SMT. ANITA SARAN JOHN,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-4(3)(1), BANGALORE

The issue urged in this appeal relates to denial of exemption u/s 54 claimed by the assessee.

During the year under consideration the assessee sold a property for 1.45 crores and computed capital gain of Rs.1.07 cores. In the return of income, the assessee claimed exemption u/s 54 of the Act to the tune of Rs.56.87 lakhs. During the course of asst. proceedings the AO asked the assessee to prove supporting documents and evidences to substantiate the claim made u/s 54 of the Act. The assessee furnished details regarding purchase of a site for Rs.16,17,095/-. The assessee had claimed cost of improvement of Rs.40.70 lakhs, but could produce part of details. Hence the assessee, vide her letter dated 4/2/2015, filed a revised the computation by reducing the claim u/s 54 of the Act to Rs.13.64 lakhs. Accordingly, the AO made addition of Rs.27.05 lakhs.

In the appellate proceedings, the ld CIT(A) proceeded to adjudicate the issue relating to deposit made by the assessee in the capital gain account scheme.

I heard the parties and perused the record. I noticed that the AO has not discussed anything about the “deposits made in the capital gain account scheme” in the assessment order. Hence, I am not able to understand as to why the Ld CIT(A) was made to adjudicate the issue relating to deposits made in Capital gains Account Scheme. Further, I notice that though the assessee has claimed exemption u/s 54 of the Act initially at Rs.56.87 lakhs, yet the claim was reduced to Rs.13.64 lakhs during the course of assessment proceedings. However, the AO has made the addition of only 27.05 lakhs, which does not constitute difference between original claim and revised claim.

Foregoing discussions would show that there is no clarity on the issue at all and hence I am of the view that the issue relating to deduction claimed u/s 54 of the Act requires fresh examination at the end of AO. Accordingly I set aside the order passed by ld CIT(A) and restore the same to the file of the AO for examining it afresh. After affording adequate opportunity of being heard to the assessee the AO may take appropriate decision in accordance with law.

In the result, the appeal of the assessee is treated as allowed for statistical purposes.