Sudipta Das (student cwa (Final)) (191 Points)
19 October 2011IT : Exemption under section 54EC is allowable in respect of capital gains arising on transfer of capital asset on which depreciation has been allowed - [2011] 14 taxmann.com 110 (Mumbai - Trib.)
SEC 54EC IS FOR LONG TERM CAPITAL ASSETS THEN HOW CAN IT BE APPLICABLE FOR DEPRICIABLE ASSETS??
Sreeniketh Angara
(B. Com CA PCC CS Executive)
(699 Points)
Replied 19 October 2011
Depreciation is claimed on Some Small Assets like Mobiles and the stuff for a single year, but for the ones like car and buildings, it can be claimed over the useful life of the asset which is certainly more than one year. So in this viewpoint.....
Vikas
(CA)
(1135 Points)
Replied 19 October 2011
govind agarwal
(article)
(27 Points)
Replied 20 October 2011
Assets like Plant and machinery though are depreciated but will remain to be Long Term assets if they qualify the criteria for holding period. Exemption u/s 54ec is provided against capital gains arisen on sale of long term capital assets , Assets like Plant and machinery though depreciated will be called Long term Assets if hold for more than 36 months and hence exemption will be provided
SEc 54ec which as you said is applicable for long term capital assets is hence allowed for dpericable assets as well if hold for more than specified years.
amitmehta_ca
(CA, CMA)
(99 Points)
Replied 20 October 2011
The above provision states that the exemption u/s 54ec is available for LT ASSET as well as shot term asset ie. depriciable assets.
A G Vishal Kirthic
(Chartered Accoutant)
(236 Points)
Replied 20 October 2011
Dear Sudipta Das,
Sec 50 is a deeming provision. Though the gain arising on transfer of a depreciable asset is Short term in nature, the asset transferred could be regarded as a Long term capital asset if it is held for more than 36 months. Sec 54 talks about capital gain arising on transfer of Long term capital asset and not Long term capital gain
VISHAL SINGH
(Chartered Accountant)
(71 Points)
Replied 20 October 2011
You may apply the decisions laid down in the case of Ace Builders P Ltd. as well as recent in 2011 of Manali Investments & claim the exemption benefit u/s 54EC.
Sudipta Das
(student cwa (Final))
(191 Points)
Replied 21 October 2011
Thanks everybody for replyig. so my interpretation is that any asset being held for more than 3 years is a long term capital asset is but if it is a depriciable asset then the gain arising out of transffer of such asset is short term capital gain. hence 54ec will be applicable for depriciable assets being held for more than 3yrs.
CAclubindia
