2021 (1) TMI 158 - AT - Income Tax

Tax Tribunal remands case on Sections 54B & 54F exemptions, instructs reassessment.

The Tribunal set aside the Commissioner of Income-tax (Appeals)'s order regarding exemptions under Sections 54B and 54F, remanding the case to the ... Denial of deduction u/s. 54F - long term capital gain - HELD THAT:- Exemption u/s. 54F, we are of the opinion that the assessee has to place necessary evidence in support of the same since the order of the CIT(Appeals) is cryptic on the issue. We therefore direct the assessee to place necessary evidence before the AO and the AO shall examine the issue, whether the assessee is entitled for additional deduction u/s. 54F with regard to long term capital gain. Exemption u/s. 54B - no revised return filed by the assessee - HELD THAT:- We find that the reason for rejection by the CITA is that assessee has not filed revised return of income before the AO. The assessee relied on the order of Tribunal in the case of Rakesh Singh v. ACIT [2012 (11) TMI 503 - ITAT BANGALORE] wherein it was held that the first appellate authority could entertain new claim of assessee, though there is no revised return filed by the assessee before the AO. Whether the assessee is entitled for exemption u/s. 54B or not, should have been examined by the CIT(Appeals). However, he rejected the claim of capital gain on the reason that the assessee has not filed revised return of income by placing reliance on the judgment of Hon’ble Supreme Court in the case of Goetze (India) Ltd. [2006 (3) TMI 75 - SUPREME COURT] In our opinion, this judgment is applicable with regard to claim before the AO, and not before the first appellate authority or the appellate Tribunal. Even if there is no revised return, the assessee can claim exemption before the appellate authorities. It being so, we set aside the order of the CIT(Appeals) on this issue and remand the same to the AO with a direction to consider the claim of assessee u/s. 54B of the Act and decision afresh on merits. The assessee shall place necessary evidence in respect of the claim of deduction u/s. 54B of the Act and the same shall be examined by the AO on merits in accordance with law - Appeal of the assessee is partly allowed for statistical purposes. Issues Involved:1. Validity and correctness of the appellate order passed by the Commissioner of Income-tax (Appeals).2. Computation of long-term and short-term capital gains.3. Entitlement to exemption under Section 54B of the Income-tax Act.4. Application of the Supreme Court decision in Goetze (India) Ltd v. CIT.5. Consideration of exemption under Section 54F for the construction of house property.6. Direction to the Assessing Officer (AO) to levy tax and interest.Issue-wise Detailed Analysis:1. Validity and Correctness of the Appellate Order:The assessee contended that the appellate order dated 18.10.2019 by the Commissioner of Income-tax (Appeals)-2, Bengaluru, was arbitrary, erroneous, and contrary to the provisions of the Income-tax Act, 1961. The grounds raised were without prejudice to one another, indicating that each ground was independent and not meant to affect the others.2. Computation of Long-term and Short-term Capital Gains:The assessee argued that the Commissioner erred in confirming the AO's computation of long-term capital gains at Rs. 13,90,206 and short-term capital gains at Rs. 37,14,599. The facts revealed that the assessee sold agricultural land for Rs. 61 lakhs, resulting in a long-term capital gain of Rs. 52,85,489 after deducting the cost of acquisition. The AO granted a deduction under Section 54F of Rs. 38,95,283, bringing the taxable long-term capital gain to Rs. 13,90,206. Additionally, the AO computed the short-term capital gain at Rs. 37,14,599, which the assessee contested.3. Entitlement to Exemption under Section 54B:The assessee claimed an exemption under Section 54B of Rs. 40,95,341 for the acquisition of agricultural land against the short-term capital gains of Rs. 37,71,014 and long-term capital gains of Rs. 3,24,327. The Commissioner rejected this claim on the grounds that the exemption was not claimed in the original return or the original grounds of appeal. The Tribunal noted that the CIT(Appeals) should have considered the claim even if it was not made in the revised return, referencing the Supreme Court's decision in Jute Corpn. of India Ltd. v. CIT and the Tribunal's decision in Rakesh Singh v. ACIT.4. Application of the Supreme Court Decision in Goetze (India) Ltd v. CIT:The Commissioner applied the Supreme Court decision in Goetze (India) Ltd v. CIT, holding that the appellate authority's powers are coterminous with those of the AO. However, the Tribunal clarified that this decision pertains to claims before the AO and not the appellate authorities. The Tribunal emphasized that appellate authorities have the jurisdiction to entertain new claims, even if not raised before the AO.5. Consideration of Exemption under Section 54F:The Tribunal directed the assessee to provide necessary evidence to support the claim for additional deduction under Section 54F of Rs. 13,90,206 related to long-term capital gains. The AO was instructed to examine this evidence and determine the entitlement to the deduction.6. Direction to the AO to Levy Tax and Interest:The assessee contested the Commissioner's direction to the AO to levy tax and interest. The Tribunal did not provide a specific ruling on this issue but remanded the case to the AO for reconsideration of the claims under Sections 54B and 54F.Conclusion:The Tribunal set aside the order of the CIT(Appeals) on the issues of exemptions under Sections 54B and 54F and remanded the case to the AO for fresh consideration. The AO was directed to examine the necessary evidence and decide on the merits of the claims in accordance with the law. The appeal was partly allowed for statistical purposes.Pronouncement:The judgment was pronounced in the open court on January 4, 2021.