CIT Vs. MEETA MACHINE TOOLS

JUDGEMENT

(1.) IN this Appeal by the Revenue for the Assessment Year 2006 -07 following question has been raised for our consideration.

(2.) IN appeal, the CIT(A) upheld the action of the Assessing Officer in treating the profit arising from the sale of depreciable asset being chargeable to tax under section 50 of the said Act as a short term capital gain. However, the CIT(A) allowed the claim of the Respondent -Assessee for investments made in bonds of National Housing Bank under section 54EC of the Act by following the decision of this Court in the matter of CIT v. Ace Builders Pvt. Ltd. : (2005) 5(I) ITCL 240 (Bom -HC): (2006) 281 ITR 210 (Bom).

(3.) ON further appeal to the Tribunal by the Revenue, the Tribunal upheld the order of CIT(A) by applying the principle laid down in Ace Builders (P) Ltd. (supra) rendered in the context of section 54E of the said Act. The Tribunal held that the fiction contained in section 50 of the Act is restricted only to the computation of capital gain and the same cannot be extended beyond that so as to deny the benefit available to the assessee under section 54EC of the said Act.