Income Tax Officer-5(2), Lucknow V. Shri Nitin Luthra, Lucknow

ITA 620/LKW/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87773 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-01-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 07-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PINKI MAHAVAR
• Assessee Lawyers: VIVEK MEHROTRA
• Keywords: Capital asset; Business income; Depreciation; Opportunity of being heard; Cost of acquisition
• Section: 54F; 5(2); 32; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. A. K. GARODIA, ACCOUNTANT MEMBER ITA NO.620/LKW/2013 ASSESSMENT YEAR:2010-11 INCOME TAX OFFICER 5(2) RANGE V, LUCKNOW V. SHRI. NITIN LUTHRA PROP. M/S NITIN SCIENTIFIC CORPORATION LUCKNOW TAN/PAN:ABIPL7445B (APPELLANT) (RESPONDENT) APPELLANT BY: SMT. PINKI MAHAVAR, D.R. RESPONDENT BY: SHRI. VIVEK MEHROTRA, C.A. DATE OF HEARING: 23 01 2015 DATE OF PRONOUNCEMENT: 02 2015 O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A) PERTAINING TO ASSESSMENT YEAR 2010-11, INTER ALIA, ON VARIOUS GROUNDS WHICH ARE AS UNDER:- 1. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER OF RS. 3,68,696/- U/S 41(2) OF THE INCOME-TAX ACT, 1961. 2. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER OF RS. 51,44,800/- UNDER HEAD SHORT TERM CAPITAL GAIN. 3. THE LD. CIT(A) FAILED TO OBSERVE THE PROVISIONS MADE IN RULE 46A OF THE INCOME-TAX RULES, WHILE ADMITTING ADDITIONAL :- 2 -: EVIDENCES WITHOUT GIVING ON OPPORTUNITY OF BEING HEARD TO THE ASSESSING OFFICER AND/OR FOR FILING OF REPORT. 2. THOUGH VARIOUS GROUNDS ARE RAISED, BUT THEY ALL RELATE TO THE APPLICATION OF PROVISIONS OF SECTION 50 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT THE ACT') FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN AND CLAIM OF DEDUCTION RAISED UNDER SECTION 54EC OF THE ACT. 3. THE FACTS IN BRIEF BORNE OUT FROM THE RECORD ARE THAT DURING THE RELEVANT ASSESSMENT YEAR, THE ASSESSEE HAS SOLD SHOP NO.UGF-2 FOR RS.40.20 LAKHS AND SHOP NO.UGF-34 FOR RS.18.76 LAKHS, WHICH WERE SHOWN AS SHOP AND GODOWN RESPECTIVELY IN THE SCHEDULE OF FIXED ASSETS. THE ASSESSEE HAS TREATED THE CAPITAL GAIN AS LONG TERM CAPITAL GAIN AND AFTER INDEXATION, COMPUTED THE LONG TERM CAPITAL GAIN AT RS.48,32,031/- AND THE SAME HAS BEEN CLAIMED AS EXEMPT UNDER SECTION 54EC OF THE ACT AND INVESTED IN NATIONAL HIGHWAY BOND. THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SUB-SECTION (2) OF SECTION 50 OF THE ACT, WHERE ANY BLOCK OF ASSETS CEASES TO EXIST, THE COST OF ACQUISITION OF THE BLOCK OF ASSETS SHALL BE THE WRITTEN DOWN VALUE OF THE BLOCK OF ASSETS AT THE BEGINNING OF THE PREVIOUS YEAR, AND THE INCOME RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER SHALL BE DEEMED TO BE THE CAPITAL GAINS ARISING FROM THE TRANSFER OF SHORT-TERM CAPITAL ASSETS. IN VIEW OF THE PROVISIONS OF SECTION 50(2) OF THE ACT, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEES CLAIM OF LONG TERM CAPITAL GAIN AND DEDUCTION UNDER SECTION 54EC OF THE ACT IS NOT TENABLE AND THE ASSESSING OFFICER ACCORDINGLY CALCULATED THE SHORT TERM CAPITAL GAIN AT RS.51,44,800/- BY REDUCING THE ORIGINAL COST OF ACQUISITION OF RS.7,51,200/- FROM THE ENTIRE SALE CONSIDERATION. 4. THE ASSESSING OFFICER HAS ALSO NOTED THAT THE ASSESSEE HAS NOT CLAIMED ANY DEPRECIATION ON BOTH THESE ASSETS, BUT THESE ARE BY NATURE BUSINESS ASSETS, BEING SHOP AND GODOWN AND ARE REFLECTED IN THE SCHEDULE :- 3 -: OF DEPRECIATION CHART OF FIXED ASSETS AND IT DOES NOT MAKE ANY DIFFERENCE WHETHER THE ASSESSEE CLAIMED DEPRECIATION OR NOT. THE ASSESSING OFFICER ACCORDINGLY CALCULATED THE DEPRECIATION TO BE ALLOWED IN DIFFERENT ASSESSMENT YEARS AND WORKED OUT THE W.D.V. OF THE GODOWN AND SHOP AS ON 1.4.2009 AT RS.1,78,623/- AND RS.2,03,881/- RESPECTIVELY. ACCORDINGLY, THE CLAIM OF EXEMPTION UNDER SECTION 54EC OF WAS DISALLOWED BY THE ASSESSING OFFICER AND THE ADDITION OF ENTIRE AMOUNT OF RS.55,13,496/- WAS MADE, WHICH INCLUDES RS.3,68,696/- AS TAXABLE PROFIT UNDER SECTION 41(2) OF THE ACT AND RS.51,44,800/- AS SHORT TERM CAPITAL GAIN. 5. