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2016 (7) TMI 1097 - ITAT MUMBAI

2016 (7) TMI 1097 - ITAT MUMBAI - TMI - Deduction u/s 54EC - short capital gain arising on sale of depreciable asset - Held that:- As decided in ITO V/s ACE Builders [2005 (3) TMI 36 - BOMBAY High Court ] the benefit of section 54E will be available to the assessee irrespective of the fact that the computation of capital gains is done either under sections 48 and 49 or under section 50. The contention of the revenue that by amendment to section 50, the long-term capital asset had been converted .....

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apital asset on which depreciation had been allowed. - Decided in favour of assessee. - I.T.A. No. 65/Mum/2015 - Dated:- 25-7-2016 - Shri Joginder Singh (JM) And Rajesh Kumar (AM) For the Appellant : Shri H M Wanare For the Respondent : None ORDER Per Rajesh Kumar, Accountant Member This is an appeal filed by the revenue and is directed against the order of the Ld. CIT(A)-31, Mumbai dt.22.10.2014 pertaining to A.Y. 2012-13. Despite of service of notice, none appeared on behalf of the assessee, t .....

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81 ITR 210) without appreciating the facts in the present case, the facts are different and distinguishable than the case law cited above. 3. The facts in brief are that the assessee, a partnership firm, filed its return of income on 28.7.2012 declaring total income of ₹ 22,45,585/-. The return was processed at Centralized Processing Centre vide order u/s 143(1) dated 19.11.2013 assessing total income at ₹ 72,29,513/- and by rejecting the deduction claimed of ₹ 49,83,928/- unde .....

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property was held by the assessee for more than three years which is not disputed but was a depreciable asset. Aggrieved by the order of the AO, the assessee referred an appeal before the ld. CIT(A), who allowed the appeal of the assessee by directing the AO to allow the deduction u/s 54EC of the Act to the tune of ₹ 49,83,928/- by observing and holding as under: 5.5. The claim of deduction u/s 54EC is allowed on transfer of a long term capital asset and it is immaterial whether the corres .....

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his view is supported by the decision of jurisdictional High Court of Bombay in the case of ITO Vs ACE Builders reported in 281 ITR 210 and therefore is the law applicable on the issue at hand to the authorities functioning within the territorial jurisdiction under the Hon'ble Court. Thus the issue, which was debatable before the cited decision of the Jurisdictional High Court, now stands clarified and the law as it stands, is against the view taken by the Assessing Officer. In view of these .....

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stment made u/s 143(1) vide order dated cannot be upheld. Accordingly, the ground raised by the appellant is allowed. 4. We have carefully perused the record available before us and heard the ld.DR. we find from the facts before us that the assessee was denied deduction u/s 54EC and now the issue before us is whether the adjustment made during processing of income tax return disallowing the appellant s claim was within the ambit of section 143(1) or not. The scope of adjustment u/s 143(1)(a) has .....

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t become a reason for absurd adjustment u/s 143(1), particularly when the appellant was given no opportunity to correct such an error since the provisions of section 139(9) are no more valid and the appellant did not get any opportunity to remove defect in the return filed. The ld. CIT(A) further observed that the direction u/s 54EC is allowed on the gain should resulting from transfer of Long Term capital asset and it is immaterial whether the corresponding gain is a short term capital gain by .....

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ted by the decision rendered in the case of ACE Builders (supra) in which the Hon ble Jurisdictional High Court has held as under : The assessee fulfilled all the conditions set out in section 54E to avail exemption, but the exemption was sought to be denied in view of fiction created under section 50. The assessee could not be denied exemption under section 54E, because, firstly, there is nothing in the section to suggest that the fiction created in section 50 is not only restricted to sections .....

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between depreciable asset and non-depreciable asset and, therefore, the exemption available to the depreciable asset under section 54E cannot be denied by referring to the fiction created under section 50. Section 54E specifically provides that where capital gain arising on transfer of a long-term capital asset is invested or deposited (whole or any part of the net consideration) in the specified assets, the assessee shall not be charged to capital gains. Therefore, the exemption under section 5 .....

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