TMI Blog2017 (11) TMI 1126X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax. Therefore, we have no hesitation in holding that the order passed under section 263 is not sustainable on this ground alone. The explanation given by the assessee in this regard vide its reply submitted to the Commissioner of Income-tax in the earlier proceeding and even in the present proceeding, we find is plausible and reasonable. A bare reading of sections 54 and 54F of the Act nowhere states that the surplus remaining after claiming deduction under section 54/54F on account of construction of house property undertaken in a year, would not be allowed set off against long-term capital gain earned in the succeeding year. There is no such specific bar provided in the section. The learned Departmental representative also agreed to this. Therefore, as long as the conditions specified under section 54F are fulfilled, the interpretation and understanding of section as taken by the assessee and also by the earlier Commissioner of Income-tax cannot be said to be perverse and grossly against law. Therefore, the argument of the learned Departmental representative that an error would be allowed to be perpetuated by setting aside the present order of the learned Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had shown long-term capital gains amounting to ₹ 35,13,572 during the impugned year and has reduced therefrom a sum of ₹ 15,06,457 which was claimed as deduction under section 54F of the Act. The learned Commissioner of Income-tax found from the records that in the preceding assessment year also, i. e., the assessment year 2004-05 the assessee had earned long-term capital gains and had claimed deduction under section 54 and section 54F of the Act. The assessee, he found, had started the construction of the house property in the assessment year 2004-05 and had claimed deduction under section 54F on the capital gains computed for the said assessment year, i. e., the assessment year 2004-05. It was further noticed that the assessee had continued to take exemption of the same construction in the assessment year 2005-06 also to the extent of ₹ 15,06,457, which claim had not exhausted in the preceding year. The learned Commissioner of Income-tax found the aforesaid claim to be ineligible as per the provisions of law and, therefore, issued notice under section 263 of the Act for reviewing the order passed by the Assessing Officer. The contents of the notice issued to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The deduction of ₹ 15,06,457 claimed under section 54F in this year pertains to the long-term capital gains transaction conducted in the assessment year 2004-05. The original assets were transferred in the assessment year 2004-05. The cost of investments in the new assets in the assessment year 2004-05 was already more than the capital gains arising on account of original assets of the assessment year 2004-05. The excess investments made in the new asset in the assessment year 2004-05 could not he carried forward (like the unabsorbed business loss/depreciation) to the next year. The sum of ₹ 15,06,457 is in regard to the new asset of the assessment year 2004-05 where the investments were already more than the capital gains arising out of original assets in the assessment year 2004-05. The deduction of ₹ 75,06,457 made in the assessment year 2005-06 is against other assets (not the original assets of the assessment year 2004-05) which were sold in this year and that too is not against 'net consideration' but against capital gains arrived at after adjustments of indexed costs. The deduction of ₹ 15,06,457 against the long-term capital gains o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e contents of the aforesaid notice are as under : 'On going through your assessment records for the assessment year 2005-06, it is seen that you have claimed exemption of ₹ 15,06,457 under section 54F out of long-term capital gain of ₹ 35,13,572. The sum of ₹ 15,06,457 is pertaining to transaction of long-term capital gain of the previous year relating to the assessment year 2004-05. Thus a sum of ₹ 15,06,457 is in regard to the original assets which were sold during the assessment year 2004-05 and in that assessment year the investments already exceeded the capital gain arising out of sale of original assets. The deduction of ₹ 15,06,457 claimed for the assessment year 2005-06 is against the other original assets which were sold in the assessment year 2005-06. The deduction of ₹ 15,06,457 claimed under section 54F in the return of income for the assessment year 2005-06 is not correct on the facts and law. From the above facts it is apparent that the assessment order allowing exemption of ₹ 15,06,457 under section 54F framed by the Income-tax Officer, VI(1) Ludhiana vide order under section 143(3) dated June 25, 2007 is errone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investments again as the assessee has met with all the requirements provided under section 54F but it can never be the intention of the legislation so the assessee claimed deduction only on the exceeded investments. Thus the deduction claimed in the return is correct on facts and law and the assessment order allowing deduction is correct. There are some judgments also on the basis of which it is very much clear that the powers under section 263 should not be used in the case present : The Assessing Officer had taken all the details of assessment year 2004-05 which has been placed on file so the Assessing Officer rightly interpreted the provisions of section 54F and allowed the exemption. So the judgment of the Income-tax Appellate Tribunal Mumbai Bench [2007] 162 Taxman 39 (Mag) is applicable to this case. The judgment of the Punjab and Haryana High Court in CIT v. Vinod Kumar Gupta [2007] 165 Taxman 225 (P H) decided on February 28, 2007, is also relevant in which the Assessing Officer while framing the assessment treated a receipt, to be a capital receipt. The hon'ble High Court held merely because there was a second opinion possible on the same facts. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent case was that the assessee had wrongly claimed and been allowed deduction under section 54F of the Act from the long-term capital gain earned by it on account of construction of house undertaken by it to the extent of ₹ 15,06,457. The reasoning being that the deduction on account of purchase of land and construction undertaken on the said land, under sections 54 and 54F, had been claimed and been allowed to the assessee in the preceding assessment year, i. e., assessment year 2004-05. The contention of the Revenue is that once the deduction under sections 54 and 54F of the Act has been claimed on account of house constructed against capital gains earned during the year, any surplus remaining therefrom cannot be carried over to the next year and claimed as deduction from capital gain earned in the succeeding year. 10. Clearly and undisputedly this issue was examined by the Commissioner of Income-tax in proceeding initiated under section 263 of the Act vide his notice dated December 14, 2007 and due reply filed by the assessee, after considering which and after being satisfied by which the proceedings were dropped. The present proceeding having been initiated on the iden ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
