ITAT ‘D’ Bench, Mumbai
Before R. S. Syal (AM) and
Vijay Pal Rao (JM)
ITA No. 5396/Mum./2009
A.Y. : 2006-2007. Decided on : 20-12-2010
Counsel for assessee/revenue : Dr. P. Daniel & S.
M. Makhija/Jitendra Yadav
Income-tax Act, 1957, section 50 — Provisions of
section 50 are not attracted in a case where on the asset transferred
depreciation was neither claimed nor allowed.
Per R. S. Syal :
Facts :
The assessee transferred office premises and
returned the gain arising therefrom as long-term capital gain. Upon being called
by the Assessing Officer (AO) to explain why the provisions of section 50 are
not applicable, the assessee submitted that though the property was included in
the block of assets but since no depreciation was ever claimed or allowed
thereon, the provisions of section 50 are not applicable. The AO held that in
view of the provisions of section 50 read with Explanation 5 of section 32, the
contention of the assessee is not acceptable. He computed the short-term capital gain and charged the same to tax.
Aggrieved the assessee preferred an appeal to the
CIT(A) who upheld the action of the AO.
Aggrieved the assessee preferred an appeal to the
Tribunal.
Held:
Section 50 gets activated only on satisfaction of
twin conditions mentioned therein viz. (i) the capital asset should be an asset
forming part of block of asset; and (ii) depreciation should have been allowed
on it under this Act or under the Indian Income-tax Act, 1922. The Tribunal
noted that the property was reflected in the Schedule of Fixed Assets at its
original purchase price. Since depreciation was never claimed, nor allowed on
this property, the Tribunal overturned the order passed by the AO and held that
the long-term capital gain declared by the assessee be accepted as such, since
no infirmity was pointed out by the AO in the calculation shown by the assessee.
The appeal filed by the assessee was allowed.
