TaxTMI 
TaxTMI 
2022 (4) TMI 971
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....n exemption u/s 54E of the IT Act, 1961. 2. On the facts and circumstances of the case and in law the ClT(A) has erred in restricting th disallowance u/s 14A read with Rule 8D from Rs. 4,60,344/- made by the AO to Rs. 66,110/-. 3. The appellant prays that the order of 01(A) or the above ground be set aside and that of Assessing Officer be restored." 3. At the outset, we find that the present appeal by the Revenue is delayed by 2 days. Shri Hoshang B. Irani, the learned Departmental Representative ("learned D.R.") submitted that the delay of 2 days may be condoned in the interest of justice. On the other hand, Shri Madhur Agarwal, learned Counsel appearing for the assessee did not object to condonation of delay in filing the present appeal and submitted that the issues raised in Revenue's appeal are covered in favour of assessee by decisions of Hon'ble Jurisdictional High Court. In view of the above, we condone the delay of 2 days in filing the present appeal and we hear the appeal on merits. 4. The assessee is engaged in the business of Consultancy Services and Forex Dealers. During the year under consideration, the assessee has shown income from business an....
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....ssessing Officer also held that the decision of the Hon'ble Jurisdictional High Court in ACE Builders Pvt. Ltd. (supra) is not applicable to the facts of the present case as the said decision pertains to section 54E of the Act. 7. In appeal before the learned CIT(A), the assessee submitted that during the year under consideration buildings forming part of block of assets on which depreciation was claimed were sold for a total consideration of Rs. 3 crores. Out of these buildings, the assessee purchased one building during the year under consideration, which was also sold as part of the block of assets, and thus the same qualifies as short term capital asset and the gain on sale of that building would only be the short term capital gain, whereas, on sale of remaining depreciable assets forming part of block of assets, capital gain is in the nature of long term capital gain as those assets were held for more than 36 months. Accordingly, the tax benefit available to long term capital asset under section 54E, 54EA, 54F of the Act and set-off of unabsorbed long term capital loss against long term capital gain would continue to be available under section 74 of the Act. In support ....
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....e considered the rival submissions and perused the material available on record. We find that the Hon'ble Jurisdictional High Court in ACE Builders Pvt. Ltd. (supra), while holding that section 50 of the Act is a deeming provision and the fiction created under the section is confined to computation of capital gain only and this section cannot convert long term capital asset into short term capital asset, observed as under:- "25. In our opinion, the assessee cannot be denied exemption under section 54E, because, firstly, there is nothing in section 50 to suggest that the fiction created in section 50 is not only restricted to sections 48 and 49 but also applies to other provisions. On the contrary, section 50 makes it explicitly clear that the deemed fiction created in subsections (1) and (2) of section 50 is restricted only to the mode of computation of capital gains contained in sections 48 and 49. Secondly, it is well established in law that a fiction created by the Legislature has to be confined to the purpose for which it is created. In this connection, we may refer to the decision of the Apex Court in the case of State Bank of India v. D. Hanumantha Rao [1998] 6 S....
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....ules, 1962 ("the Rules"). 15. The brief facts of the case pertaining to this issue as emanating from the record are: During the year under consideration, the assessee earned income of Rs. 66,110, which was claimed as exempt under the Act. The assessee also suo-motu disallowed expenditure to an extent of Rs. 64,315, for earning the exempt income. During the course of assessment proceedings, the assessee was asked to furnish the details of exempt income as well as the details of expenditure incurred or attributable for earning the same. In reply, the assessee submitted the working of suo- motu disallowance under section 14A of the Act at Rs. 64,315. The Assessing Officer vide order dated 28.12.2016, did not agree with the submissions of the assessee and made disallowance of Rs. 3,96,029, under section 14A r/w rule 8D of the Rules for earning of exempt income. 16. In appeal before the learned CIT(A), the assessee submitted that during the year under consideration, it has interest free funds aggregating to Rs. 14.93 crores, which were utilized for making investments aggregating to Rs. 1.46 crores which resulted in tax free income and, therefore, no disallowance under section 14A ....