Exemption u/s 54EC can be claimed in respect of “Depreciable asset”:

Assessee sold certain “Depreciable Assets” forming part of “Block of Assets” which were held for more than 36 months, earned capital gain which was offered for taxation as “Short term capital gain” u/s 50, invested such funds in RECL bonds and claimed exemption u/s 54EC which was denied by AO since he was of the view that by virtue of S.50, such capital gain shall be “Short term capital gain” whereas exemption u/s 54EC is available only in respect of “Long Term Capital Gain”. The Hon’ble ITAT held that legal fiction created by the statute by virtue of S.50 is merely to deem “capital gain” as short term capital gain and not to deem “the asset” as short term capital asset. Therefore it cannot be said that S.50C converts a long term capital asset into a short term capital asset. Hence, the assessee was eligible for exemption u/s 54EC in respect of such capital gain.

[DCIT Vs. ADITYA MEDISALES LTD. – ITA No.2544/Ahd/2012 &

 ITO Vs. M/S. POLESTAR INDUSTRIES – ITA Nos.1944/Ahd/2010]