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2014 (1) TMI 601 - AT - Income TaxEligibility for exemption u/s 54EC - taxability of advance - Held that:- Under section 2(47)(v), if the possession was handed over as part performance of the agreement, then, there is a "transfer" within the meaning of section 2(47) of the Income-tax Act, even though there may not be a "transfer" under the common law - The assessee, by her letter dated 26-12-2008 admits that as on 31-03-2006 she was the owner of the property - It is clear that the possession was not handed over on 01-02-2006 and it was handed over only on 16-06-2006 - The transfer of property took place only in the assessment year 2007-08 and not in 2006-07 Since it was an advance relatable to the capital asset it was not taken as income - This advance shall be adjusted when the property would be transferred and the capital gain computed - The advance could be adjusted against the purchase price when the transfer of the property is taken place, i.e. in the year under consideration. Section 54EC provides for exemption in respect of capital gain arising from transfer of a long term capital asset if the same was invested at any time within a period of six months after the date of transfer of the capital asset - The investment of Rs.20 lakhs was made in the financial year 2006-07, i.e. before the date of transfer - The lower authorities have rightly found that the assessee is not entitled for exemption u/s 54EC of the Act - Decided against assessee. Improvement cost - Held that:- The power of the CIT(A) is co-terminus with that of the assessing officer, therefore, the powers exercisable by the assessing officer can also be exercised by the CIT(A) - The CIT(A) restricted the cost of improvement to Rs.5 lakhs instead of Rs.10 lakhs allowed by the assessing officer - When the income of the assessee is increased, he has to give a notice of enhancement and seek the comments / response from the assessee as required u/s 251(2) of the Income-tax Act - The Tribunal is of the considered opinion that the CIT(A) is not justified in increasing the income by restricting the cost of improvement without issuing a notice of enhancement. However, this is a rectifiable defect - The issue is set aside for fresh adjudication.
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