If Period Of Holding Of Plant & Machinery Is More Than 36 Months, it Qualifies As Long-Term Capital Asset As Per Sec 2(42A): Ahmedabad ITAT
Live LawThe Ahmedabad ITAT ruled that when the period of holding of the plant and machinery is more than 36 months, then the same has to be treated as long-term capital asset in pursuant to the provisions of section 2 of the Income tax Act. At the same time, the Bench clarified that “for the purpose of set off of the long-term capital loss under the provisions of subsection to section 70 of the Act, there is no such restriction that the deemed short-term capital gain on the sale depreciable assets cannot be set off against the long-term capital loss”. Likewise, the assessee has also sold its plant and machinery being depreciable assets and has earned long-term capital gain of ₹ 8,75,97,511.00 but the same was deemed as short-term capital gain in pursuant to the provisions of section 50 of the Act. The assessee subsequently has set off the long-term capital loss on the sale of shares in the return of income against the short-term capital gain on the sale of plant and machineries. As per the AO, the gain on the sale of plant and machinery is of short-term nature by virtue of the provisions of section 50 of the Act and therefore such gain cannot be set off against the long-term capital loss by virtue of the provisions of subsection to section 70 of the Act.
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