Appellant wins appeal on capital gains calculation dispute, Tribunal rules in favor.

The appellant's excess deduction claim under section 10 of the Income Tax Act was partially disallowed by the Assessing Officer, leading to a reopening of the case. Additionally, the claim of deduction under section 54 was disallowed by the Principal Commissioner of Income Tax, who deemed the gain as Short Term Capital Gain instead of Long Term Capital Gain. The appellant appealed, arguing that the holding period for capital gains should be calculated from the agreement date in 2009. The Tribunal sided with the appellant, considering the gain as Long Term Capital Gain and allowing the appeal, quashing the Principal Commissioner's order.

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Issues:
The judgment involves the issue of excess deduction claimed under section 10 of the Income Tax Act and the disallowance of deduction claimed under section 54 of the Act.

Excess Deduction Claimed u/s 10:
The appellant, an individual salaried employee, filed a return of income for the AY 2015-16 admitting a total income of Rs. 20,27,160/-. The Assessing Officer (AO) observed an excess claim of Rs. 13,00,147/- u/s 10 of the Act, leading to reopening of the case u/s 148. The appellant responded by filing a revised return, but the AO still found an excess claim of Rs. 6,76,342/-, which was added to the total income. The Principal Commissioner of Income Tax (Pr. CIT) u/s 263 noticed a claim of deduction u/s 54 for Rs. 18,11,240/-, arising from the sale of property. The Pr. CIT concluded that the gain should be taxed as Short Term Capital Gain (STCG) instead of Long Term Capital Gain (LTCG) due to the holding period. Consequently, the claim u/s 54 was disallowed as it is admissible only on LTCG. The Pr. CIT directed the AO to recompute the income. The appellant appealed against this order.

Disallowed Deduction Claimed u/s 54:
The appellant contended that the date of agreement for property purchase in 2009 should be considered for calculating the holding period for capital gains. The Pr. CIT argued that since the property was registered in 2013 and sold in 2015, the gain should be treated as STCG. The appellant relied on the decision of the Madras High Court in CIT vs. S.R. Jeyashankar [2015] 373 ITR 0120, emphasizing the importance of the agreement date. The Tribunal found that the Pr. CIT ignored the agreement date and held that the gain should be treated as LTCG. Citing Circular No.471, the Tribunal supported the appellant's argument, quashed the Pr. CIT's order, and allowed the appeal.

Separate Judgment:
The appellate tribunal, consisting of Hon'ble Judicial Member Shri Duvvuru Rl Reddy and Hon'ble Accountant Member Shri S Balakrishnan, pronounced the judgment on 31st March 2023.

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