TaxTMI 
TaxTMI 
2017 (11) TMI 1126
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....the assessee against the order passed by the Commissioner of Income-tax under section 263 of the Act in I. T. A. No. 667/Chd/2010. I. T. A. No. 667/Chd/2010 3. At the outset, it may be pointed out that the present appeal was dismissed in limine for want of prosecution vide order dated June 10, 2013 but was thereafter called in consequence to a miscellaneous application filed by the assessee, vide order of the Income-tax Appellate Tribunal dated October 21, 2016 in M. A. No. 11/2016. In pursuance of the said order, the case was fixed for hearing before us. 4. The facts of the present case are that initially the assessment under section 143(3) of the Act was passed in the case of the assessee for the impugned assessment year i.e., the assessment year 2005-06 vide order dated June 25, 2007. Thereafter on a perusal of the assessment record, the learned Commissioner of Income-tax found that the order passed by the Assessing Officer was erroneous causing prejudice to the interests of the Revenue since the assessee had been incorrectly allowed the claim of exemption of long-term capital gains under section 54F of the Act to the extent of Rs. 15,06,457. The learned Commissioner of Incom....
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....ear 2005-06 against the long-term capital gains arising out of sale of new assets has made the following deductions : Long-term capital gains after indexed cost 35,13,572 Less : Exemption under section 54F Investment as per the last return in residential 15,65,076 Add : Construction during the year 2004-05 1,42,108 Add : Construction during the year 2005-06 3,02,590 20,09,774 Less : 5,03,317 15,06,457 20,07,115 The deduction of Rs. 15,06,457 claimed under section 54F in this year pertains to the long-term capital gains transaction conducted in the assessment year 2004-05. The original assets were transferred in the assessment year 2004-05. The cost of investments in the new assets in the assessment year 2004-05 was already more than the capital gains arising on account of original assets of the assessment year 2004-05. The excess investments made in the new asset in the assessment year 2004-05 could not he carried forward (like the unabsorbed business loss/depreciation) to the next year. The sum of Rs. 15,06,457 is in regard to the new asset of the ....
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....view by the Commissioner of Income-tax on the same issue earlier also and after considering the reply filed by the assessee the proceeding initiated under section 263 of the Act had been dropped by the Commissioner of Income- tax. The learned counsel for the assessee drew our attention to the following documents to substantiate its above contention : "(i) Copy of the notice dated December 14, 2007 issued by the Commissioner of Income-tax-III, Ludhiana placed at paper book page No. 1. The contents of the aforesaid notice are as under : 'On going through your assessment records for the assessment year 2005-06, it is seen that you have claimed exemption of Rs. 15,06,457 under section 54F out of long-term capital gain of Rs. 35,13,572. The sum of Rs. 15,06,457 is pertaining to transaction of long-term capital gain of the previous year relating to the assessment year 2004-05. Thus a sum of Rs. 15,06,457 is in regard to the original assets which were sold during the assessment year 2004-05 and in that assessment year the investments already exceeded the capital gain arising out of sale of original assets. The deduction of Rs. 15,06,457 claimed for the assessment year 2005-06 is....
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....l the requirements provided under section 54F and claimed deduction under section 54F. There is noth ing in the section which bars the assessee to claim the deduction regarding exceeded investment of earlier year provided under section 54F regarding claiming of exemption are not applicable to the assessee. On a plain reading of section 54F it seems that the assessee is enti tled to claim exemption on full investments again as the assessee has met with all the requirements provided under section 54F but it can never be the intention of the legislation so the assessee claimed deduction only on the exceeded investments. Thus the deduction claimed in the return is correct on facts and law and the assessment order allowing deduction is correct. There are some judgments also on the basis of which it is very much clear that the powers under section 263 should not be used in the case present : The Assessing Officer had taken all the details of assessment year 2004-05 which has been placed on file so the Assessing Officer rightly interpreted the provisions of section 54F and allowed the exemption. So the judgment of the Income-tax Appellate Tribunal Mumbai Bench [2007] 162 Taxman 39....
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....e case of Distributors (Baroda) P. Ltd. v. Union of India [1985] 155 ITR 120 (SC). 9. We have heard the contentions of both the parties and perused the orders of the authorities below. The issue and the error as per the learned Commissioner of Income-tax which had occurred in the order of the Assessing Officer which required initiation of review proceedings in the present case was that the assessee had wrongly claimed and been allowed deduction under section 54F of the Act from the long-term capital gain earned by it on account of construction of house undertaken by it to the extent of Rs. 15,06,457. The reasoning being that the deduction on account of purchase of land and construction undertaken on the said land, under sections 54 and 54F, had been claimed and been allowed to the assessee in the preceding assessment year, i. e., assessment year 2004-05. The contention of the Revenue is that once the deduction under sections 54 and 54F of the Act has been claimed on account of house constructed against capital gains earned during the year, any surplus remaining therefrom cannot be carried over to the next year and claimed as deduction from capital gain earned in the succeeding yea....