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July 2011

Capital gain: Exemption u/s.54E of Incometax Act, 1961: A.Y. 2007-08: Long-term capital gain on transfer of depreciable asset: Investment of net consideration in Capital Gains Deposit Account Scheme: Assessee entitled to exemption u/s.54F.

By K. B. Bhujle, Advocate
Reading Time 1 mins
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[CIT v. Rajiv Shukla, 334 ITR 138 (Del.)]

In the A.Y. 2007-08, the assessee had long-term capital gain on transter of depreciable assets. The assessee invested the net capital gain in the Capital Gains Deposit Account Scheme and calimed exemption u/s.54F of the Income-tax Act, 1961. The AO disallowed the claim on the ground that the capital gain arising from transfer of a depreciable asset shall be deemed to be capital gain arising from transfer of a short-term capital asset. The Tribunal allowed the assessee’s claim.

On appeal by the Revenue, the Delhi High Court upheld the decision of the Tribunal and held as under: “The income earned by the assessee on sale of depreciable asset was to be treated as long-term capital gain, entitling him to the benefit of section 54F.”

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