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WITH THE SUBMISSION THAT SECTION 41(1) AND 41(2) OF THE ACT ARE NOT APPLICABLE IN THE ASSESSEES CASE, AS THE CONDITION PRECEDENT FOR INVOKING THE SAID PROVISIONS ARE THAT BUILDING, MACHINERY, PLANT OR FURNITURE MUST BE OWNED BY THE ASSESSEE AND IN RESPECT OF WHICH DEPRECIATION IS CLAIMED UNDER CLAUSE (I) OF SUB-SECTION (1) OF SECTION 32; AND THE SAID ASSETS HAS BEEN USED FOR THE PURPOSE OF BUSINESS. THE LAST TWO CONDITIONS ARE NOT SATISFIED, AS THE ASSESSEE NEVER CLAIMED ANY DEPRECIATION IN ANY OF THE YEARS NOR THE ASSESSING OFFICER HAS ALLOWED ANY DEPRECIATION IN ANY OF THE PRECEDING YEAR IN THE ASSESSMENT ORDER. IT WAS ALSO CONTENDED THAT PROVISIONS OF SECTION 50(2) OF THE ACT CANNOT BE INVOKED, AS IT CAN ONLY BE INVOKED WHERE THE ASSETS FORMING PART OF THE BLOCK OF ASSETS IN RESPECT OF WHICH DEPRECIATION HAS BEEN ALLOWED UNDER THE INCOME-TAX ACT. THEREFORE, COMPUTATION OF SHORT TERM CAPITAL GAIN MADE AS PER PROVISIONS OF SECTION 50(2) OF THE ACT WAS INCORRECT. IT WAS ALSO CONTENDED BEFORE THE LD. CIT(A) THAT THE PROPERTIES IN QUESTION WERE PURCHASED IN ASSESSMENT YEARS 2002- 03 AND 2005-06 THROUGH HIS OWN RESOURCES AND NOT THROUGH BUSINESS ACCOUNT. THE ASSESSEE WAS THE PROPRIETOR OF M/S NITIN SCIENTIFIC CORPORATION AND HAS BEEN FILING A SINGLE RETURN FOR ITS BUSINESS INCOME AND OTHER INCOME LIKE INCOME FROM OTHER SOURCES AND HOUSE PROPERTY FOR MANY :- 4 -: YEARS. AS NO SEPARATE RETURN WAS FILED BY THE ASSESSEE FOR THE INCOME OTHER THAN BUSINESS, NO SEPARATE BALANCE SHEET WAS EVER MADE FOR THE ASSESSEE AS INDIVIDUAL. A PROPRIETORSHIP RETURN CAN BE FILED ON PROPRIETOR PAN ONLY. THEREFORE, AS PER LAW, TWO RETURNS CANNOT BE FILED FOR SAME PERSON. THE ASSESSEE HAS SHOWN ALL ASSETS IN THE BALANCE SHEET FILED WITH THE DEPARTMENT, WHETHER THESE WERE RESIDENTIAL HOUSE FOR WHICH RENTAL INCOME WAS DERIVED OR BUSINESS ASSETS. IT WAS FURTHER EXPLAINED THAT SALE PROCEEDS WERE ALSO DEPOSITED IN THE SAVING BANK ACCOUNT OF THE ASSESSEE AND NATIONAL HIGHWAY BONDS WERE ALSO PURCHASED FROM THE SAME SAVING BANK ACCOUNT. IT WAS FURTHER EXPLAINED THAT IN THE BALANCE SHEET, THE ASSETS IN QUESTION WAS SHOWN AS FIXED ASSETS, BUT NO DEPRECIATION WERE EITHER CHARGED OR ALLOWED BY THE ASSESSING OFFICER IN ANY PRECEDING YEARS. THE REASON FOR NOT CLAIMING DEPRECIATION FOR ANY YEAR WAS THE NATURE OF PROPERTIES IN QUESTION, AS THE PROPERTIES WERE PERSONAL IN NATURE AND NO DEPRECIATION WAS EVER CLAIMED. THE ASSESSEE HAS ALSO PLACED RELIANCE UPON VARIOUS JUDICIAL PRONOUNCEMENTS. 6. THE LD. CIT(A) RE-EXAMINED THE CLAIM OF THE ASSESSEE IN THE LIGHT OF LEGAL PROVISIONS AND VARIOUS JUDICIAL PRONOUNCEMENTS AND THE LD. CIT(A) WAS OF THE VIEW THAT IN THE CASE OF DEPRECIATION OF ASSETS, THE DEEMED FICTION UNDER SECTION 50 OF THE ACT IS RESTRICTED ONLY TO THE MODE OF COMPUTATION OF CAPITAL GAINS CONTAINED UNDER SECTION 48 AND 49 OF THE ACT AND DOES NOT APPLY TO ANY OTHER PROVISION. SECTION 54EC OF THE ACT DOES NOT MAKE ANY DISTINCTION BETWEEN DEPRECIABLE ASSET AND NON-DEPRECIABLE ASSET. THEREFORE, EXEMPTION AVAILABLE UNDER SECTION 54EC OF THE ACT CANNOT BE DENIED BY REFERRING TO THE FICTION CREATED UNDER SECTION 50 OF THE ACT. THE RELEVANT OBSERVATIONS OF THE LD. CIT(A) ARE EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE:- 4(4) I HAVE EXAMINED THE FACTS AND CIRCUMSTANCES OF THE CASE. I HAVE CONSIDERED THE 'ID INGS OF THE ASSESSING OFFICER AND THE :- 5 -: SUBMISSIONS OF THE APPELLANT. THE FACTS OF THE CASE ARE THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE