Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2015 (2) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (2) TMI 1380 - ITAT BANGALOREBenefit of exemption u/s.54G - Short term capital gain - as claimed that the capital gain is not chargeable to tax and is exempt u/s.54G - whether the property transferred by the Assessee was a capital asset, being machinery or plant or building or land or any rights in building or land used for the purposes of the business of an industrial undertaking situate in an urban area? - HELD THAT:- Explanation to section 54G(1) of the Act expressly provides that having regard to the population, concentration of industries, need for proper planning of the area and the other factors, the Central Government by general or special order declared to be an urban area for the purpose of sub-section(1) of section 54G of the Act. CBDT has issued notification dated 27/04/2006 for the purpose of exemption of capital gains u/s 54G in conformity to the Explanation above, declaring Bangalore as urban area. Such notification as we have already seen has been held by the Hon’ble Karnataka High Court [2005 (5) TMI 690 - KARNATAKA HIGH COURT] as applicable from the date of notification and has no retrospective effect. In view of the legal position mentioned above, the assessee’s contention is not tenable. Bangalore was notified as urban area - assessee raised another issue that u/s 280ZA of the Act, which was a section providing for relief to Assessees who relocate their industries to Backward area, Bangalore was notified as urban area for the purpose of giving relief for shifting the industry from Bangalore to other backward area - Section 280ZA of the Act was introduced by the Finance Act 1965 with effect from 01/04/1965 and omitted by the Finance Act 1987 with effect from 01/04/1988. Section-280Z provided for relief by way of reduction of a fraction of tax on capital gains arising from the sale of the assets at the old place from where an industrial undertaking is shifted in terms of the scheme of the Central Government announced for this purpose. In order to be eligible for the concession specified conditions have to be fulfilled. Though the expression industrial ‘undertaking’ has not been defined in this chapter, it should bear the meaning assigned to it in section 80J of the Act formerly section 84 of the Act. CBDT has issued notification urban areas u/s 280Y(d) vide Notification No.S.O.3419 dated 22/09/1967 thereby Bangalore Corporation is declared as “urban areas” for the purpose of XXIIB of the Act. Moreover, this notification is applicable for tax credit certificates for shifting of industrial undertaking from urban areas u/s 280Y(d) r.w.s. 280ZA of the Act and same cannot be held to be applicable for exemption u/s 54G of the Act. As also seen that the Hon’ble High Court of Karnataka has held that Notification dated 27.10.2006 cannot apply retrospectively. In such circumstances, we are of the view that the ld. CIT(Appeals) was justified in upholding the order of the Assessing Officer denying the benefit of section 54G to the assessee. Assessee filed before us Notification No.9447 dated 6.1.1994. The said Notification was issued by the Central Govt. notifying areas which have to be regarded as urban areas for the purpose of section 2(1A) & 2(14) of the Act, which defines agricultural income and capital assets respectively. It was pointed out by him that municipal area of Bangalore and area upto a distance of 8 Kms. from municipal limits of Bangalore in all directions have been notified as urban areas. According to him, definition of urban area cannot be different for the purpose of section 54G. We are unable to accept the aforesaid argument of the ld. counsel for the assessee. The benefit conferred u/s. 54G of the Act is a specific benefit. Explanation below section 54G(1) of the Act contemplates notification by the Central Government for the purpose of allowing deduction u/s. 54G of the Act. The Notification issued under a different provision of the Act which is meant for different purpose cannot be applied while dealing with the provision of section 54G of the Act. We therefore reject the argument of assessee.
|