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Income Tax Appellate Tribunal, “SMC” Bench, Mumbai
The assessee has filed this appeal challenging the order 3.12.2009 passed by learned CIT(A)-1, Mumbai and it relates to A.Y. 2014-15. The assessee is aggrieved by the decision of learned CIT(A) in confirming the enhancement of capital gain declared by the assessee from Rs. 18,934/- to Rs. 27,48,834/- by CPC in the intimation issued under section 143(1) of the Act.
None appeared on behalf of the assessee, even though the notices were sent by registered post on several occasions. Hence, I proceed to dispose of the appeal, ex-parte, without presence of the assessee.
I have heard learned DR and perused the record. The assessee is a charitable trust registered under section 12AA of the I.T. Act. The return of income filed by the assessee for the year under consideration was processed by the CPC under section 143(1) of the Act. The assessee had declared capital gain from sale of shares at Rs.18,934/- after deducting cost of acquisition. The CPC did not allow deduction for cost of acquisition and accordingly computed
2 Shri Brindavan Behari Kripa Trust short term capital gain at Rs. 15,27,536/-. The CPC has stated that computation is made under section 11(1A) of the Act. The Learned CIT(A) also confirmed the same.
I have heard learned DR and perused the record. I noticed that both the CPC as well as learned CIT(A) has taken support from the provisions of section 11(1A) of the Act for arriving at the conclusion that the cost of acquisition of capital asset cannot be deducted while computing capital gain. Provisions of section 11(1A) of the Act reads as under :
11(1A) For the purposes of sub-section (1),— (a) where a capital asset, being property held under trust wholly for charitable or religious purposes, is transferred and the whole or any part of the net consideration is utilised for acquiring another capital asset to be so held, then, the capital gain arising from the transfer shall be deemed to have been applied to charitable or religious purposes to the extent specified hereunder, namely:— (i) where the whole of the net consideration is utilised in acquiring the new capital asset, the whole of such capital gain; (ii) where only a part of the net consideration is utilised for acquiring the new capital asset, so much of such capital gain as is equal to the amount, if any, by which the amount so utilised exceeds the cost of the transferred asset; (b) where a capital asset, being property held under trust in part only for such purposes, is transferred and the whole or any part of the net consideration is utilised for acquiring another capital asset to be so held, then, the appropriate fraction of the capital gain arising from the transfer shall be deemed to have been applied to charitable or religious purposes to the extent specified hereunder, namely:— (i) where the whole of the net consideration is utilised in acquiring the new capital asset, the whole of the appropriate fraction of such capital gain; (ii) in any other case, so much of the appropriate fraction of the capital gain as is equal to the amount, if any, by which the appropriate fraction of the amount utilised for acquiring the new asset exceeds the appropriate fraction of the cost of the transferred asset.
A careful perusal of the above said provision would show that this Section 11(1A) is akin to Section 54F of the Act providing deduction/exemption from the capital gain if a new asset is purchased from out of sale consideration
3 Shri Brindavan Behari Kripa Trust of the old asset, i.e., the provisions of section 11(1A) may be used by the assessee, if it has purchased a new capital asset out of the sale consideration of the capital asset sold earlier. Accordingly, if the assessee has not purchased any new capital asset out of the sale consideration of the old asset, then the provisions of sec. 11(1A) shall not apply. In that situation, other provisions of Act applicable for computing total income of a charitable trust should be applied in the hands of the assessee.
I noticed that learned CIT(A) has not examined the issue applying the legal principles discussed above. From the record, it is not clear as to whether the assessee has purchased any new capital asset out of sale consideration or not. If it has purchased new capital asset, then the said cost should have been allowed deduction in terms of sec.11(1A) of the Act. In the absence of relevant details, I am of the view that this issue requires fresh examination at the end of Ld CIT(A). Accordingly I set aside the order passed by learned CIT(A) and restore all the issues to his file for examining them afresh in the light of legal principles discussed above and also after hearing the assessee.
In the result, appeal filed by the assessee is treated as allowed for statistical purposes.
Order pronounced in the open court on 19.07.2022.