxed as short term capital gain u/s 50 of the Act HELD THAT:- As decided in case of Nectar Beverages [ 2009 (7) TMI 5 - SUPREME COURT ] bottles and crates purchased prior to 31.3.1995 did not form part of the block of assets, hence, profits on sale of such assets were not taxable as a balancing charge, neither under Section 41(1) nor under Section 50. In respect of bottles and crates purchased after 1.4.1995, on account of deletion of proviso to Section 31(1)(ii) (vide Finance Act, 1995) such bottles and crates formed part of block of assets and consequently such assets purchased after 1.4.1995, in this case, became exigible to capital gains tax under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chased for leasing to earn rental income which has been taxed as business income. [3.1] During the year under consideration, the appellant sold Glow Sign Boards and Oxygen Gas Cylinders. The appellant when purchased both the Oxygen Gas Cylinders and Glow Sign Boards treated each unit of leased Glow Sign Board and Oxygen Gas Cylinder as item of plant as the cost being less than Rs. 5,000/- and claimed whole cost as 100% depreciation under the first proviso to Section 32 (1) (ii) of the Act. [3.2] The Assessing Officer rejected the claim of the depreciation of the appellant holding that the transaction entered into by the appellant assessee being the last day of the accounting year cannot constitute business and the Glow Sign Boards were noth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olding that each Glow Sign Board to be treated as plant. [3.5] Another issue which was arising from the assessment order was with regard to confirming the addition of Rs.19.95 Lakhs representing the sale proceeds of Gas Cylinders for the year under consideration which were purchased in the Assessment Year 1988-89 and on which 100% depreciation was claimed and allowed under first proviso to Section 32 (i) (ii) of the Act and written down the value had become Nil at the end of the Assessment Year 1988-89 which was confirmed by the CIT(A). [3.6] Being aggrieved, the appellant assessee preferred an appeal before the Tribunal. The Tribunal, in view of the decision of the Hon ble Bombay High Court in the case of Nectar Beverages vs. CIT reported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depreciation in the relevant assessment year and sale proceeds of same therefore could not have been subjected to any tax under Section 50(1) and Section 50 (2) of the Act respectively. [7] Learned advocate Mr. Patel for the respondent could not controvert the aforesaid fact that the decision of the Hon ble Bombay High Court in the case of Nectar Beverages (supra) has been reversed by the Hon ble Supreme Court, as submitted by learned advocate for the appellant assessee. [8] The Hon ble Supreme Court in the aforesaid decision in the case of Nectar Beverages (supra) has held as under: 10. At the outset, it may be noted that, by the above Finance Act, the first proviso to Section 32 (1) (ii) stood deleted w.e.f. 1.4.1996. Consequently, bottle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) (ii) and hence did not form part of the block of assets. 12. For reasons given hereinabove, we are of the view that bottles and crates purchased prior to 31.3.1995 did not form part of the block of assets, hence, profits on sale of such assets were not taxable as a balancing charge, neither under Section 41(1) nor under Section 50. In respect of bottles and crates purchased after 1.4.1995, on account of deletion of proviso to Section 31(1)(ii) (vide Finance Act, 1995) such bottles and crates formed part of block of assets and consequently such assets purchased after 1.4.1995, in this case, became exigible to capital gains tax under Section 50. [9] In view of the above dictum of law, both the Tax Appeals are allowed and we answer the que ..... X X X X Extracts X X X X X X X X Extracts X X X X
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