SOLD SHOP NO. UGF-2 FOR RS. 40,20,000/- AND SHOP NO. UGF-34 FOR RS. 18,76,000/- WHICH WERE SHOWN AS SHOP AND GODOWN RESPECTIVELY IN THE SCHEDULE OF FIXED ASSETS. THE COST OF ACQUISITION OF THE TWO IS RS. 3,02,500/- AND RS. 4,48,700/- RESPECTIVELY. THE ASSESSEE TREATED THE CAPITAL GAIN AS LONG TERM CAPITAL GAIN AND AFTER INDEXATION COMPUTED LONG TERM CAPITAL GAIN OF RS. 48,32,031/-, WHICH WAS CLAIMED AS EXEMPT UNDER SECTION 54EC OF THE ACT AND SECTION 54F OF THE ACT, AS THE ASSESSEE HAD INVESTED RS. 48,50,000/- IN NATIONAL HIGHWAY BOND AND IN RESIDENTIAL HOUSE. THE AO DID NOT ACCEPT THE CLAIM OF THE ASSESSEE AND COMPUTED THE SHORT TERM CAPITAL GAINS ON TRANSFER OF THE ABOVE ASSETS AT RS. 51,44,800/- AND CALCULATED THE TAXABLE PROFIT UNDER SECTION 41(2) OF THE ACT AT RS. 3,68,696/-. THE ISSUE IS WHETHER RELIEF UNDER SECTION 54EC AND SECTION 54F OF THE ACT IS ALLOWABLE TO THE APPELLANT ON INVESTMENT IN NATIONAL HIGHWAY BOND/RESIDENTIAL HOUSE OUT OF SALE PROCEEDS OF SALE OF DEPRECIABLE ASSET IN VIEW OF SECTION 50 OF THE ACT. 4(5) IT IS IMPERATIVE TO REFER TO SECTION 41(2) OF THE ACT, WHICH PROVIDES AS UNDER 41(2) WHERE ANY BUILDING, MACHINERY, PLANT OR FURNITURE, (A) WHICH IS OWNED BY THE ASSESSEE; (B) IN RESPECT OF WHICH DEPRECIATION IS CLAIMED UNDER CLAUSE (I) OF SUB SECTION (1) OF SECTION 32; AND (C) WHICH WAS OR HAS BEEN USED FOR THE PURPOSES OF BUSINESS, IS SOLD, DISCARDED, DEMOLISHED OR DESTROYED AND THE MONEYS PAYABLE IN RESPECT OF SUCH BUILDING, MACHINERY, PLANT OR FURNITURE, AS THE CASE MAY BE, TOGETHER WITH THE AMOUNT OF SCRAP VALUE, IF ANY, EXCEEDS THE WRITTEN DOWN VALUE, SO MUCH OF THE EXCESS AS DOES NOT EXCEED THE DIFFERENCE BETWEEN THE ACTUAL COST AND THE WRITTEN DOWN VALUE SHALL BE :- 6 -: CHARGEABLE TO INCOME-TAX AS INCOME OF THE BUSINESS OF THE PREVIOUS YEAR IN WHICH THE MONEYS PAYABLE FOR THE BUILDING, MACHINERY, PLANT OR FURNITURE BECAME DUE. IN THE INSTANT CASE THE SHOPS SHOWN IN THE SCHEDULE OF FIXED ASSETS WERE OWNED BY THE APPELLANT BUT WERE NEITHER USED FOR THE PURPOSE OF BUSINESS HAVING BEEN TREATED AS PERSONAL ASSETS NOR WERE ANY DEPRECIATION EITHER CLAIMED BY THE APPELLANT OR ALLOWED BY THE ASSESSING OFFICER IN ANY OF THE EARLIER ASSESSMENT YEARS. THE SHOPS CAME IN THE OWNERSHIP OF THE APPELLANT IN ASSESSMENT YEAR 2002- 2003 AND ASSESSMENT YEAR 2005-2006 AND NO DEPRECIATION WAS CLAIMED OR ALLOWED ON THESE ASSETS IN THE RELEVANT ASSESSMENT YEAR. ON THE CONTRARY THE AO AT PAGE 3 OF THE ASSESSMENT ORDER HAS WORKED OUT THE WRITTEN DOWN VALUE AND PROFIT AND UNDER SECTION 41(2) OF THE ACT BY CALCULATING THE DEPRECIATION ON THE ASSETS WHICH WAS ALLOWABLE IN EARLIER ASSESSMENT YEARS EVEN THOUGH THE SAME WAS NOT ACTUALLY ALLOWED IN THE RELEVANT ASSESSMENT YEAR. AS THE CONDITIONS MENTIONED IN SECTION 41(2) OF THE ACT WERE NOT FULFILLED THERE WAS NO JUSTIFICATION IN COMPUTING THE PROFITS UNDER SECTION 41(2) OF THE ACT BY CALCULATING THE DEPRECIATION AS DEEMED TO HAVE BEEN ALLOWED. 4(6)(I) IT IS ALSO NECESSARY TO REFER TO PROVISIONS OF SECTION 50 AND SECTION 54EC OF THE ACT TO ASCERTAIN WHETHER THE RELIEF IS ALLOWABLE TO THE APPELLANT ON SALE OF SHOPS WHERE THE SALE PROCEEDS HAVE BEEN INVESTED IN NATIONAL HIGHWAY BONDS. SECTION 50(2) OF THE ACT PROVIDES AS UNDER - ''SPECIAL PROVISION FOR COMPUTATION OF CAPITAL GAINS IN CASE OF DEPRECIABLE ASSETS. NOTWITHSTANDING ANYTHING CONTAINED IN CLAUSE (42A) OF SECTION 2, WHERE THE CAPITAL ASSET IS AN ASSET FORMING PART OF A BLOCK OF ASSETS IN RESPECT OF WHICH DEPRECIATION HAS BEEN ALLOWED UNDER THIS ACT OR UNDER THE INDIAN INCOME-TAX ACT, 1922 (11 OF 1922) THE PROVISIONS OF SECTIONS 48 :- 7 -: AND 49 SHALL BE SUBJECT TO THE FOLLOWING MODIFICATIONS: (1) WHERE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE ASSET TOGETHER WITH THE FULL VALUE OF SUCH CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF ANY OTHER CAPITAL ASSET FALLING WITHIN THE BLOCK OF THE ASSETS DURING THE PREVIOUS YEAR, EXCEEDS THE AGGREGATE OF THE FOLLOWING AMOUNTS, NAMELY : (I) EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER OR TRANSFERS; (II) THE WRITTEN DOWN VALUE OF THE BLOCK OF ASSETS AT THE BEGINNING OF THE PREVIOUS YEAR; AND (HI) THE ACTUAL COST OF ANY ASSET FALLING WITHIN THE1 BLOCK OF ASSETS ACQUIRED DURING THE PREVIOUS YEAR, SUCH EXCESS SHALL BE DEEMED TO BE THE CAPITAL GAINS ARISING FROM THE TRANSFER OF SHORT-TERM CAPITAL ASSETS; (2) WHERE ANY BLOCK OF ASSETS CEASES TO EXIST AS SUCH, FOR THE REASON THAT ALL THE ASSETS IN THAT BLOCK ARE TRANSFERRED DURING THE PREVIOUS YEAR, THE COST OF ACQUISITION OF THE BLOCK OF ASSETS SHALL BE THE WRITTEN DOWN VALUE OF THE BLOCK OF ASSETS AT THE BEGINNING OF THE PREVIOUS YEAR, AS INCREASED BY THE ACTUAL COST OF ANY ASSET FALLING WITHIN THAT BLOCK OF ASSETS, ACQUIRED BY THE ASSESSEE DURING THE PREVIOUS YEAR AND THE INCOME RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER OR TRANSFERS SHALL BE DEEMED TO BE THE CAPITAL GAINS ARISING FROM THE TRANSFER OF SHORT-TERM CAPITAL ASSETS.' SECTION 54EC OF THE ACT PROVIDES AS UNDER- 54EC. CAPITAL GAIN NOT TO BE CHARGED ON INVESTMENT IN CERTAIN BONDS.- (1) WHERE THE CAPITAL GAIN ARISES FROM THE TRANSFER OF A LONG-TERM CAPITAL ASSET (THE CAPITAL ASSET SO TRANSFERRED BEING HEREAFTER IN THIS SECTION REFERRED TO AS THE ORIGINAL ASSET) AND THE ASSESSEE HAS, AT ANY TIME WITHIN A PERIOD OF SIX MONTHS :- 8 -: AFTER THE DATE OF SUCH TRANSFER, INVESTED THE WHOLE OR ANY PART OF CAPITAL GAINS IN THE LONG-TERM SPECIFIED ASSET, THE CAPITAL GAIN SHALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SECTION, THAT IS TO SAY,- (A) IF THE COST OF THE LONG-TERM SPECIFIED ASSET IS NOT LESS THAN THE CAPITAL GAIN ARISING FROM THE TRANSFER OF THE ORIGINAL ASSET, THE WHOLE OF SUCH CAPITAL GAIN SHALL NOT BE CHARGED UNDER SECTION 45; (B) IF THE COST OF THE LONG-TERM SPECIFIED ASSET IS LESS THAN THE CAPITAL GAIN ARISING FROM THE TRANSFER OF THE ORIGINAL ASSET, SO MUCH OF THE CAPITAL GAIN AS BEARS TO THE WHOLE OF THE CAPITAL GAIN THE SAME PROPORTION AS THE COST OF ACQUISITION OF THE LONG-TERM SPECIFIED ASSET BEARS TO THE WHOLE OF THE CAPITAL GAIN, SHALL NOT BE CHARGED UNDER SECTION 45 : PROVIDED THAT THE INVESTMENT MADE ON OR AFTER THE 1ST DAY OF APRIL, 2007 IN THE LONG-TERM SPECIFIED ASSET BY AN ASSESSEE DURING ANY FINANCIAL YEAR DOES NOT EXCEED FIFTY LAKH RUPEES. 4(6)(II) ACCORDING TO SECTION 50 OF THE ACT IF AN ASSESSEE HAS SOLD A CAPITAL ASSET FORMING PART OF BLOCK OF ASSETS (BUILDING, MACHINERY ETC) ON WHICH THE DEPRECIATION HAS BEEN ALLOWED UNDER THE ACT, THE INCOME ARISING FROM SUCH CAPITAL ASSET IS TREATED AS SHORT TERM CAPITAL GAIN. IN THE INSTANT CASE NO DEPRECIATION WAS ALLOWED ON THE SOLD ASSETS. THE APPELLANT HAS SOLD A SHOP ACQUIRED FOR RS. 4,48,700/- FOR SALE CONSIDERATION OF RS. 40,20,000/- AND A SHOP ACQUIRED FOR RS. 3,02,500/- ON SALE CONSIDERATION OF RS. 18,76,000/-. AN AMOUNT OF RS. 46,50,000/- HAS BEEN INVESTED IN NATIONAL HIGHWAY BONDS AND AN AMOUNT OF RS. 2,00,000/- HAS BEEN INVESTED IN A NEW RESIDENTIAL ASSET. THE PROVISIONS ABOVE DO NOT PROVIDE ANY PROHIBITION IN CLAIM OF EXEMPTION UNDER SECTION 54EC OF THE ACT IN RESPECT OF DEPRECIABLE ASSETS. THE DEEMING PROVISION IN SECTION 50 OF THE ACT TALKS OF CALCULATION OF SHORT TERM CAPITAL GAINS BUT PROVISION OF SECTION :- 9 -: 54EC OF THE ACT DOES NOT PROHIBIT EXEMPTION IN CASE THE ASSETS SOLD IS A LONG TERM CAPITAL ASSETS WHETHER DEPRECIABLE OR NOT. ON THE CONTRARY IN THE INSTANT CASE, THE TWO SHOPS WERE TREATED AS PERSONAL ASSETS ON WHICH NEITHER WAS ANY DEPRECIATION CLAIMED NOR THE SHOPS USED IN BUSINESS. 