Non-residents not entitled to benefit of section 112 of Income Tax Act, 1961-AAR

0 comments Tuesday, August 2, 2011
The applicant, a company based in Scotland sold shares of Cairns India Limited to Petronas Corporation Intl. Limited for a consideration of USD 241,426,379 in off-market-mode and not through a recognized stock exchange. The assessee filed an application for advance ruling claiming that it was entitled to the benefit of the Proviso to s. 112 (1) and liable to pay tax at 10% of the capital gains. The Revenue resisted the plea on the ground that the benefit of the Proviso to s. 112 was available only to assessees who were eligible to the benefit of indexation in the second proviso to s. 48 and as the assessee was not eligible for indexation, it could not claim the benefit of the lower rate of tax in the Proviso to s. 112. HELD upholding the Revenue’s plea:

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Gain from sale of Depericiable asset is short term even though no depericiation claimed in last two years-Kerala HC


Kerala High Court in an important Judgement has held that gain arising from the sale of a depericiable asset on which depericiation was not claimed deliberately in last two years by the assessee will still be treated as Short Term Capital Gain. 

The assessee in this case did not claim the depericiation in the last two years on an asset which was depericiated in earlier years and such asset was used for business purposes in earlier years and formed part of block of assets. Gain arising out of sale of such asset was treated as LTCG by assessee,  claiming that in view of section 50 depericiation was not allowed/claimed on such asset and the said asset has ceased to be part of the block of assets.
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