Tax Appeal Outcome: Assessee wins on capital gain, allowed claim under IT Act.

The appeal involved the deletion of an addition of long term capital gain and the disallowance of a claim under section 54 of the IT Act 1961. The CIT(A) ruled in favor of the assessee regarding the long term capital gain, emphasizing correct indexation principles. In the case of the disallowance under section 54, the Tribunal upheld the CIT(A)'s decision, allowing the claim as the investment in the new property was made within the extended time limit. The revenue's appeal was dismissed, affirming the assessee's entitlement to exemption under section 54.

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Issues:
Deletion of addition of long term capital gain and disallowance of assumption of claim under section 54 of IT Act 1961.

Deletion of Addition of Long Term Capital Gain:
The appeal concerned the deletion of an addition of Rs. 8,18,317 made by the Assessing Officer on account of long term capital gain. The assessee sold a property inherited from his wife and claimed index cost of acquisition based on fair market value as of 1.4.1981. The AO, however, calculated the indexed cost from 1994, resulting in a higher long term capital gain. The CIT(A) ruled in favor of the assessee, emphasizing that indexation should consider the period the asset was held by the previous owner. The Tribunal upheld the CIT(A)'s decision, citing relevant legal provisions and precedents.

Disallowance of Claim under Section 54:
The second issue revolved around the AO disallowing the claim under section 54 due to the sale consideration not being deposited in the capital gain account scheme by the due date. The CIT(A) allowed the claim, stating that the investment in the new property was made within the extended time limit under section 139(4). The Tribunal supported this decision, referencing judgments by the Guwahati High Court and Punjab & Haryana High Court. It concluded that the assessee was entitled to exemption under section 54 as the investment was made within the prescribed time frame. The appeal by the revenue was dismissed based on these findings.

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