4(6)(III) SECTION 50 OF THE ACT NOWHERE SAYS THAT DEPRECIATED ASSET SHALL BE TREATED AS SHORT-TERM ASSETS, WHEREAS SECTION 54EC OF THE ACT HAS AN APPLICATION WHERE LONG-TERM CAPITAL ASSET IS TRANSFERRED AND THE AMOUNT RECEIVED IS INVESTED OR DEPOSITED IN THE SPECIFIED ASSETS AS REQUIRED UNDER SECTION 54EC OF THE ACT. FOR APPLICATION OF SECTION 54EC OF THE ACT THE NECESSARY PRE-REQUISITE CONDITION AND ENQUIRY WOULD BE, WHETHER THE ASSESSEE HAS TRANSFERRED LONG-TERM CAPITAL ASSET AND WHETHER THE CONSIDERATION SO RECEIVED IS INVESTED OR DEPOSITED-WITHIN THE TIME-LIMIT IN SPECIFIED ASSET. CAPITAL GAIN MAY HAVE BEEN RECEIVED BY THE ASSESSEE ON DEPRECIABLE ASSETS, IF CONDITIONS NECESSARY UNDER SECTION 54EC OF THE ACT ARE COMPLIED WITH BY THE ASSESSEE, HE WILL BE ENTITLED TO THE BENEFIT ENVISAGED IN SECTION 54EC OF THE ACT. 4(7)(I) IN ORDER TO EXAMINE THE ISSUE IT WOULD NOT BE OUT OF PLACE TO REFER TO THE DECISION OF HON'BLE MUMBAI HIGH COURT IN THE CASE OF CIT VS ACE BUILDERS (P) LTD. ON 07.03.2005 [144 TAXMAN 855]. IN THIS CASE THE QUESTION REQUIRED TO BE CONSIDERED WAS, WHETHER THE DEEMING FICTION CREATED UNDER SECTION 50 OF THE ACT WAS RESTRICTED TO SECTION 50 OF THE ACT ONLY OR WAS IT APPLICABLE TO SECTION 54E OF THE ACT AS WELL, IN OTHER WORDS, THE QUESTION WAS, WHETHER THE LONG-TERM CAPITAL GAIN ARISES ON TRANSFER OF A DEPRECIABLE LONG-TERM CAPITAL ASSET, WHETHER THE ASSESSEE CAN BE DENIED EXEMPTION UNDER SECTION 54E OF THE ACT MERELY BECAUSE SECTION 50 OF THE ACT PROVIDES THAT THE COMPUTATION OF SUCH CAPITAL GAINS SHOULD BE DONE AS IF ARISING FROM THE TRANSFER OF SHORT-TERM CAPITAL ASSET. THE HON'BLE COURT LAID DOWN AS UNDER- IN OUR OPINION, THE ASSESSEE CANNOT BE DENIED EXEMPTION UNDER SECTION 54E, BECAUSE, FIRSTLY, THERE IS NOTHING IN :- 10 -: SECTION 50 TO SUGGEST THAT THE FICTION CREATED IN SECTION 50 IS NOT ONLY RESTRICTED TO SECTIONS 48 AND 49 BUT ALSO APPLIES TO OTHER PROVISIONS. ON THE CONTRARY, SECTION 50 MAKES IT EXPLICITLY CLEAR THAT THE DEEMED FICTION CREATED IN SUB- SECTIONS (1) AND (2) OF SECTION 50 IS RESTRICTED ONLY TO THE MODE OF COMPUTATION OF CAPITAL GAINS CONTAINED IN SECTIONS 48 AND 49. SECONDLY, IT IS WELL ESTABLISHED IN LAW THAT A FICTION CREATED BY THE LEGISLATURE HAS TO BE CONFINED TO THE PURPOSE FOR WHICH IT IS CREATED. IT IS TRUE THAT SECTION 50 IS ENACTED WITH THE OBJECT OF DENYING MULTIPLE BENEFITS TO THE OWNERS OF DEPRECIABLE ASSETS. HOWEVER, THAT RESTRICTION IS LIMITED TO THE COMPUTATION OF CAPITAL GAINS AND NOT TO THE EXEMPTION PROVISIONS. IN OTHER WORDS, WHERE THE LONG-TERM CAPITAL ASSET HAS AVAILED DEPRECIATION, THEN THE CAPITAL GAIN HAS TO BE COMPUTED IN THE MANNER PRESCRIBED UNDER SECTION 50 AND THE CAPITAL GAINS TAX WILL: BE CHARGED AS IF SUCH CAPITAL GAIN HAS ARISEN OUT OF A SHORT-TERM CAPITAL ASSET BUT IF SUCH CAPITAL GAIN IS INVESTED IN THE MANNER PRESCRIBED IN SECTION 54E, THEN THE CAPITAL GAIN SHALL NOT BE CHARGED UNDER SECTION 45 OF THE INCOME TAX ACT. TO PUT IT SIMPLY, THE BENEFIT OF SECTION 54E WILL BE AVAILABLE TO THE ASSESSEE IRRESPECTIVE OF THE FACT THAT THE COMPUTATION OF CAPITAL GAINS IS DONE EITHER UNDER SECTION 48 AND 49 OR UNDER SECTION 50. THE CONTENTION OF THE REVENUE THAT BY AMENDMENT TO SECTION 50, THE LONG-TERM CAPITAL ASSET HAS BEEN CONVERTED INTO A SHORT-TERM CAPITAL ASSET IS ALSO WITHOUT ANY MERIT. AS STATED HEREINABOVE, THE 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 SECTION 50 CONVERTS LONG-TERM CAPITAL ASSET INTO A SHORT-TERM CAPITAL ASSET. :- 11 -: 4(7)(II) SIMILAR ISSUE WAS ALSO CONSIDERED BY HIGH COURT OF GAUHATI IN THE CASE OF CIT VS ASSAM PETROLEUM INDUSTRIES (P.) LTD [2003] 131 TAXMAN 699 (GAU.). THE HEAD NOTE READS AS UNDER - 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 4(8) IN THE CASE OF DR. (MRS) SUDHA S TRIVEDI VS ITO (2009) 31 SOT 38(MUM), THE HON'BLE ITAT, MUMBAI