2012 (12) TMI 724 - AT - Income Tax

Appellate Tribunal clarifies tax exemptions, directs reassessment on trading and household expenses.

The Appellate Tribunal partially allowed the Revenue's appeal, setting aside certain issues for reconsideration. The Tribunal upheld the Commissioner of ... Long term capital gain – Purchase and sale of Property - whether for making profits or to use it for Residential purposes - Held that:- It is a residential house, which is a subject matter of long term capital gain u/s 54 and it is any other asset which is not a residential house which is a matter of capital gain u/s 54. There is no finding of the AO that the assessee has claimed exemption u/s 54F. It is also undisputed that the assessee was the owner of residential house/flat at Delhi at Vasant Kunj which was sold during the impugned year and capital gain was earned by the assessee which was invested by purchase of a residential house at Amritsar. These facts are coming in the order of the CIT(A) itself and as per statement of total income of the assessee it will be interest of justice, if the matter is setaside to the file of the CIT(A) who after considering the provision of section 54 instead the provisions of section 54F will decide the issue afresh. Trading addition being difference between sundry debtors and the sales – Held that:- Books of account of the assessee have not been rejected. The assessee having filed all the copies of account of trade creditors as confirmed by the AO by issuing notice u/s 133(6) therefore, the genuineness of the trade creditors cannot be doubted - ground raised by revenue dismissed Addition due to inadequate household withdrawals – Held that:- Assessee was living in a joint family and A.O. has not considered the withdrawals made by other members of the family, which were on record CIT(A) after considering the submissions of the assessee deleted the addition made by the AO on account of household withdrawals - CIT(A) rightly deleted the addition. Issues involved:1. Exemption under section 54F of the Income-tax Act for long-term capital gain.2. Trading addition and business expenses.3. Addition on account of household expenses.Exemption under section 54F of the Income-tax Act for long-term capital gain:The appeal involved a dispute regarding the exemption claimed by the assessee under section 54 of the Income-tax Act for long-term capital gain arising from the sale of a residential property. The Assessing Officer (AO) disallowed the exemption, asserting that the property was not purchased for residential purposes but for profit-making. However, the Commissioner of Income Tax (Appeals) reversed this decision, stating that the assessee rightfully invested the capital gain under section 54F of the Act. The Appellate Tribunal noted discrepancies in the AO's findings and the assessee's claim, emphasizing the distinction between sections 54 and 54F of the Act. The Tribunal set aside the matter for reconsideration by the CIT(A) to determine the issue afresh, ensuring a fair hearing for the assessee.Trading addition and business expenses:The AO had made a trading addition of Rs. 2,50,030 based on the difference between sundry debtors and sales. However, the CIT(A) overturned this addition, citing the submission of explanations by the assessee and the confirmation of trade creditors through notices issued under section 133(6) of the Act. The Tribunal concurred with the CIT(A)'s decision, emphasizing that the books of account were not rejected, and the genuineness of trade creditors was established. Consequently, the Tribunal dismissed the revenue's appeal against the deletion of the trading addition.Addition on account of household expenses:Regarding the addition of Rs. 84,000 on account of inadequate household withdrawals, the CIT(A) ruled in favor of the assessee after considering the submissions. The Tribunal agreed with the CIT(A), highlighting that the AO failed to consider withdrawals made by other family members and did not provide reasons for deeming the household withdrawals as inadequate. Consequently, the Tribunal upheld the CIT(A)'s decision to delete the addition made by the AO on account of household withdrawals.In conclusion, the Appellate Tribunal partially allowed the Revenue's appeal for statistical purposes, setting aside certain issues for reconsideration and upholding the CIT(A)'s decisions on trading additions and household expenses.