In Brief
The case concerns whether a shipowner is entitled to exemption under Section 54E of the Income Tax Act on capital gains from selling a loading platform, given that depreciation had been claimed on the asset. The assessee earned substantial gains but the tax authorities rejected the exemption, arguing that Section 50 (which creates a special rule for computing capital gains on depreciated assets) barred such exemption. The Supreme Court held that Section 50's fiction applies only to the computation of capital gains and cannot restrict independent exemptions. Since Section 54E makes no distinction between depreciated and non-depreciated assets, the exemption applies equally to both.
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