HAS HELD THAT SECTION 54EC OF THE ACT IS AN INDEPENDENT PROVISION NOT CONTROLLED BY SECTION 50 OF THE ACT. IF THE CAPITAL ASSET IS HELD FOR MORE THAN 36 MONTHS THE BENEFIT OF SECTION 54EC OF THE ACT CANNOT BE SNATCHED AWAY BECAUSE SECTION 50 OF THE ACT IS RESTRICTED ONLY TO THE MODE OF COMPUTATION OF CAPITAL GAIN CONTAINED IN SECTION 48 OF THE ACT AND SECTION 49 OF THE ACT AND THIS FICTION CANNOT BE EXTENDED BEYOND THAT FOR DENYING THE BENEFIT OTHERWISE AVAILABLE TO THE ASSESSEE UNDER SECTION 54EC OF THE ACT, IF THE OTHER REQUISITE CONDITIONS OF THE SECTION ARE SATISFIED. SIMILAR FINDINGS HAVE ALSO BEEN RECORDED BY THE HON'BLE ITAT, MUMBAI IN THE CASE OF DCIT VS BHARAT ENTERPRISES (2011) 14 TAXMANN.COM 110. FURTHER, ALLOWABILITY OF EXEMPTION UNDER SECTION 54F OF THE ACT UNDER SIMILAR CIRCUMSTANCES HAS BEEN ALLOWED BY HON'BLE ITAT, JAIPUR IN THE CASE OF PRAKASH KARNAWAT (2011) 16 TAXMANH.COM 357. 4(9) ON THE BASIS OF ABOVE EXAMINATION I FIND THAT IN THE CASE OF DEPRECIABLE ASSETS THE DEEMED FICTION UNDER SECTION 50 OF THE ACT IS RESTRICTED ONLY TO THE MODE OF COMPUTATION OF CAPITAL GAINS CONTAINED UNDER SECTION 48 OF THE ACT AND SECTION 49 OF THE ACT AND DOES NOT :- 12 -: APPLY TO ANY OTHER PROVISION. THE FICTION CREATED BY THE LEGISLATURE IS TO BE CONFINED TO THE PURPOSE FOR WHICH IT IS CREATED. FURTHER, SECTION 54EC OF THE ACT DOES NOT MAKE ANY DISTINCTION BETWEEN DEPRECIABLE ASSET AND NON-DEPRECIABLE ASSET. EXEMPTION AVAILABLE UNDER SECTION 54EC OF THE ACT CANNOT BE DENIED BY REFERRING TO THE FICTION CREATED UNDER SECTION 50 OF THE ACT. BENEFIT OF SECTION 54EC OF THE ACT IS AVAILABLE TO THE ASSESSEE IRRESPECTIVE OF THE FACT THAT THE COMPUTATION OF CAPITAL GAINS IS DONE EITHER UNDER SECTION 48 OF THE ACT OR SECTION 49 OF THE ACT OR UNDER SECTION 50 OF THE ACT. THE LEGAL FICTION CREATED BY THE STATUTE UNDER SECTION 50 OF THE ACT IS ONLY TO DEAL CAPITAL GAIN AS SHORT TERM CAPITAL GAIN AND NOT TO DEEM THE ASSET AS SHORT TERM CAPITAL ASSET. THEREFORE, IT CANNOT BE SAID THAT SECTION 50 OF THE ACT CONVERTS LONG TERM CAPITAL ASSET INTO A SHORT TERM CAPITAL ASSET. MOREOVER, IN THE INSTANT CASE THE DEPRECIATION WAS NOT CLAIMED AT ALL AND THE SHOPS TRANSFERRED WERE NOT TO BE TAKEN AS DEPRECIABLE ASSETS. EVEN SO THE EXEMPTION UNDER SECTION 54EC OF THE ACT OR UNDER SECTION 54F OF THE ACT CANNOT BE DENIED TO THE APPELLANT. 4(10) THUS, RESPECTFULLY FOLLOWING THE DECISIONS OF THE HON'BLE HIGH COURT AND THE HON'BLE ITAT, THE ASSESSING OFFICER IS DIRECTED TO ALLOW EXEMPTION UNDER SECTION 54EC OF THE ACT ON INVESTMENT IN ELIGIBLE BONDS OUT OF THE SALE PROCEEDS FROM THE TRANSFER OF THE LONG TERM CAPITAL ASSET. THE AO IS DIRECTED TO ALLOW EXEMPTION UNDER SECTION 54EC OF THE ACT OF RS.46,50,000/- FOR INVESTMENT MADE IN NATIONAL HIGHWAY BONDS AND RS. 2,00,000/- FOR INVESTMENT IN RESIDENTIAL HOUSE UNDER SECTION 54F OF THE ACT. THE ADDITIONS OF RS.3,68,696/- AND RS. 51,44,800/- MADE BY THE AO ARE DELETED GIVING CONSEQUENTIAL RELIEF TO THE APPELLANT. 7. AGGRIEVED, THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL WITH THE SUBMISSION THAT SINCE THE ASSESSEE HAS SHOWN THE IMPUGNED PROPERTIES AS PART OF BLOCK OF ASSETS, PROVISIONS OF SECTION 50(2) OF THE ACT WERE RIGHTLY INVOKED BY THE ASSESSING OFFICER. IT IS IRRELEVANT WHETHER THE :- 13 -: ASSESSEE HAS CLAIMED DEPRECIATION OR NOT. WHILE COMPUTING THE SHORT TERM CAPITAL GAIN, THE ASSESSING OFFICER HAS ALLOWED DEPRECIATION IN THE CORRESPONDING ASSESSMENT YEARS AS PER RULES. BESIDES, HE HAS PLACED RELIANCE UPON THE ORDER OF THE ASSESSING OFFICER. 8. