Frank S. International ITL Limited Vs ACIT(IT) (ITAT Mumbai)
ITAT Mumbai held that the rate of tax on a short term capital gain on depreciable assets u/s. 50 has been held to be the rate of long term capital gain @ 20% as per Section 112 of the Income Tax Act. Accordingly, appeal of assessee allowed.
Facts- The assessee is an Indian branch of Frank International ITL Limited. The assessee’s case was selected for scrutiny and notices u/s. 143(2) and 142(1) were duly issued and served upon the assessee.
AO after duly considering the assessee’s submission, passed the draft assessment order u/s. 143(3) r.w.s. 144C(1) of the Act, dated 29.09.2021, determining total income at Rs.14,27,19,759/- by making an addition of Rs.15,20,19,347/-, after deducting the unabsorbed brought forward depreciation of Rs.1,35,10,563/- as short-term capital gain on sale of depreciable business assets. AO then passed the final assessment order dated 12.11.2021, u/s. 143(3) r.w.s. 144C(3) of the Act, confirming the income determined in the draft assessment order.
CIT(A) upheld the action of AO. Being aggrieved, the present appeal is filed.
Conclusion- Held that the special bench in the case of SKF India Ltd. has decided this issue in favour of the assessee by treating the gain arising out of such transaction to be a short term capital gain as per Section 50 but had applied the rate of long term capital gain @20% as per Section 112 of the Act.
