75th Founding Day Lecture Meeting on “India@2030” Know More

December 2010

Capital gains : Computation : Depreciable asset : S. 50 of Income-tax Act, 1961 : Land is not a depreciable asset : S. 50 not applicable where land forms part of whole undertaking which is transferred.

By K. B. Bhujle | Advocate
Reading Time 1 mins

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Reported :

24. Capital gains :
Computation : Depreciable asset : S. 50 of Income-tax Act, 1961 : Land is not a
depreciable asset : S. 50 not applicable where land forms part of whole
undertaking which is transferred.

[CIT v. Coimbatore Lodge,
328 ITR 69 (Mad.)]

The assessee was running a
lodge. The assessee transferred the lodge and claimed exemption u/s. 54EC of the
Income-tax Act, 1961. The Assessing Officer disallowed the claim for exemption.
The Commissioner (Alleals) and the Tribunal held that the assessee was entitled
to exemption u/s.54EC of the Act.

On appeal by the Revenue,
the Madras High Court upheld the decision of the Tribunal and held as under :

“Land is not the
depreciable asset. S. 50 of the Act deals only with the transfer of
depreciable assets. Once the land forms part of the assets of the undertaking
and the transfer is of the entire undertaking as a whole, it is not possible
to bifurcate the sale consideration in a particular asset.”


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