Case Law Details
Hirsh Bracelet India Pvt. Ltd. Vs ACIT (ITAT Bangalore)
Section 50 of the Act is a special provision for computation of capital gains in case of depreciable assets and is applicable only to capital assets forming part of Block of Assets on which depreciation has been allowed under the Act. and also only for the purposes of sections 48 and 49 of the Act.
It is undisputed that the capital assets transferred by the assessee are lease hold right in the land (acquired in 1991) and building on the land constructed subsequently. It is undisputed that right in lease hold land cannot form part of any Block of Assets on which depreciation can be claimed. It is undisputed that no depreciation was claimed or allowed under the Act on the right in lease hold land. It is also undisputed that buildings form a part of Block of Assets on which depreciation and that depreciation was claimed and allowed under the Act on the buildings.
On a plain reading of section 50 of the Act, it is clear that it is applicable for transfer of buildings and not for transfer of right in lease hold land. Therefore, the Capital Gains on the transfer of the right in lease hold land has to be computed under the normal provisions as Long Term Capital Gains and the Capital Gains on the transfer of the buildings has to be computed under the provisions of section 50 as Short Term Capital Gains. The observations of the CIT(Appeals) contrary to the aforesaid provisions are unsustainable and are hereby vacated. The ld. counsel for the assessee has in this regard rightly placed reliance on the decision of Hon’ble Rajasthan High Court in the case of CIT v. Vimal Chand Golecha [1993] 201 ITR 442 (RAJ.) wherein it was held that when price of two capital assets is charged at one consolidated price, where a gain from one of capital assets was a short-term capital gain while from other it was a long term capital gain, then the assessee is entitled to bifurcate the same and benefit to assessee could not be denied in respect of gain arising from sale of an asset which could be considered as long-term capital gain.
FULL TEXT OF THE ITAT JUDGEMENT
Please become a Premium member. If you are already a Premium member, login here to access the full content.
