Sale of a depreciable asset & short term Capital Gain

Dear Mita,

Thanks for sharing,

I rember few days back when someone asked this issue I said that if computation is being made u/s 50A then Capital Gains can be short term as well as Long term.

Reasons for that are 

Sec 50 - First of all it begins with non-obstante clause w.r.t. definition of Long Term Capital Asset & thereafter it specifically provides that "Gains will be from Short Term Capital Asset"

Whereas Sec 50A
the above two things as mentioned in Sec 50 are not there  THEREFORE THE GAINS COMPUTED CAN BE LONG TERM AS WELL AS SHORT TERM -

Sec 50A READS AS UNDER
50A.  Where the capital asset is an asset in respect of which a deduction on account of depreciation under clause (i) of sub-section (1) of section 32 has been obtained by the assessee in any previous year, the provisions of sections 48 and 49 shall apply subject to the modification that the written down value, as defined in clause (6) of section 43, of the asset, as adjusted, shall be taken as the cost of acquisition of the asset.

But I still have some doubts, can sumone plz put some light on the nature of capital gains computed u/s 50A........  

Thx Mita & Thx Amir....

If depreciable assets has been written off and the deferred tax asset/liability has also been written back. Is depreciation under income tax act is still allowable. 

As per Sec. 50 :-  Income received through of transfer of depreciable capital asset(s) that is forming part of 'block of asset' shall be treated as Short term capital gains. Therefore, only if capital asset is a depreciable asset forming part of ''block of asset'' Sec. 50 applies.

Sec 50A applies where for assessee engaged in generation or generation and distribution of power who has opted for depreciation u/s 32(1)(i). 50A only states that WDV with adjustments is to be taken as cost of acquisition. 50A does not state whether capital gains are to be taken as short term or long term.

Assessee engaged in generation or generation and distribution of power may opt for straight line method depreciation u/s 32(1)(i). Depreciation on straight line method is applied on individual asset and ''not block of asset''.

Combined reading of the above sections shows that S.50 does not apply if depreciation is claimed on straight line method as per sec. 32(1)(i). Therefore capital gains on such assets can be short term or long term depending upon period of holding (36months).