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

Assessee sold certain “Depreciable Assets” forming part of “Block of Assets” which were held for more than 36 months, earned capital gain, invested such funds in specified 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 High Court held that special provisions of S.50 for computation of capital gains in case of depreciable assets are confined in relation to S.48 & 49 only. S.54EC is available in respect of “Long term capital asset”. Once such condition is fulfilled, the fact that asset was such on which depreciation has been allowed and therefore computation of capital gain would be done as per S.50 by applying modifications in S.48 & 49 would not change the “Nature” of capital assets for “Availability of exemption u/s 54EC”.

[HIMALAYA MACHINERY PVT. LTD. - TAX APPEAL NO.271 of 2012 - GHC]