Short term capital gains arising from the transfer of depreciable assets held for more than 36 months u/s. 50(2) of the Act can be set-off against bro

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Recently, the Mumbai bench of Income-tax Appellate Tribunal (the Tribunal) in the case ofManali Investments v. ACIT (ITA No.6646/Mum/2008 A.Y.2005-06)) held that the short term capital gains arising from the transfer of depreciable assets held for more than 36 months under Section 50(2) of the Income-tax Act, 1961 (the Act) can be set-off against the brought forward long term capital losses under Section 74 of the Act.

Further, Section 50 of the Act is a deeming provision and the same has to be restricted only to the computation of capital gain of depreciable assets. Once the computation part is over, the operation of Section 50 of the Act comes to an end and the capital gains so determined shall be dealt with as per the other provisions of the Act.