COMMISSIONER OF INCOME TAX Vs. COIMBATORE LODGE

JUDGEMENT

(1.) THE Revenue has come forward with the above appeal raising the following substantial questions of law :

(2.) THE issue is directly covered by the decision of a Division Bench of this Court in Asstt. CIT vs. Raka Food Products (2005) 199 CTR (Mad) 151 : (2005) 277 ITR 261 (Mad), wherein the Division Bench had taken a view that where once land forms part of the assets of the undertaking and the transfer was of the entire undertaking as a whole, it was not possible to bifurcate the sale consideration to a particular asset. It was further held that s. 50 of the Act would apply only when depreciable assets alone are transferred.

(3.) IN the case on hand, the assessee, who was running a lodge, is stated to have sold the property situated at No. 22/44, Venkatrao Road, Salem along with superstructures, namely, the building constructed thereon. While the assessing authority declined the claim of the assessee for exemption under s. 54EC of the Act, the CIT(A) allowed the assessee's appeal and granted the relief under s. 54EC of the Act. The Tribunal confirmed the said order of the CIT(A) by applying the ratio of the decision of this Court reported in Asstt. CIT vs. Raka Food Products (supra). The Division Bench has held that "land is not the depreciable asset. Sec. 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". As already observed above, s. 50 of the Act applies only when depreciable assets alone are transferred.