MR. SAMUEL THANGARAJ PONNIAH,SALEM vs. ITO WARD 1 (5), SALEM

This appeal of the assessee is directed against the order passed by the Principal Commissioner of Income Tax, Salem dated 01.03.2018 and pertains to the assessment year 2010-11.

Shri T.S. Lakshmi Venkataraman, Ld. Representative for the assessee submitted that the Pr. CIT revised the assessment by issuing direction to the Assessing Officer to withdraw the exemption granted u/s. 54 of the Income Tax, 1961 (for short ‘the Act’). The Pr. CIT has also directed the Assessing Officer to rework the long term capital gain after considering the provisions of Sec. 50C of the Act. As far as the second direction with regard to reworking of the capital gain become infructuous since, the Assessing Officer has considered and decided the matter. As far as the exemption claimed u/s. 54 of the Act, the Ld. Representative submitted that the Assessing Officer after considering the entire issue found that the long term capital gain was Rs. 5,24,278/- and accordingly, allowed the deduction u/s. 54F of the Act. Since the Assessing Officer has made proper enquiry and recorded a finding there is no error in the order of Assessing Officer. Therefore, the Pr.CIT is not justified in invoking his jurisdiction u/s. 263 of the Act.

On the contrary, Shri S. Bharath, the Ld. Departmental Representative submitted that the assessee has not claimed deduction u/s. 54F of the Act in the original return. No deduction was also claimed in the return filed consequent to the notice issued u/s. 148 of the Act. Moreover, in the course of the assessment proceedings, the assessee filed a letter claiming deduction u/s.54F of the Act. Therefore, the Pr. CIT found that the assessee is not entitled for deduction u/s. 54F of the Act. The Ld. Departmental Representative placed reliance on the judgment of Apex Court in the case of Goetze (India) Ltd vs. CIT, 284 ITR 323 (SC).

Having heard the Ld. Representative for the assessee and the Ld. Departmental Representative and perused the relevant material available on record. We also carefully gone through the judgment of Apex In the very same judgment, the Apex Court categorically found that the power of this Tribunal will not impinge to admit additional or any other ground. Therefore, there is no impediment for this Tribunal to consider the claim u/s.54F of the Act. Moreover, the Apex Court in the case of CIT vs. Shelly Products and Another, (2003) 261 ITR 367 had categorically found that it is open to the assessee to bring to the notice of the Assessing Officer any claim in the course of the assessment proceedings even though it was not claimed in the return of income. This judgment of the Apex Court was not considered by the latest judgment in Geozte (India)

In the result, the appeal filed by the assessee in 2010-2011 is allowed.