2011 (4) TMI 173 - HC - Income Tax

High Court affirms deduction claim for capital gains; Supreme Court dismisses appeal, no substantial legal question raised.

Commissioner of Income-tax Versus Rajiv Shukla

The High Court upheld the decision of the Income-tax Appellate Tribunal, which allowed the assessee's deduction claim under section 54F of the Income-tax ... Deduction u/s 54F - Sale of depreciable assets - Assessing Officer rejected the claim of the assessee under section 54F on the ground that the assessee had not produced any evidence showing investment in the Capital Gains Deposit Account Scheme under section 54F and that the flat sold by him was a depreciable asset. As per the provisions of section 50, the capital gain arising from transfer of depreciable asset shall be deemed to be the capital gain arising from transfer of short-term capital asset and, therefore, deduction under section 54F was not available. - Held that:- In view of the decisions of Gauhati High Court has taken an identical view in CIT v. Assam Petroleum Industries P. Ltd. [2003 -TMI - 11870 - GAUHATI High Court ] and Commissioner of Income-Tax Versus Ace Builders (P.) Ltd. (2005 -TMI - 9448 - BOMBAY High Court) the assessee is entitled for exemption u/s 54F. Issues:Assessment of long-term capital gain and eligibility for deduction under section 54F of the Income-tax Act, 1961.Analysis:In the assessment year 2007-08, the assessee declared long-term capital gain on the sale of a property and claimed a deduction under section 54F, stating that the amount was invested in a property in Mumbai. The Assessing Officer rejected the claim, citing lack of evidence for investment in the Capital Gains Deposit Account Scheme under section 54F and considering the sold property as a depreciable asset. Consequently, the Assessing Officer added the capital gain under 'Short-term capital gain.'The Commissioner of Income-tax (Appeals) overturned the addition, a decision upheld by the Income-tax Appellate Tribunal. The Tribunal relied on a judgment by the Bombay High Court in a similar case, which was also followed in subsequent cases. The Revenue's appeal against the judgment was dismissed by the Supreme Court. The High Court noted that the Gauhati High Court had a similar stance in a relevant case.After reviewing the judgments of the Bombay High Court and the Gauhati High Court, the High Court found no reason to deviate from the established interpretation. Consequently, the High Court concluded that no substantial question of law arose for consideration and dismissed the appeal accordingly.