In Brief
The Supreme Court held that an assessee is entitled to claim exemption under Section 54E of the Income Tax Act on capital gains from the sale of a long-term asset, even if depreciation was claimed on that asset. The Court ruled that the fiction created by Section 50 (which applies to depreciable assets) is limited to computing capital gains under Sections 48-49 and cannot restrict exemptions under Section 54E. Since Section 54E makes no distinction between depreciable and non-depreciable assets, the assessee cannot be denied exemption merely because depreciation was claimed. The appeal was dismissed, confirming the Tribunal and High Court's decision in favour of the assessee.
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