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, HAS CONTENDED THAT FOR INVOKING THE PROVISIONS OF SECTION 50(2) OF THE ACT, THERE SHOULD BE A CAPITAL ASSET IN THE FORM OF BLOCK OF ASSETS, IN RESPECT OF WHICH DEPRECIATION HAS BEEN ALLOWED UNDER THIS ACT. THEREFORE, IF DEPRECIATION WAS NOT ALLOWED IN ANY OF THE EARLIER ASSESSMENT YEARS, PROVISIONS OF SECTION 50(2) OF THE ACT CANNOT BE INVOKED FOR COMPUTING THE SHORT TERM CAPITAL GAIN ON TRANSFER OF PART OF BLOCK OF ASSETS. SIMILAR IS THE POSITION WITH REGARD THE APPLICABILITY OF PROVISIONS OF SECTION 41(2) OF THE ACT AS BEFORE INVOKING THE PROVISIONS OF SECTION 41(2) OF THE ACT, THE ASSET SHOULD BE DEPRECIABLE ASSETS AND DEPRECIATION SHOULD HAVE BEEN CLAIMED IN EARLIER ASSESSMENT YEARS. IF DEPRECIATION IS NOT CLAIMED IN EARLIER YEARS, PROVISIONS OF SECTION 41(2) OF THE ACT CANNOT BE INVOKED. IT WAS FURTHER CONTENDED THAT THE ASSESSEE IS AN INDIVIDUAL AND HAS SUBMITTED ONE RETURN OF INCOME AFTER PREPARING A SINGLE BALANCE SHEET. THE SHOPS AND GODOWNS WERE SHOWN AS PART OF FIXED ASSETS, BUT NO DEPRECIATION WAS EVER CLAIMED IN ANY OF THE ASSESSMENT YEAR. THEREFORE, THESE ASSETS CANNOT BE CALLED TO BE DEPRECIABLE ASSETS AND PROVISIONS OF SECTION 50(2) OF THE ACT CANNOT BE INVOKED. IT IS A SALE OF CAPITAL ASSET AND LONG TERM CAPITAL GAIN ACCRUED THEREON WAS INVESTED IN NATIONAL HIGHWAY BONDS AND EXEMPTION WAS CLAIMED UNDER SECTION 54EC OF THE ACT. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO PLACED RELIANCE UPON THE ORDER OF THE LD. CIT(A). 9. HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORITIES IN THE LIGHT OF THE RIVAL SUBMISSIONS, WE FIND THAT FOR INVOKING THE PROVISIONS OF SECTION 41(1) OR 41(2) OF THE ACT AND 50(2) OF THE ACT FOR THE PURPOSE OF COMPUTING SHORT TERM CAPITAL GAIN, THREE CONDITIONS MUST BE SATISFIED I.E. :- 14 -: (1) ASSETS MUST BE OWNED BY THE ASSESSEE; (2) DEPRECIATION ON THE ASSETS MUST HAVE BEEN CLAIMED UNDER CLAUSE (I) OF SUB-SECTION (1) OF SECTION 32 OF THE ACT; AND (3) THE ASSETS MUST HAVE BEEN USED FOR THE PURPOSE OF BUSINESS. IN THE INSTANT CASE, THOUGH THE ASSETS WERE OWNED BY THE ASSESSEE, BUT NO DEPRECIATION WAS EVER CLAIMED OR ALLOWED BY THE ASSESSING OFFICER IN ANY OF THE ASSESSMENT YEAR. THEREFORE, REQUISITE CONDITIONS FOR APPLICABILITY OF AFORESAID PROVISIONS ARE NOT FULFILLED. FOR THE SAKE OF REFERENCE, WE EXTRACT THE PROVISIONS OF SECTIONS 41(1); 41(2) AND 50(2) OF THE ACT AS UNDER:- SECTIONS 41(1) & 41(2): (1) WHERE AN ALLOWANCE OR DEDUCTION HAS BEEN MADE IN THE ASSESSMENT FOR ANY YEAR IN RESPECT OF LOSS, EXPENDITURE OR TRADING LIABILITY INCURRED BY THE ASSESSEE (HEREINAFTER REFERRED TO AS THE FIRST- MENTIONED PERSON) AND SUBSEQUENTLY DURING ANY PREVIOUS YEAR,-- (A) THE FIRST-MENTIONED PERSON HAS OBTAINED, WHETHER IN CASH OR IN ANY OTHER MANNER WHATSOEVER, ANY AMOUNT IN RESPECT OF SUCH LOSS OR EXPENDITURE OR SOME BENEFIT IN RESPECT OF SUCH TRADING LIABILITY BY WAY OF REMISSION OR CESSATION THEREOF, THE AMOUNT OBTAINED BY SUCH PERSON OR THE VALUE OF BENEFIT ACCRUING TO HIM SHALL BE DEEMED TO BE PROFITS AND GAINS OF BUSINESS OR PROFESSION AND ACCORDINGLY CHARGEABLE TO INCOME-TAX AS THE INCOME OF THAT PREVIOUS YEAR, WHETHER THE BUSINESS OR PROFESSION IN RESPECT OF WHICH THE ALLOWANCE OR DEDUCTION HAS BEEN MADE IS IN EXISTENCE IN THAT YEAR OR NOT; OR (B) THE SUCCESSOR IN BUSINESS HAS OBTAINED, WHETHER IN CASH OR IN ANY OTHER MANNER WHATSOEVER, ANY AMOUNT IN RESPECT OF WHICH LOSS OR EXPENDITURE WAS INCURRED BY THE FIRST-MENTIONED PERSON OR SOME BENEFIT IN RESPECT OF THE TRADING LIABILITY REFERRED TO IN CLAUSE (A) BY WAY OF REMISSION OR CESSATION THEREOF, THE AMOUNT OBTAINED BY THE SUCCESSOR IN BUSINESS OR THE VALUE OF BENEFIT ACCRUING TO THE SUCCESSOR IN BUSINESS SHALL BE DEEMED TO BE PROFITS AND GAINS OF THE :- 15 -: BUSINESS OR PROFESSION, AND ACCORDINGLY CHARGEABLE TO INCOME-TAX AS THE INCOME OF THAT PREVIOUS YEAR. 1. FOR THE PURPOSES OF THIS SUB-SECTION, THE EXPRESSION 'LOSS OR EXPENDITURE OR SOME BENEFIT IN RESPECT OF ANY SUCH TRADING LIABILITY BY WAY OF REMISSION OR CESSATION THEREOF' SHALL INCLUDE THE REMISSION OR CESSATION OF ANY LIABILITY BY A UNILATERAL ACT BY THE FIRST MENTIONED PERSON UNDER CLAUSE (A) OR THE SUCCESSOR IN BUSINESS UNDER CLAUSE (B) OF THAT SUB-SECTION BY WAY OF WRITING OFF SUCH LIABILITY IN HIS ACCOUNTS. 