2015 (10) TMI 2045 - AT - Income Tax

Tribunal partially allows appeal, upholds assessment reopening within limitation. Appellant granted Section 54F exemption, directs income recomputation.

Ashok Kapasiawala Versus The ITO Ward-7 (1), Surat

The tribunal partially allowed the appeal, upholding the reopening of assessment within the limitation period. The appellant was granted exemption under ... Entitlement to exemption u/s.54F - Held that:- In the present case, the assessee purchased new asset on 05/10/2009 and had transferred the original asset on 8/01/2008. As per Section 54F (1) of the Act, the exemption would be available if the assessee purchased the residential house within two years after the date when transfer took place. As per the judgment of K. Ramachandra Rao case [2015 (4) TMI 620 - KARNATAKA HIGH COURT] the provisions of section 54F(4) would not be attracted in the event if the assessee has purchased or constructed the residential house within the period prescribed under section 54(1) of the Act. In the case in hand, there is no dispute with regard to the fact that the assessee had purchased within two years [the period prescribed u/s.54(F(1)] a new asset on 05/10/2009 from the date of transfer of the original asset. The Revenue has not cited or placed on record any contrary judgment by the Hon’ble Jurisdictional High Court or Hon’ble Supreme Court. Therefore, respectfully following the ratio laid down by the Hon’ble Karnataka High Court in the case of CIT vs K.Ramachandra Rao (supra), we hereby set aside the impugned order and direct the AO to re-compute the assessed income after granting the benefit of section 54F of the Act to the assessee. - Decided partly in favour of assessee for statistical purposes. Issues Involved:1. Denial of exemption under Section 54F.2. Notice under Section 148 issued after the limitation period.Issue-wise Detailed Analysis:1. Denial of exemption under Section 54F:The appellant argued that the CIT(A) erred in not allowing the exemption under Section 54F of the Income Tax Act. The appellant claimed that the investment in residential property was made within the stipulated period of two years from the date of transfer of the original asset. The appellant sold an office for Rs. 36 lakhs on 08/01/2008 and invested Rs. 1,06,00,000 in a residential property on 05/10/2009. The authorities below denied the exemption, which the appellant contended was incorrect. The appellant relied on various case laws, including the judgments of the Hon'ble High Court of Punjab and Haryana in CIT vs. Jagtar Singh Chawla and the Hon'ble High Court of Karnataka in CIT vs. K. Ramachandra Rao.The tribunal analyzed Section 54F and concluded that the exemption is available if the new asset is purchased within two years from the date of transfer of the original asset. The tribunal noted that the appellant purchased the new asset within the prescribed period and thus was entitled to the exemption. The tribunal cited the Karnataka High Court's judgment in K. Ramachandra Rao, which held that if the investment is made within the stipulated period, the provisions of Section 54F(4) are not attracted, even if the amount was not deposited in the capital gain account scheme before the due date prescribed under Section 139(1). Consequently, the tribunal directed the AO to re-compute the assessed income after granting the benefit of Section 54F to the appellant.2. Notice under Section 148 issued after the limitation period:The appellant contended that the reopening of the assessment was barred by limitation, as the notice under Section 148 was issued after the limitation period. The appellant argued that the CIT(A) failed to appreciate this fact. However, the tribunal found that the appellant did not place any material on record to support the contention that the reopening was time-barred. According to Section 149, a notice under Section 148 can be issued within four years from the end of the relevant assessment year unless certain conditions are met, allowing for an extension up to six years. In this case, the notice was issued on 27/03/2012 and served on 28/03/2012 for the assessment year 2008-09, which was within the permissible period. Thus, the tribunal found no merit in the appellant's argument and rejected this ground of appeal.Conclusion:The tribunal partly allowed the appeal for statistical purposes. The tribunal upheld the reopening of the assessment as being within the limitation period and directed the AO to grant the exemption under Section 54F, following the relevant judicial precedents. The order was pronounced on 10th September 2015 at Ahmedabad.