the assessee had not obtained any depreciation after the asset became an asset of the partnership firm constituted under the deed dated June 16, 1977. In this context reference may usefully be made to the decision of the Calcutta High Court in the case of CIT v. Bhupender Singh Atwal [1983] 140 ITR 928, delivered by Sabyasachi Mukharji J., as he then was, who, speaking for the Bench, held that after an asset has become the property of a new firm the cost of acquisition by the firm is to be taken into account for computing the capital gains, and not the written down value of the asset on the date of dissolution of the old firm. Section 50 would only apply to the cases where the assessee had obtained the depreciation.
Deemed fiction created in Ss.(1) and Ss.(2) of S. 50 is restricted only to the mode of computation of capital gains contained in S. 48 and S. 49 and does not apply to other provisions. A fiction created by the legislature has to be confined to the purpose for which it is created. Further, S. 54E does not make any distinction between depreciable assets and non-depreciable assets. Exemption available u/s.54E cannot be denied by referring to the fiction created u/s.50. Benefit of S. 54E is available to the assessee irrespective of the fact that the computation of capital gains is done either u/s.48 and u/s.49 or u/s.50. Legal fiction created by the statute is to deem the capital gain as short-term capital gain and not to deem the asset as short-term capital asset. Therefore, it cannot be said that S. 50 converts long-term capital asset into a short-term capital asset. Accordingly, the Tribunal was justified in allowing exemption u/s.54E in respect of the capital gains arising on the transfer of a capital asset on which depreciation had been allowed.
Section 54E, read with section 50, of the Income-tax Act, 1961 – Capital gains – Not to be charged in certain cases – Assessment year 1991-92 – Whether section 50 nowhere says that depreciable asset shall be treated as short-term capital asset and section 54E has an application where long-term capital asset is transferred – Held, yes – Whether capital gain may have been received by assessee on depreciable asset, and if conditions necessary under section 54E are complied with by assessee, he will be entitled to benefit under section 54E – Held, yes
Section 50 of the Income-tax Act, 1961 – Capital gains – Computation of, in case of depreciable assets – Assessment year 1994-95 – Whether for purpose of section 50(2), where 100 per cent depreciation had been allowed on assets, whole of amount received by assessee on sale of those depreciated assets is required to be treated as capital gain arising from transfer of short-term capital assets – Held, yes
The Ministry of Corporate Affairs has clarified that Circular No. 19 and 20 of 2011 issued on 02.05.2011 that were issued for laying down certain procedure to regulate cases wherein filing of conflicting returns with regard to appointment of Directors or change of Director/Directors have now been superseded. This has been done in the light of some specific cases wherein it appears that either there was lack of consent of the removed/changed director or due process of Law were not followed.
Now, the world is in twenty first century, everywhere changes could be visualised but with respect to accounting, auditing etc, where is the change? Modern organisations have become more sophisticated and thus resulted in decentralisation of their activities and consequently the top management is remotely concerned with the day to day activities of the Organisation. With this backdrop the internal auditing has acquired a great deal of significance. The following are my opinion about modern Internal Audits. Let us see what it is……..
Payment paid by company to ESI department for delay in payments was nothing but compensation and was compensatory in nature. Thus, the impugned amount was to be allowed u/s 37(1).
Briefly stated the assessee is a Partner in the firm M/s Balachandra Laboratories. The firm had property at Thane on which development rights were transferred to M/s Friends Development Corporation (FDC) for an amount of Rs.17.00 crores. The said firm paid one third of consideration to legal heirs and Ms Balachandra laboratories claimed deduction in their assessment. The assessee happens to be one of the legal heirs of Late Shri C N Bhatavadekar. In the course of inquiry and assessment proceedings the issue relating to taxing of capital gains in the hands of the firm resulted in allowing the claim made to M/s Videocon Properties Ltd at Rs.95.00 lakhs paid to avoid civil litigation consequent to the compromise reached before the Bombay High Court. However, an amount of Rs.5.29 crores i.e. 1/3 rd of the total amount paid to legal heirs of Shri C N Bhatavadekar (who had 33% share in the property) was not allowed on the reason that it was an appropriation of the firm’s income. There were other issues with reference to the cost of acquisition etc., in the firm’s case which are not relevant for the issue in the present appeal.
Vide a penalty order u/s 271(1)(c) dated 27-03-2009, it was held that the assessee has concealed the income of Rs.8,16,617/- which was taxed on account of estimation of profit. The First Appellate Authority has expressed that since the addition was in respect of Gross Profit and work-inprogress was based upon certain estimation, therefore, it was not a case of concealment, hence, deleted the penalty following the judgment of Hon’ble jurisdictional High Court in the case of CIT v. J.H. Parabia (Transport) P. Ltd. (2006) 284 ITR 361 (Guj).
Read the ITAT Ahmedabad order on interest U/s. 234B for the assessment year 1997-98. Learn about the appeal and dismissal grounds. Stay informed.