2. FOR THE PURPOSES OF THIS SUB-SECTION, 'SUCCESSOR IN BUSINESS' MEANS-- (2) WHERE ANY BUILDING, MACHINERY, PLANT OR FURNITURE,-- (A) WHICH IS OWNED BY THE ASSESSEE ; (B) IN RESPECT OF WHICH DEPRECIATION IS CLAIMED UNDER CLAUSE (I) OF SUB-SECTION (1) OF SECTION 32 ; AND (C) WHICH WAS OR HAS BEEN USED FOR THE PURPOSES OF BUSINESS,IS SOLD, DISCARDED, DEMOLISHED OR DESTROYED AND THE MONEYS PAYABLE IN RESPECT OF SUCH BUILDING, MACHINERY, PLANT OR FURNITURE, AS THE CASE MAY BE, TOGETHER WITH THE AMOUNT OF SCRAP VALUE, IF ANY, EXCEEDS THE WRITTEN DOWN VALUE, SO MUCH OF THE EXCESS AS DOES NOT EXCEED THE DIFFERENCE BETWEEN THE ACTUAL COST AND THE WRITTEN DOWN VALUE SHALL BE CHARGEABLE TO INCOME-TAX AS INCOME OF THE BUSINESS OF THE PREVIOUS YEAR IN WHICH THE MONEYS PAYABLE FOR THE BUILDING, MACHINERY, PLANT OR FURNITURE BECAME DUE. WHERE THE MONEYS PAYABLE IN RESPECT OF THE BUILDING, MACHINERY, PLANT OR FURNITURE REFERRED TO IN THIS SUB-SECTION BECOME DUE IN A PREVIOUS YEAR IN WHICH THE BUSINESS FOR THE PURPOSE OF WHICH THE BUILDING, MACHINERY, PLANT OR FURNITURE WAS BEING USED IS NO LONGER IN EXISTENCE, THE PROVISION OF THIS SUB-SECTION SHALL APPLY AS IF THE BUSINESS IS IN EXISTENCE IN THAT PREVIOUS YEAR. :- 16 -: SECTION 50(2): NOTWITHSTANDING ANYTHING CONTAINED IN CLAUSE (42A) OF SECTION 2, WHERE THE CAPITAL ASSET IS AN ASSET FORMING PART OF A BLOCK OF ASSETS IN RESPECT OF WHICH DEPRECIATION HAS BEEN ALLOWED UNDER THIS ACT OR UNDER THE INDIAN INCOME-TAX ACT, 1922 (11 OF 1922), THE PROVISIONS OF SECTIONS 48 AND 49 SHALL BE SUBJECT TO THE FOLLOWING MODIFICATIONS:- XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX (2) WHERE ANY BLOCK OF ASSETS CEASES TO EXIST AS SUCH, FOR THE REASON THAT ALL THE ASSETS IN THAT BLOCK ARE TRANSFERRED DURING THE PREVIOUS YEAR, THE COST OF ACQUISITION OF THE BLOCK OF ASSETS SHALL BE THE WRITTEN DOWN VALUE OF THE BLOCK OF ASSETS AT THE BEGINNING OF THE PREVIOUS YEAR, AS INCREASED BY THE ACTUAL COST OF ANY ASSET FALLING WITHIN THAT BLOCK OF ASSETS, ACQUIRED BY THE ASSESSEE DURING THE PREVIOUS YEAR AND THE INCOME RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER OR TRANSFERS SHALL BE DEEMED TO BE THE CAPITAL GAINS ARISING FROM THE TRANSFER OF SHORT-TERM CAPITAL ASSETS. 10. THOUGH THE ASSETS WERE SHOWN IN THE CATEGORY OF FIXED ASSETS, BUT NO DEPRECIATION WAS CLAIMED. THEREFORE, THE PROVISIONS OF SECTION 41(2) AND 50(2) OF THE ACT CANNOT BE INVOKED FOR THE PURPOSE OF COMPUTATION OF SHORT TERM CAPITAL GAIN. IN THAT EVENTUALITY, THE NORMAL LONG TERM CAPITAL GAIN WAS ACCRUED TO THE ASSESSEE AND THE ASSESSEE HAS CLAIMED EXEMPTION UNDER SECTION 54EC OF THE ACT BY MAKING INVESTMENT IN NATIONAL HIGHWAY BONDS. THEREFORE, THE ASSESSEE WOULD BE ENTITLED FOR EXEMPTION UNDER SECTION 54EC OF THE ACT. 11. WE HAVE ALSO CAREFULLY EXAMINED THE ORDER OF THE LD. CIT(A) AND WE FIND THAT THE LD. CIT(A) HAS APPRECIATED THE LEGAL PROVISIONS IN THE LIGHT OF VARIOUS JUDICIAL PRONOUNCEMENTS BEFORE CONCLUDING THAT THE BENEFIT OF :- 17 -: SECTION 54EC OF THE ACT ARE AVAILABLE TO THE ASSESSEE IRRESPECTIVE OF THE FACT THAT COMPUTATION OF CAPITAL GAIN IS DONE EITHER UNDER SECTION 48 OR 49 OR 50 OF THE ACT. SINCE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A), WE CONFIRM THE SAME. 12. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTIONED PAGE. SD/- SD/- [A. K. GARODIA] [SUNIL KUMAR YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 26 TH FEBRUARY, 2015 JJ:0602 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR