ITAT: Sale Proceeds from Depreciated Assets Qualify for Tax Benefits
ECONOMY & POLICY

ITAT: Sale Proceeds from Depreciated Assets Qualify for Tax Benefits

The Income Tax Appellate Tribunal (ITAT) has ruled that proceeds from the sale of depreciated assets qualify for tax benefits if they are invested in the purchase or construction of a new residential property. The decision provides much-needed clarity for taxpayers looking to reinvest proceeds from assets that have lost value over time.

The ruling stems from a case where a taxpayer claimed capital gains exemption under Section 54F of the Income Tax Act. This section allows for tax exemption on long-term capital gains if the proceeds are reinvested in a residential property. The taxpayer had sold a depreciated asset and used the proceeds to purchase a new home, seeking tax relief on the reinvested amount.

The tax authorities initially rejected the claim, stating that the asset was depreciated and, hence, did not qualify for tax benefits. However, the ITAT overruled this decision, stating that the nature of the asset?s depreciation does not negate the taxpayer's eligibility for benefits under Section 54F. The tribunal emphasised that the purpose of the law is to encourage reinvestment in residential properties, regardless of the asset's prior depreciation.

This ruling is significant as it sets a precedent for similar cases, providing relief to taxpayers who seek to reinvest their capital in real estate, even from depreciated assets. It also underscores the importance of the provisions under Section 54F, which aim to incentivize investment in residential properties.

The Income Tax Appellate Tribunal (ITAT) has ruled that proceeds from the sale of depreciated assets qualify for tax benefits if they are invested in the purchase or construction of a new residential property. The decision provides much-needed clarity for taxpayers looking to reinvest proceeds from assets that have lost value over time. The ruling stems from a case where a taxpayer claimed capital gains exemption under Section 54F of the Income Tax Act. This section allows for tax exemption on long-term capital gains if the proceeds are reinvested in a residential property. The taxpayer had sold a depreciated asset and used the proceeds to purchase a new home, seeking tax relief on the reinvested amount. The tax authorities initially rejected the claim, stating that the asset was depreciated and, hence, did not qualify for tax benefits. However, the ITAT overruled this decision, stating that the nature of the asset?s depreciation does not negate the taxpayer's eligibility for benefits under Section 54F. The tribunal emphasised that the purpose of the law is to encourage reinvestment in residential properties, regardless of the asset's prior depreciation. This ruling is significant as it sets a precedent for similar cases, providing relief to taxpayers who seek to reinvest their capital in real estate, even from depreciated assets. It also underscores the importance of the provisions under Section 54F, which aim to incentivize investment in residential properties.

Next Story
Products

unWOOD transforms plastic waste into durable wood alternative

unWOOD, a breakthrough innovation, is converting hard-to-recycle plastic waste into a durable alternative to natural wood. Developed through a proprietary process called Intelligent Compounding, unWOOD uses a Macro Molecular Fiber Matrix (MMFM) structure to replicate the strength, look, and feel of hardwood—without the environmental cost.Conceptualised by Dr Babu Padmanabhan, the material addresses key flaws in traditional plastic recycling by consuming minimal energy, using zero water, and generating no microplastics. “Any application that introduces plastics into areas where it cannot be..

Next Story
Real Estate

India's first AI-integrated campus announced in Noida

Yashoda Hospital and Bhutani Infra have announced plans to develop India’s first fully AI-integrated mixed-use campus in Greater Noida West. The upcoming project will feature a hospital, retail spaces, offices, SOHOs, serviced apartments, and a hotel—all operating within a self-learning, generative AI-powered ecosystem.The AI-first campus will integrate real-time data systems, predictive analytics, and adaptive infrastructure to offer personalised experiences across functions. From AI-enabled footfall tracking and dynamic energy optimisation to smart F&B and retail insights, the develo..

Next Story
Infrastructure Urban

Postal Dept Unveils Stamp Honouring 125 Years of Kodaikanal Observatory

The Department of Posts is proud to release a commemorative postage stamp celebrating 125 years of the Kodaikanal Solar Observatory (KSO). Recognising the legacy of the KSO through this special stamp is a fitting tribute to one of India’s most significant scientific institutions and highlights the nation’s long-standing contribution to global science.The Commemorative stamp was released by S Rajendra Kumar, Chief Postmaster General, Karnataka Circle in the gracious presence of A S Kiran Kumar, Chairperson, Governing Council, IIA and Former Chairman, ISRO and other esteemed guests at Indian..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?