A block of machinery (15% rate) had opening WDV of Rs 8,50,000 on 1.4.2025. New plant was bought on 30.11.2025 for Rs 8,50,000, and during June 2025 three machines from the block were sold for Rs 21,00,000. The result for A.Y. 2026-27 is:

1. Section 50 applies to depreciable assets forming part of a block; any resulting gain is always short-term. 2. Aggregate of opening WDV and additions during the year = Rs 8,50,000 + Rs 8,50,000 = Rs 17,00,000. 3. Sale consideration of machines sold = Rs 21,00,000. 4. Since consideration exceeds the block value plus additions, the excess is deemed STCG: Rs 21,00,000 - Rs 17,00,000 = Rs 4,00,000. 5. The block's WDV becomes Nil and no depreciation is allowed for the year on this block. 6. Option B fails because section 50 overrides section 2(42A) — the gain can never be long-term. Option C ignores the new plant added to the block (21,00,000 - 8,50,000). Option D applies only when consideration is absorbed by the block value, which is not the case here. _Source: ICAI CA Inter P3(A) Income-tax SM (May 2026), Ch 3 Unit 4 Capital Gains, PDF p. 53_