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September 2011

Depreciation: Computation: Block of assets: WDV: S. 43(6)(c)(i)(B): Sale of flat forming part of block of assets: Apparent consideration and not its fair market value to be deducted.

By K. B. Bhujle, Advocate
Reading Time 1 mins
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[CIT v. Cable Corporation of India Ltd., 336 ITR 56 (Bom.)]

The assessee had sold a flat forming part of block of assets for a consideration of Rs.9 lakh. The assessee deducted the said amount of Rs.9 lakh from the block of assets and computed the depreciation allowable on the balance amount. The Assessing Officer determined the fair market value of the flat at Rs.66,44,902 and reduced the said amount from the written down value of the block of assets while calculating the depreciation. The Tribunal accepted the assessee’s claim.

On appeal by the Revenue, the Bombay High Court upheld the decision of the Tribunal and held as under :

 “The Tribunal was right in holding that for the purpose of calculating depreciation allowable to a block of fixed assets, only the apparent consideration for which the flat was sold should be reduced from the block of the fixed assets being Rs.9 lakhs even though the fair market value of the flat was Rs.66,44,902 as determined by the Departmental Valuation Officer.”

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