Brief of the case:
ITAT Mumbai held in ITO Vs Legal Heir of Shri Durgaprasad Agnihotri that to respect the decision given by jurisdictional Hon’ble High Court in CIT vs. Ace Builders (P.) Ltd. [2006] 281 ITR 210 (Bom) it was upholding the decision given by CIT(A) that the exemption u/s 54EC would be available on short term capital gain arising on sale of depreciable assets u/s 50.
ITAT was of the view that as sec 50 overrides sec 2(42A) and 2(29A) which defines the short term capital asset and long term capital asset respectively and also sec 50 clearly defines the short term capital gain as a difference between the WDV and the sales price. So as sec 50 deals with only short term capital asset so no question of exemption u/s 54EC would arise but as ITAT was bound to announce the decision as per the decision given by jurisdictional Hon’ble High Court in CIT vs. Ace Builders (P.) Ltd. [2006] 281 ITR 210 (Bom) so exemption u/s 54EC would be available for capital gain u/s 50.
Facts of the case:
The assessee was an individual engaged in the business of photography. During the year under consideration, the assessee earned income from business as well as income from other sources. The assessee also earned long term capital gain, which was claimed exempt under section 54EC. The assesse sold one shop and earned capital gain on the sale of the said shop. The assesse made investment of Rs.25,50,000, in capital gain bonds of National Highway Authority of India and claimed exemption under section 54EC of the Act against the aforesaid capital gain earned. The Assessing Officer denied the benefit of exemption under section 54EC on the ground that the shop was a depreciable asset and the resultant gain was a short term capital gain whereas the exemption under section 54EC was available only on long term capital gain (LTCG).
