Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (9) TMI 1029 - AT - Income TaxApplicability of section 11(1A) - investments in new capital asset - investments out of advance of sale receipts being eligible for deduction u/s 11(1A) - Held that:- The provisions of Section 11(1A) are clearly applicable in facts and circumstances as neither the assessee has been held to be noncharitable entity nor the new assets have been held to be purchased for purposes other than charitable nor it has been held that the new assets are not qualified for such deduction. It reveals that the assessee society has sold two properties on 31.3.2010 but claiming to have received advance against these sales, the assessee has claimed to have made investments in new capital asset in form of FDs and New Building at Shalimar Garden-II, Village Pasonda to be used for running school and has claimed deduction u/s. 11(1A) out of capital gains arising on sale of assets. The case of assessee is covered squarely by the decision of Mumbai ITAT decisions in the case of Shri Ramnagar Trust vs. Third ITO (1985 (2) TMI 75 - ITAT BOMBAY-E ) and ITAT as regards investments out of advance of sale receipts being eligible for deduction u/s 11(1A). Also find that Ld. CIT(A) has rightly held that when the advance was given for new capital asset and FDs were purchased, the assessee had not received commensurate advance out of sale consideration. It is noted that when assessee paid advance of ₹ 21 Lacs for purchase of new asset, it had received only ₹ 6 lacs towards sale consideration. Similarly, when FDs were purchased for ₹ 30 Lac, it had received another sum of only ₹ 20 Lacs advance out of sale consideration. Thus only ₹ 26 Lacs could be said to have been invested out of advance received out of sale consideration. As per provisions of Section 11(1A)(a), the capital gain deemed to applied for charitable purposes would be the sum invested (Rs. 26 lacs in this case). The cost of asset sold (which is ₹ 551000/- in this case). Hence, the allowable deduction is only ₹ 20,49,000/- which the Ld. CIT(A) has rightly deleted and addition of ₹ 13,26,400/- was rightly sustained as per provisions of Section 11(1A)(a)
|