Transfer of Depreciable Assets: Tax rate prescribed U/s 112 is applicable even if it is deemed to be taxed as short-term capital gains U/s 50.
In an interesting ruling, the Mumbai ITAT in the case of Frank S. International ITL Limited, held that the tax rate prescribed under Section 112 is applicable on the transfer of depreciable assets, which are deemed to be taxed as short-term capital gains under Section 50.
The ITAT relied on the Special Bench ruling in the case of SKF India Limited, wherein it was held that the deeming fiction created under Section 50 cannot convert a ‘long-term capital asset’ into a ‘short-term capital asset’ for other purposes of the Act, including for the tax rate specified under Section 112, which applies to income arising from the transfer of long-term capital asset chargeable under the head “Capital Gains”.
The copy of the order is as under:
