TaxTMI 
TaxTMI 
2020 (10) TMI 712
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....he assessee and his wife, Smt. Malathi Prakash sold a property in which they had half share each. The assesses filed their returns of income declaring long term capital gain on sale of property at Allalsandra Village, Yelahanka Hobli, Bangalore North Taluk [hereinafter referred to as 'the property']. 3. Both the assesses claimed deduction u/s. 54F of the Act which was allowed in the assessments completed u/s. 143(3) of the Act. By the orders impugned in these appeals, the Pr. CIT set aside the orders of AO allowing deduction to the assesses u/s. 54F of the Act and also on the issue of quantum of capital gain for de novo assessments by the AO in the light of observations made in the impugned orders. 4. According to the assessee, since in the impugned orders, the AO was directed to de novo assessments on the computation of long term capital gain and deduction u/s. 54F of the Act, the assessee's earlier tax consultant advised the assesses that the issues can be agitated in the order to be passed afresh by the AO u/s. 143(3) r.w.s. 263 of the Act. Later on, the AO passed the order u/s. 143(3) r.w.s. 263 of the Act dated 26.12.18 in which the issues raised in the 263 order were held a....
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....5,00,000/-. The Share of each of Assessees was Rs. 87,50,000. The description of the property in the sale deed in the property schedule was that the property that was sold had an asbestos sheet roof house measuring 200 Sq.ft. built with brick and cement mortar in hollow blocks. 8. The Assessee and his deceased wife purchased two properties as follows:- (i) Flat No.302 & 303, Pooja Apartments, Vittal Mallya Road, Bangalore, under a sale deed dated 9.5.2012 for a sale consideration of Rs. 1,50,00,000 + registration and Stamp duty which was around Rs. 1,50,590 and Rs. 8,40,000 respectively. (hereinafter referred to as Flat at Pooja Apartment) Total investments = 1,59,90,590 (Rs. 1,50,00,000+1,50,590+8,40,000) (ii) Flat No.1101 in building known as High Point Apartments in Palace Road, Bangalore under a sale deed dated 17.10.2012 for a sale consideration of Rs. 1,10,00,000 + registration and stamp duty charges of Rs. 66,000 and Rs. 1,10,620 respectively.(hereinafter referred to as flat at High Point Apartment) Total investment = Rs. 1,11,76,620 (Rs. 1,10,00,00+66,000+1,10,620) 9. M.Lokesh filed return of income computing LTCG on sale of the property as follows:- (i) Cos....
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....: (a) the assessee, - (i) owns more than one residential house, other than the new asset, on the date of transfer of the original asset; or 13. The Pr. CIT in the impugned order gave three findings:- (i) The cost of watchman salary was not an allowable deduction u/s.48 of the Act as it was neither of acquisition or cost of improvement or expenses incidental to the transfer of the capital asset. If the watchmen salary is excluded from computation of LTCG then the LTCG would be Rs. 1,64,21,161/-. (ii) U/s.54F of the Act if the value of investment in the new asset is less than the sale consideration received on transfer, then the deduction u/s.54F of the Act had to be allowed only on proportionate basis. In this regard the CIT took the investment in flat at pooja apartment as new asset on which deduction u/s.54F was claimed by both the Assessees and gave a finding that the investment in the new asset was Rs. 1,59,90,590 and the capital gain was Rs. 1,64,21,161. The proportional deduction to be allowed u/s.54F was only Rs. 1,50,04,803 and consequently there would be a taxable capital gain on sale of the property of Rs. 14.16,358 (Rs. 1,64,21,161 - 1,50,04,803) (iii) The CIT ....
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....mely :- (i) expenditure incurred wholly and exclusively in connection with such transfer; (ii) the cost of acquisition of the asset and the cost of any improvement thereto: He submitted that Under Section 54 of the Act, if capital gain arises from the transfer of a long-term capital asset, being buildings or land appurtenant thereto, and being a residential house, the income of which is chargeable under the head "Income from house property" (hereafter in this section referred to as the original asset), and the assessee has within a period of one year before or two years after the date on which the transfer took place (a) purchased, or (b) has within a period of three years after that date constructed, a residential house; then, capital gain will be exempt to the extent of Long-Term Capital Gains OR to the extent of amount invested in the purchase or construction of the new residential house, whichever is less. 16. He submitted that u/s.54F of the Act, if capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter referred to as the original asset), and the assessee has, (i) within a period of one year before or (ii) two....
