TMI Blog2013 (12) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... ss the capital gain/ loss arising therefrom or deduction u/s 54 - revision u/s 263 is valid - Decided against the assessee. CIT worked out the short term capital gains holding that the Assessee is not entitled to deduction u/s 54. He has not appreciated that for determining whether an asset is long term or short term capital asset, the period of `holding' the asset is relevant and not merely the date of registered conveyance - The period of holding of the asset by the Assessee has to be reassessed based on the facts of the case - The Assessee had incurred expenditure Rs. 17,10,000/- which may have to be added to the cost of acquisition of the asset - If this expenditure is taken into account there will not be any capital gains but only l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e course of scrutiny proceedings before the assessing officer a request was made to allow the exemption for Long Term Capital Gains u/s. 54 of the IT Act, as the capital gains were used/invested for purchase of a residential property. In support of the claim, an un- registered purchase document was produced before the assessing officer. 3. On verification of the purchase deed no 2554/05 dt.06.06.2005 of house bearing No.10-10-8, at Old Survey No. 413/C-2, T.S.No.970, Arandalpet, Near Palnadu bus stand, Narasaraopet produced, it was noticed that this property was purchased for a consideration of Rs.27,00,000/-. Out of this, an amount of Rs.25,00,000/- was paid as advance and the balance amount of Rs.2,00,000/- was to be paid at the time of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pital gain. The Commissioner of Income Tax further held as follows : "7.2. Exemption u/s 54 can be claimed against the tong term capital gains only. In the present case the gains received by the assessee are short term capital gains in nature, Hence the assessee is not entitled for any exemption u/s. 54. The Assessing Officer is directed to revise the Order passed u/s 143(3) r.w.s. 148 dated 30-12-2010 by bringing to tax the above Short Term Capital Gains and initiate Penalty proceedings u/s 271 (1)(c) of the Act. 7.3. Assuming but riot accepting for a while that the gains are long term capital gains, for the deduction u/ s 54 is to be allowable, the assessee should invest tong term capital gains for purchase or construction of a new ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 Less: Cost Acquisition including stamp duty 13,22,380 16,77,620 Less: Cost of improvement 17,10,000 Capital gain/Loss 32,380 10. The learned A.R. submitted that there is no long term or short term capital gain whatsoever since there is a loss of Rs.32,380/- in the case of the assessee. 11. We have heard both the parties and perused the materials on record. We find, from the Memo of income and the return filed, that the Assessee has not mentioned anything about capital gains or capital loss. There is also no claim for exemption u/s 54. The AO has also not dealt with any of the claim of the Assessee regarding sale of property at Somaji Guda, Hyderabad. Nothing ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... based on the facts of the case. Further even assuming that it is a short term capital asset, the Assessee had submitted that she had incurred expenditure Rs. 17,10,000/- ,supported by Engineer's certificate, which may have to be added to the cost of acquisition of the asset. If this expenditure is taken into account there will not be any capital gains but only loss on sale. This aspect has not been considered by the CIT. 13. In the circumstances, while upholding the assumption of jurisdiction u/s 263, we set aside the order of the CIT in so far as merits of the issue is concerned, and remit the matter to the files of the AO to consider the gains arising from sale of property at Somaji Guda, Hyderabad in accordance with law. To this extent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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