By Mr. Ajay R. Singh & Mr. Rahul R. Sarda, Advocates

1. (a) Revision of return – After due date – Whether permissible – Sec. 139(5). (b) Consistency – Claim accepted in earlier and later years – Cannot be rejected in the current year.

(a) The AO disregarded the claim of deduction of STT paid by the assessee in the revised return on the ground that the revised return was filed beyond the due date prescribed u/s 139(5). On appeal, the CIT (A) accepted assessee’s revise return. The Tribunal held that the AO had disallowed the relief to the assessee only on the technical ground of delay in filing the revised return and that the AO had to assess the correct income of the assessee on the basis of the provisions of the Act and in case if the assessee inadvertently had offered the higher income, the same could not be taxed by taking excuse of technicalities. Even otherwise there is no restriction on the jurisdiction and the power of appellate authority to consider a fresh plea in view of the judgment of Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 (SC). Therefore, the Revenue’s appeal was dismissed and revised return was accepted.

(b) The AO has disallowed the depreciation and expenses in respect of luxury boat owned by the assessee on the ground that the same are personal in nature. On appeal, the Ld. CIT(A) has allowed the claim of the assessee on the ground that the claim of the assessee was allowed in the earlier years as well as in the subsequent years and therefore the same are to be allowed as business expenditure. Held, in both earlier and later years, assessee’s claim was allowed during assessment u/s 143(3) and therefore in the absence of change in facts and circumstances, AO should maintain rule of consistency.

ACIT v. M/s R. T. Exports Ltd., ITA No. 4468/M/2012 dt. 15/05/2015 (ITAT Mumbai) (

R.T. Exports Ltd.pdf

2. Reassessment – Set off of long term capital loss against short term capital gains – Issue examined in original assessment proceedings: Sec 147

The assessment was reopened after four years on the ground that the assessee had set off long term capital loss against short term capital gains. The assessee objected to the reopening on the ground that during the original assessment proceedings, all details were disclosed and that there was no failure on part of the assessee in doing so and that there was no allegation to the contrary in the recorded reasons. The Tribunal observed that the impugned set off was brought to the notice of the AO by way of a note to the computation of income filed with the return of income which meant that when the assessment was made originally u/s. 143(3) of the Act, the AO has examined this issue as was evident from the assessment order placed on record and it was only after examining the details, the AO has allowed the set off of brought forward long term capital loss from short term capital gains. Hence, the order of the CIT (A) quashing the reassessment was upheld.

DCIT v. M/s Concast (India) Ltd. ITA No. 4577/M/2013 dated 20/05/2015, AY 2004-05 (Mumbai ITAT) (

Concast India Ltd.pdf

3. Exemption u/s 54EC – Allowable beyond Rs. 50 lakhs – Investment in two financial years.

Held, investment in sec. 54EC bonds beyond Rs. 50 lakhs spread across two financial years is allowable as deduction u/s 54EC if the investment is made within the prescribed time.

M/s Ketan Chemicals v. ITO, ITA No. 6636/M/2013 dt. 08/04/2015, AY 2009-10 (Mumbai ITAT) (

Ketan Chemicals.pdf

4. Penalty – Exemption u/s 54F – Loan paid to builder treated as consideration for acquisition of flat – Section 271(1)(c).

The assessee earned long term capital gain from which he claimed exemption u/s 54F. After perusing the details, the AO allowed the deduction u/s. 54F partly and in respect of the balance claim, penalty proceedings were initiated u/s. 271(1)(c). The disallowance so made was in respect of the amount which was advanced by the assessee to the builder beyond one year before the sale and was converted into consideration for acquisition of flat at the time of sale deed. The assessee submitted that while there is stipulation in relation to the purchase of property before one year of the sale, there is no stipulation in so far as the payment for the property is concerned.

The Tribunal observed that the issue of whether the assessee is entitled for deduction u/s. 54F on this conversion of loan into sale consideration is definitely a highly debatable issue, therefore, in our considered opinion, penalty cannot be levied u/s. 271(1)(c).

Shri Aftab Abdul Rehman Badshah v. ITO, ITA No. 7307/M/2013 dt. 20/05/2015, AY 2009-10, (Mumbai ITAT) (

Aflab Abdul Rehman Badshah.pdf

(Note : Whole decision can be downloaded from CTC‘s website : www.ctconline.orgunder Knowledge| Center Menu)

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