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2016 (9) TMI 1201 - ITAT MUMBAI

2016 (9) TMI 1201 - ITAT MUMBAI - TM - Disallowance of Exemption under section 54F - Held that:- Since the assessee in the case on hand has utilized the amount of capital gains in investing in the purchase of a residential property (flat) within the extended period as stipulated under section 139(4) of the Act for A.Y. 2008-09, the assessee is entitled for exemption under section 54F of the Act. - Disallowance under section 14A - Held that:- We have heard the rival contentions of both the pa .....

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e said disallowance by the assessee is ₹ 1,28,247/- as given at para 5.1 (supra). The AO is directed to verify the veracity of the assessee’s claim and workout the correct disallowance under section 14A r.w. Rule 8D(2)(iii) after affording the assessee adequate opportunity of being heard. - ITA No. 6204/Mum/2014 - Dated:- 17-8-2016 - Shri Jason P. Boaz, Accountant Member and Shri Sandeep Gosain, Judicial Member For The Appellant : Shri Naresh Kumar For The Respondent : Shri M.V. Rajguru OR .....

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2013 wherein the assessee s income was determined at ₹ 6,15,95,202/- in view of the following additions/disallowances; - (i) Recomputation of long term capital gain (LTCG) on denial of exemption claimed under section 54F of the Act ₹ 5,90,99,080/- (ii) Disallowance under section 14 ₹ 2,56,495/- 2.2 Aggrieved by the order of assessment for A.Y. 2008-09 dated 11.03.2013, the assessee preferred an appeal before the CIT(A)-34, Mumbai challenging the aforementioned two additions/dis .....

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961 ( the Act ). It is prayed that the learned Assessing Officer be directed to grant the benefit of section 54F of the Act to the Appellant. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A)-34 has erred in disallowing an amount of ₹ 2,56,495/- under section 14A of the Act. 3. The consequent interest and penalty demanded under section 271(1)(c) be dropped. It is prayed that the Learned Assessing Officer be directed to drop the penalty proceedings and quash th .....

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flat) at Emporis , Bandra, Mumbai on 07.08.2008. The transfer deed/agreement for purchase of the property was dated 07.08.2008 when payment of ₹ 5,17,00,000/- was made. The remaining amounts were paid from 01.08.2008 onwards. The AO examined whether the consideration received was utilised before the date of furnishing the return of income under section 139(1) and if not whether the same was deposited in the specified capital gains account before due date for filing of return as per provisi .....

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ied by the central government before the due date for filing the return of income under section 139(1) of the Act, i.e. in the case before 31.07.2008. Since the factual position remained that only ₹ 5 lakhs of the consideration was invested by the assessee towards the purchase of the flat upto 31.07.2008, the due date for filing the return of income for A.Y. 2008-09, the AO recomputed the LTCT of the assessee at ₹ 5,90,99,080/- after denying the assessee s claim for exemption of S .....

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ned order of the learned CIT(A) in upholding the AO s action in recomputing the LTCG on sale of shares and denying the assessee the exemption claimed under section 54F of the Act. Before us, the learned A.R. for the assessee reiterated the facts as submitted before the authorities below, that the extended period for filing the return of income under section 139(4) of the Act has to be considered for the purpose of utilization of the capital gains for claiming exemption under section 54f of the A .....

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Galaiya vs. ITO (2012) 24 taxmann.com 11(Mum) and wherein on similar facts the issue has been decided in favour of the assessee. In this regard the learned A.R. submitted that the assessee s case was squarely covered, inter alia, by the following judicial pronouncements: - (i) CIT vs. M/s. Jagriti Agarwal (2011) 339 ITR 610 (P&H) (ii) CIT vs. Rajesh Kumar Jalan (2006) 296 ITR 374 (Gau) (iii) Anil Kumar Omkar Singh Aurora (ITA No. 4648/Mum/2013 dated 06.11.2013 (iv) Fatima Bai vs. ITO (2009) .....

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perused and carefully considered the material on record. From an appreciation of the material on record the undisputed fact in the case on hand is that the assessee purchased the new house property (i.e. flat) before expiry of the period for filing the return under section 139(4) of the Act. The only point of dispute for our consideration is whether since the assessee failed to deposit the unutilized portion of the capital gains arising on sale of the shares in the capital gains account scheme n .....

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Jagriti Aggarwal (2011) 339 ITR 610 (P&H) wherein their Lordships have held that the provisions of section 139(4) is not an independent provision, but is related to the time contemplated under section 139(1) of the Act. Accordingly, 139(4) of the Act has to be read alongwith subsection (1) of section 139 and the due date for furnishing the return of income under section 139(1) is subject to the extended period under section 139(4) of the Act has to be considered for the purpose of utilizatio .....

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a vs. ITO (2012) 24 taxmann.com 11 (Mumbai ITAT) and Shri Anil Kumar Omkar Singh Aurora vs. ITO (ITA No. 4648/Mum/2013) have followed the aforecited decisions of the Hon'ble Punjab & Haryana High Court and Hon'ble Gauhati High Court to hold that the assessee was entitled to be allowed deduction under section 54F of the Act for utilisation of sale consideration/capital gains for investment in the purchase of new residential property within the period specified under section 139(4) of .....

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tion 54F of the Act. We therefore reverse the orders of the authorities below on this issue and consequently allow ground No. 1 of the assessee s appeal. 5. Ground No. 2 - Disallowance under section 14A of the Act 5.1 In this ground the assessee has challenged the disallowance of ₹ 2,56,495/- made by the authorities below under section 14A of the Act. Before us, the learned A.R. for the assessee submitted that the disallowance has been made under section 14A r.w Rule 8D(2)(iii). According .....

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