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....venue. His submission was that all issues sought to be agitated by the learned counsel for the Assessee are not relevant to the present appeal. 18. We have given a very careful consideration to the rival submissions. From a perusal of the orders of assessment in the case of both the Assessee's, it appears to us that before concluding the assessment proceedings the AO did not make any enquiries with regard to the deduction u/s.54F of the Act. However in the note attachment to the order of assessment, there is a reference to the claim of the Assessee having been examined u/s.54 of the Act and the factum of having verified all sale deeds and purchase deeds. Since the office note is not clear about what enquiries the AO made before concluding the assessment, we have to conclude that the findings of the Pr.CIT that the AO has not made adequate and proper enquiries before concluding the Assessment, is correct. The ld. Counsel for the assessee could not substantiate before us as to how the AO made enquiries on this issue before concluding the assessment, except by pointing out that all facts were laid before the AO and it can be presumed that he had taken note of this aspect while concl....
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....ction under old section 33B and the new section 263 is easier to fulfill. The reason is that it is not the Income Tax Officer but a superior Officer like the Commissioner who is exercising a revisional jurisdiction suo motu there under. The superior officer could be trusted with a larger power. The only requirement for the exercise of this power is that the Commissioner should consider that the order passed by the. Income Tax Officer is "erroneous in so far as it is prejudicial to the interests of the Revenue." What is the meaning of "erroneous" in this context? It was argued for the assessees by Shri G. C. Sharma that the word "erroneous" means that the order must appear to be wrong on the face of it. In other words, he equated the "error" with "error of law apparent on the face of record" which is a well-known ground for the review of a quasijudicial order by this Court under Article 226. We are unable to agree with this interpretation. The intention of the legislature was to give a wide power to the Commissioner. He may consider the order of the Income Tax Officer as erroneous not only because it contains some apparent error of reasoning or of law or of fact on the face of i....
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....y the assessed from different parties on her investments. Notwithstanding these defects the Income Tax Officer did not investigate into the various sources but assessed the assessed on a total income of Rs. 9037.00. The inquiries made by the Commissioner revealed that the assessed did not reside or carry on business at the address given in the return. The Commissioner was also of the view that the Income Tax Officer was not justified in according the initial capital, the sale of ornaments, the income from business, the investments, etc.. without any inquiry or evidence whatsoever and that the order of assessment was erroneous and prejudicial to the interests of the Revenue. The High Court held that there were materials to justify the Commissioner's finding that the order of assessment was erroneous insofar as it was prejudicial to the interests of the Revenue. Shri Sharma tried to distinguish this decision on the ground that the address of the assessed in that case was given incorrectly. The decision of the High Court and that of the Supreme Court were not, however, based on that ground at all. On the contrary, the Supreme Court followed their previous decision in Rampyari ....
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....correct, the correct provisions of law under which deduction has to be allowed should be the basis of completion of assessment. In the present case, if the claim of the Assessee is considered as one made u/s.54 of the Act, then the claim of the Assessee for deduction should be considered under that statutory provision. The difference between a claim u/s.54 and 54F of the Act is as follows:- Section 54 Section 54F To claim full exemption the entire capital gains have to be invested. To claim full exemption the entire sale receipts have to be invested. In case entire capital gains are not invested - the amount not invested is charged to tax as long-term capital gains. In case entire sale receipts are not invested, the exemption is allowed proportionately. [Exemption = Cost the new house x Capital Gains/Sale Receipts] Assessee should not own more than one residential house at the time of sale of the original asset. 21. For Sec.54 of the Act to apply, the asset that was transferred should be a residential house. From the description of the property in the sale deed it appears that there was a house. As to whether the same can be said to be a residential house for the p....